Last week, NAIOP held its Commercial Real Estate Conference 2015 in Toronto, Ontario, Canada. At major meetings such as this one, NAIOP’s government affairs staff is often invited to update members on public policy issues affecting commercial real estate, and on politics in the United States. Most of these discussions occur with NAIOP members during their National Forums meetings, which are smaller, private meetings where individuals are more at ease sharing their views and opinions. This gives them an opportunity to talk with those of us involved in the day-to-day aspects of politics and public policy in the United States, and it gives NAIOP staff insight into what our members are thinking and feeling.
While you might not have thought it would occur in Toronto, politics – including talk of the U.S. presidential campaign – was certainly in the air at NAIOP’s annual meeting. First of all, Canada was less than a week away from holding its own federal elections, which invariably invited comparisons to the presidential race in the U.S. NAIOP members from Canada were bemoaning the fact that their campaign had lasted an unprecedented 11 weeks, while most NAIOP members from the U.S. would have gladly parted with a limb if it meant keeping the U.S. presidential campaign to fewer than three months!
In addition, the first Democratic debate was being held during the conference, with all eyes on Hillary Clinton and Bernie Sanders, amid rampant speculation as to whether Joe Biden would enter the race. The congressional wing of the Republican Party had nearly blown itself up the week before, and was scrambling to find a new Speaker of the House. Donald Trump was still the leading Republican candidate in the GOP field, as well as the leading topic of conversation among those following the race. Finally, a political figure – former Pennsylvania governor and first Secretary of Homeland Security Tom Ridge – was our conference keynote speaker, ensuring that he would be asked to provide his views and analysis of the political terrain.
Our members wanted to hear about issues affecting their bottom line. We talked about carried interest compensation in real estate partnerships and whether it would continue to be taxed as capital gains rather than as ordinary income. Ever since Donald Trump and others promised to eliminate the “carried interest loophole” and go after the Wall Street hedge fund managers who use it, the issue had been given new life in the presidential campaign as a populist talking point.
Most of our members knew that the last version of such a proposal that made it into a major tax reform plan provided a carve-out for real estate development — a major victory for NAIOP and our industry, and a position that would bolster our efforts during tax reform discussions under the next president. They wanted to hear about the likelihood that Section 1031 like-kind tax-deferred exchanges would continue, and were glad to hear that we have provided Congress with economic studies showing the economic contribution and value of like-kind exchanges in the real estate world. And we gave them updates on transportation policy, energy policy, and the latest regulations advanced by the Environmental Protection Agency, among other things.
In addition to substantive policy discussions on issues, the NAIOP members with whom our staff spoke wanted to discuss congressional politics and the presidential race. Regarding the Democratic nominees, there were very few NAIOP members who were outspoken in their belief that Vermont Senator Bernie Sanders would actually defeat Hillary Clinton for the nomination. Some voiced support for Vice President Joe Biden entering the field, but not a strong belief he could prevail over Clinton. As might be expected, more energy and focus was given to the race for the GOP nomination, since that had seen the most unconventional candidates.
Some still theorize Donald Trump will quit the race, sooner rather than later, if he is not assured of winning the nomination. However, most analysts no longer simply dismiss his chances. Opinions of Trump among NAIOP members we met with ran the gamut. Some calling themselves conservative Republicans expressed a deep dislike for him. One expressed her strongly-held view that he has alienated female voters, and his nomination would be disastrous for the GOP in the general election. Yet others were intent on supporting Trump despite any misgivings, having become tired of what they term “politics as usual” practiced by “conventional politicians.” Five out of ten NAIOP members at one Forum meeting voiced support for Trump, primarily as a protest vote. These NAIOP members also voiced strong support for Ben Carson, and to a lesser extent, Carly Fiorina. Their disillusionment with politics runs deep.
One thing we all know: Unlike Canada, the U.S. race has a long way to go.