From local environmental laws in
California to messy zoning regulations
and what was perceived to be
a lack of leadership in Washington, it
seems the industry does not view the
current governmental climate favorably.
These challenges were echoed by
Mary Kay Bier, frst vice president at Kidder Mathews in San Diego.
"The cost of doing business in California
is a challenge," she said. "Development
fees and Title 24 requirements
increase the cost of development.
Development in certain sectors like
professional office and industrial may
not be able to be supported by market
rents. In San Diego, low vacancy rates
and not enough inventory to lease or
sell are huge challenges."
Douglas J. Shea, founder of Long
Beach, Calif.-based INCO Commercial,
seconded Bier's notion that government
interference can hinder not
just the commercial real estate industry,
but commerce and, thereby, local
business in general.
"The biggest challenges to the commercial
real estate industry for 2016
are the same as they were in 2015," he
asserted. "There are too many governmental
intrusions into every transaction.
The small governments increasing
the minimum wage will also have
a major impact on 2016."
The upcoming 2016 presidential
election provided hope for some,
while others thought it would simply
bring more of the same. A majority of
respondents felt it would be benefcial
to the industry if a Republican candidate
"The election will have a major impact,"
said Jack Vander Woude, principal
at the Tahiti Group in Southern
California. "If it's a Republican victory,
we should see less regulatory
agency costs, timeline issues, obstacles,
etc., compared to the ones that
currently exist in our world of California,
'the land of CEQA [California
Environmental Quality Act].'"
Some were less than thrilled with
the thought of Democrats maintaining
the top seat.
"Clinton says she will penalize companies
that move manufacturing and
monies out of the U.S. to avoid taxes,
which will slow business growth,"
Bier said. "The cost of business due to
insurance and wage increases will also
hinder growth. It's hard to say what
will happen if a Republican is elected.
Their views on taxation are mixed, although
I do feel the commercial real
estate market will grow at a quicker
pace with a Republican president."
Not surprisingly, Donald Trump
and Hillary Clinton were the two
candidates who elicited the strongest
"If any Republican except Trump
wins, I think the market will react
positively," said an anonymous broker
participant. "If it is Hillary [Clinton],
I think there will be a pull back.
If her early lead is very evident, that
pull back could start this June or July."
Despite the spectrum of concerns,
2016 does seem to be on track for another
positive year of growth throughout
all three professional industries,
according to our respondents. While
we're all aware the good times can't
last forever, it is heartening to know
the West's major players expect another
stellar performance this year in
much of the commercial real estate