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Why Washington Has It Wrong on Small Business

November 12th, 2012 • By: bcchrisc News

For starters, policy makers should ask a simple question: What is a small business, anyway?

By AARON CHATTERJI

It’s time for the government to get a lot smarter about small-business policy.

In an era when political battles are nastier than ever, small business is the American dream we can all agree on. Democrats and Republicans alike line up behind the idea that small firms are job creators—the backbone of the economy—and they deserve a helping hand from the federal government.

Yet we’re not doing all we can to support them—because we’re treating them all exactly the same.

It’s obvious that small businesses are incredibly diverse, with very different needs, aspirations and potential. The government, though, lumps them all into one category, covered by the same rules, policies and federal agency. Generally speaking, if you have fewer than 500 employees, you’re a generic “small business”—whether you’re the dry cleaner who’s been on the same corner for a decade or a tech company that just launched in a dorm room.

For the rest of the article click here:  http://online.wsj.com/article/SB10001424052702303768104577460040429463650.html?mod=ITP_thejournalreport_0

Or email Christopher Campagna at cmc@braddockcommercial for PDF of the article.

 

Real Estate Investors Likely to Face New Tax Bite

November 8th, 2012 • By: bcchrisc Uncategorized

Some Investors Likely to Face New Tax Bite

Those Dabbling in Real Estate Could See Surtax on Rental Income Starting Jan. 1; Just Who Qualifies Is in Question

By A.D. PRUITT

The presidential election could determine whether the wealthiest Americans will see their income taxes rise or fall. But there is one tax increase that is likely to occur no matter who wins office: an investment surtax that begins on New Year’s Day and will hit thousands of real-estate investors.

The tax won’t affect real-estate companies or those who work full-time managing their real-estate portfolio. But so-called passive investors—those who dabble in real estate part-time but have other jobs—could be subject to a 3.8% surtax on rental income from the properties.

The tax, which was included in the Affordable Healthcare Act passed by Congress in 2010, is intended to raise funds to pay for the law. It covers all types of investment income, not just real-estate income. But the rules regarding real-estate investors, including guidelines that determine who is and isn’t a passive investor, remain in contention. And that is causing confusion and anxiety.

Read the entire article:

http://online.wsj.com/article/SB10001424052970204789304578086741173681434.html

 

For ideas and strategies on how to deal with this change in the law please call or email Christopher Campagna at  703-549-1695  x1  or  cmc@braddockcommercial.com.

 

Post Election Leasing Boom or Bust?

November 2nd, 2012 • By: Communications Asset Management, Brokerage Services, Commercial, News, Real Estate

From the Washington Business Journal

By Daniel J. Sernovitz

http://www.bizjournals.com/washington/print-edition/2012/11/02/leasing-boost-post-election-not-likely.html?s=print

 The mantra among Washington’s commercial real estate brokers for the past year has been that things will pick up after the elections.

It’s that notion, combined with the looming threat of billions of dollars in automatic spending cuts slated to go into effect early next year, that many blame for a pronounced drop in leasing activity and multimillion-dollar investment sales.

But with Nov. 6 just days away, several government leasing experts are now voicing a growing fear that neither President Barack Obama nor Republican nominee Mitt Romney will be able to do much to revive federal real estate leasing in the Washington area any time soon.

That’s a dour outlook given the optimism that normally surfaces leading up to a presidential election in this town. The Washington area typically perks up after an election, regardless of whether the incumbent or challenger wins. A second-term president will usually take on bigger and more ambitious initiatives without fear those actions will cost him the next election. And newly elected presidents often come into office full of new ideas that could likewise be good for the region’s office market.

The problem this time, some experts say, is that regardless of who wins, the president-elect will still have to deal with two nagging issues that will keep Uncle Sam’s real estate needs constrained for months, if not years, to come: a sluggish economy and a cash-strapped federal government.

“Generally, I expect something more dramatic from elections than I feel about this election,” said Joe Delogu, a principal at FD Stonewater, which focuses on federal real estate leasing. “This time, I don’t think it’ll be much change either way because the overarching problem for either administration is that there’s just no revenue. Government real estate is on a diet, and it’s going to stay that way.”

There are plenty of variables that could influence federal real estate leasing in the next presidential administration, including whether Dan Tangherlini will remain head of the General Services Administration and who will lead the congressional subcommittees charged with approving multimillion-dollar real estate leases for the federal government.

There’s also the question of either candidate’s winning margin and if that winner’s party takes or holds control of the House and Senate. Over the past decade, the region’s real estate market added 37.3 million square feet of new leases when the president and Congress were politically aligned, according to commercial real estate firm Jones Lang LaSalle Inc. That compares with just 2.1 million square feet when not aligned. During that 10-year period, Jones Lang LaSalle notes Congress and the White House were aligned from 2003 to 2006, during President George W. Bush’s terms in office, and from 2009 to 2010, under Obama but before Republicans took control of the House of Representatives.

That raises at least one ray of hope, that the new president and Congress will be more willing to find compromise than the current executive and legislative branches, said Darian LeBlanc, senior managing director of Cassidy Turley’s government services division. Those branches will need to make some tough decisions after the election, including whether to derail sequestration, renew the Bush-era tax cuts and pass a budget or continue to operate under a continuing resolution. With those issues settled, federal agencies and the businesses that rely on them will both be more likely to commit to making major real estate decisions.

Obama and Romney have both placed emphasis on reducing federal spending, Romney from the campaign trail and Obama as both president and presidential candidate. In June 2010, Obama tasked federal agencies with finding $8 billion in real estate savings by the end of the 2012 fiscal year. The federal Office of Management and Budget said in May it was more than $5.6 billion toward that goal as of the first quarter of the year but has not come out with a final tally for the fiscal year, which ended Sept. 30.

Romney has not indicated he would set a similar target for real estate savings but has voiced several positions that could lead in the same direction. Among his remarks, Romney has proposed to cut 10 percent of the federal workforce through attrition. A slimmer workforce, which his campaign estimates would save about $4 billion, would likely result in leaner real estate needs. Romney has also voiced criticism of certain federal agencies, including the Department of Education and the Environmental Protection Agency, which could see deeper reductions in their budgets under a Romney administration.

How deeply those cuts are felt in the Washington area is unclear. The rub, Colliers International Executive Vice President Kurt Stout said, is that federal agencies tend to be more protective of their headquarters, and D.C. is a headquarters town. That means if agencies are forced to absorb a cut to their budgets or workforces, they are more likely to make those cuts in bureaus or outposts far outside the Beltway.

Ultimately, Delogu said, the economy will need to rebound, and with it the amount of taxes the federal government raises, before the agencies can start to grow their space needs in any substantial way.

And private-sector businesses are not likely to increase spending, however, until they have more confidence in where federal taxation and other regulatory issues are heading. That will enable them to make growth decisions and expand their own space needs as well. At this point, Delogu said, many businesses in the Washington area have been reluctant to make those kinds of space decisions.

Braddock Commercial President Christopher Campagna quoted in CoStar Watch List Newsletter

 

“Most of our clients have already accounted for the worst case, and pulled back,” explains Christopher M. Campagna, president of Braddock Commercial Real Estate Services in Alexandria, VA. “So, when the worst case does not materialize we will have a mini-boom of spending activity resulting in good leasing activity in the second and third quarters next year. But no one should get too heady about prospects for 2013 or 2014,” he warns. “Our operational philosophy is for cash/asset preservation to come first, and be very cautious on equity risk with little or no debt accumulation. We are still facing a classic market conundrum – cheap debt, reasonable prices, but too much risk and no good matrix to price it.”

Please follow the link below for the entire article:

http://www.costar.com/News/Article/DC-Real-Estate-Pros-Weigh-In-On-Forces-Driving-Investment-Sales-Market-Through-Year-End/142923

 

Braddock sponsors Run For Shelter Race

October 17th, 2012 • By: bcchrisc News

Braddock Commercial is proud to announce their sponsorship and participation in the Run For Shelter 5k/10k/FunRun hosted by the Carpenter’s Shelter for the Homeless.  Braddock’s associate director, Tom Hawkins, will be running in the 10k on November 17, 2012.  Contact us if you want to participate and we can get you $5 off on your registration!

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