The outcome of the midterm elections will impact the political environment and possibly the policy environment, but it is much less likely to significantly change the economic environment or impact the performance of commercial real estate (CRE).
- The consensus is that growth in the U.S. economy is likely to remain healthy regardless of the outcome of the elections, particularly in the near term—2018/2019. Given the correlation, demand for CRE space should also remain healthy.
- The real estate policy environment is unlikely to change dramatically regardless of the vote, but under certain scenarios, more of a gridlock situation could emerge. Historically, congressional productivity has declined after the midterm elections.
CRE values are more likely to be influenced by interest rates and the tremendous amount of capital targeting North American assets. Closed-end funds have $191 billion of dry powder as of October 2018—up nearly 32% since year-end 2016.