Housing Complex

The Republican Office Space Premium?

Via GlobeSt, broker CBRE's research arm has put together a chart of how quickly Washington-area commercial real estate gets absorbed under Republican and Democratic rule. The results are pretty clear: The market does awesomely when the GOP's in charge.

Pinning down the reason for that is more difficult, though. The report's authors suggest, logically enough, that commercial real estate may do better when government services are contracted out, which tends to happen under Republicans (they're "cutting the size of government"). Given that the federal government accounts for 40 percent of the region's workforce, it should at least have a biig effect. But procurement spending has increased fairly steadily throughout the years, with no noticeable variation when Congress flips: 

Chart by the Center for Regional Analysis at George Mason University.

Also, it's not as if government workers only work in federal buildings. At the moment, out of the 100 million square feet of office space in the General Services Administration's portfolio, 58 percent is leased. So fluctuations in federal employment would also affect the commercial real estate market, and there, we've got some different trends:

Chart by the Center for Regional Analysis at George Mason University.

I'd like to say that one-party rule gives rise to more lobbyists, but I'm not sure they'd move the dial on real estate that much. So there are likely other factors at play here.

  • Andrew Hunt

    Look at the changing rate of increase in procurement, however. I don't know if there's a chart anywhere that's easy to find, but you can see the procurement slope is steeper from 1998-2000 and 2002-2004, the two tall areas in the first graph.

    That's because the first graph is of office space absorption--the amount of new office space getting used, not the total amount of occupied office space. I'd bet that the total occupied offtice space chart would look a lot like that total procurement chart. The absorption chart--the change in office space usage as compared to the increase in supply--is more comparable to the rate of change in procurement.

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