Intelligent Investment

Federal Elections Have Little Immediate Impact on Real Estate Investment Activity

September 3, 2024 3 Minute Read

Executive Summary

CBRE finds that there has been no material change in commercial real estate investment activity or values in the months just before and after federal elections, despite widespread belief to the contrary.
This is not to say that certain policy proposals will not impact commercial real estate market fundamentals and investment activity in the long term.
Key policy areas that could impact commercial real estate during the next presidential administration include trade, taxes, regulations, government spending and the federal budget deficit.

Figure 1: Q4 share of annual investment volume in federal election years

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Source: CBRE Research.

Our analysis looked for impacts of federal elections on investment market dynamics since 2000. We employed statistical methods to reveal even subtle impacts on variables such as deal count, cap rates and the distribution of investment activity across property types, quarters and months. In each case, we did not find any notable differences between presidential and non-presidential election years, except during the Global Financial Crisis. We studied primary and secondary markets separately and reached the same conclusion: The election itself had no material impact on investment activity or values.

To ensure there were no lagged impacts, we analyzed investment activity during the quarter when a presidential election was held and the following two quarters. There was no statistical evidence to suggest that the lifting of pre-election uncertainty unlocked capital. This gives us confidence that elections don’t impact investment activity over the short term.

The same conclusion holds for property values: Rather than elections, broader macro conditions —particularly interest rates—are what drive changes in capitalization rates.

Figure 2: Marco economic trends, not presidential elections, drive cap rate movement

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Source: CBRE Research, CBRE Econometric Advisors, Q2 2024.

The Bottom Line

Presidential elections have no material impact on commercial real estate investment activity or values in the months immediately before or after they take place. However, certain policies that are enacted over the course of a presidential administration can present significant risks or opportunities. These include government spending and the federal budget deficit, individual and corporate income taxes and regulation in such areas as energy and housing.

Figure 3: CHIPS Act drives growth in tech manufacturing facility construction

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Source: U.S. Census Bureau.

At this stage, most policy proposals from this year’s two major presidential candidates generally lack detail. The ability of the next administration to implement its proposals will largely depend on political control of Congress and, as always, will be subject to negotiation. It is the actual laws and regulations that most influence the broader macro-economic environment and ultimately commercial real estate investment activity and asset values.

CBRE concludes that there is no benefit in delaying strategic property decisions just because an election is two months away, especially if there is an opportunity to capture favorable pricing amid a market recovery.