The Institute of Real Estate Management (IREM®) and the CCIM Institute (both based in Chicago) recently joined forces to raise awareness on Capitol Hill of key issues affecting the commercial real estate industry. More than 275 IREM and CCIM Institute members representing 40 states and the District of Columbia held 200 meetings with their respective senators and congressmen, and their staffs, to voice the industry’s concerns about four pending legislative initiatives: banks in real estate, leasehold improvements, property/casualty/terrorism insurance, and climate change/energy.
Banks in Real Estate
Commercial real estate practitioners oppose changes or interpretations in current federal regulations that would permit banks or bank holding companies or subsidiaries to enter the field of real estate management and brokerage beyond properties owned by these institutions. Reasons for opposition include:
- The safety and soundness of the economy should not be put at risk by untested regulation.
- The Gramm-Leach-Bliley Act adopted by Congress in 1999 maintains a separation between banking and commerce.
- Financial holding companies do not have the ability to manage and broker commercial real estate with the same level of competence and personal service as independent real estate professionals.
Commercial real estate practitioners believe that the current 15-year cost recovery period for leasehold improvements should not be permitted to expire at the end of this year. It would be unrealistic to revert to the prior recovery period of 39 years depreciable life for tenant improvements. Among their arguments:
- A realistic cost recovery period, such as 10-15 years, is a reasonable incentive to keep downtown office, commercial, and retail space modern, efficient and competitive with suburban space. In addition, such a change would more closely mirror corresponding lease terms for these properties.
Commercial real estate practitioners support extending the Terrorism Risk Insurance Extension Act (TRIEA), set to expire at the end of 2007. They note that:
- The frequency and intensity of large natural disasters in recent years has made purchasing and maintaining adequate property insurance very difficult in some areas.
- Insurers are declining to write new policies, failing to renew existing policies and increasing premiums on existing policies.
- Both commercial and multi-family properties should have access to affordable property insurance.
- Terrorism insurance availability is critical to financing commercial real estate development, particularly in densely populated areas that are perceived to be terrorist targets.
Commercial real state practitioners support positive incentives for energy conservation activities, energy tax credits, and voluntary programs like ENERGY STAR® and the EPA’s Green Lights. In addition:
- They support the development of voluntary standards for reducing greenhouse gas emissions.
- They acknowledge the serious concerns about global climate change but believe additional research is needed to determine what level of greenhouse gases are affecting the environment versus natural climatic changes humans cannot control.
This information was provided by the Institute of Real Estate Management, a source for education, resources, information and membership for real estate management professionals for more than 70 years. The CCIM Institute confers the Certified Commercial Investment Member (CCIM) designation to commercial real estate professionals through an extensive curriculum of 200 classroom hours, in additional to professional experiential requirements. Both organizations are based in Chicago.