How A Donald Trump Presidency Could Affect DC's Office Market
The DC area office market, with a large proportion of federal agencies, contractors and lobbyists, is uniquely affected by the federal government's activity. As the nation mulls the possible effects of a Donald Trump presidency in the days after his surprise victory, some DC office experts see reasons for optimism in the local market.
Avison Young US capital markets managing director John Kevill expects to see a pickup in leasing activity from the GSA, government contractors, consultants and lobbyists.
"His promise to spend on infrastructure, reinvigorate the military, hire more ICE agents than ever before," John says, "will lead to a growth in the local government footprint."
He says this may result in a resurgence in demand for existing suburban office stock that has largely been considered functionally obsolete. He also predicts a growth in lobbying for industries like healthcare and tax reform, leading to increased demand for trophy CBD office space.
Elizabeth Norton's research team at Transwestern looked at the market impacts of every election since World War II, and found generally greater local office demand when the White House was in Republican hands. Although, she says, this is largely due to the timing of events like military conflicts and recessions, and cautions against looking too much into the party in power.
"It's hard to speculate the true impact at the end of the day, but historically we find it's events, rather than the president, that truly impact the market," Elizabeth, snapped above at a Bisnow event with Bisnow VP of sales/pro mic holder Mike Ponticelli, says.
These unpredictable events, like 9/11 for George W. Bush, can immediately change the direction of a president's agenda and lead a candidate who ran on reducing government spending to dramatically grow the size of government. Because of this uncertainty, Newmark Grubb Knight Frank senior managing director of market research Greg Leisch also warns against betting on Trump's campaign promises coming to fruition.
"The platform that one runs on, and the deeds that one can undertake, are often two different things," Greg says. "Because the circumstances of governing are entirely unique to the circumstances of the moment."
While investors may have a wait-and-see attitude, DC officials are already looking into Trump's policy proposals and trying to figure out what he actually plans to do as president that could affect the District.
At a press conference Wednesday afternoon, Mayor Muriel Bowser said she is putting together a committee to analyze Trump's policies and how they could impact DC's budget, policies and programs. Bowser said she had hopes to hear more substantive proposals from Trump during his victory speech, but there was one point that stuck out to her.
"I think that we found some area, a very significant area of common ground," Bowser said. "That is his focus, and ours, on how we rebuild American infrastructure and certainly we have those concerns in Washington, DC. To the extent that the federal government can be focused on roads and bridges and public transportation and how those public infrastructure projects can put DC residents to work, that’s certainly an area of common ground."
Bowser did acknowledge areas where she has concerns about Trump's effect on DC residents, like his vow to repeal the Affordable Care Act and defund Planned Parenthood. Still, she expressed a willingness to work with Trump on urban issues.
"I have taken issue with the way he describes inner cities, but to the extent that he is sincere about working in urban areas and working with cities, he should start with his new hometown," Bowser said. "We will work with him if he’s willing to help us make the investments in infrastructure."
