Federal and Regional Updates that Impact CRE

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It’s probably safe to say that few of us in the commercial real estate industry will regret the first quarter of 2020 coming to an end. 

COVID-19 is cratering the global economy, with equities in the US seeing the most significant decline since the Great Depression almost 100 years ago. Oil prices have plummeted, banks and businesses are slashing their forecasts for the year, while landlords and tenants wonder what will happen next.

Fortunately, in the US, the federal government and local governments are diligently working to relieve those impacted by the COVID-19 pandemic. Here’s a breakdown of what policies are in effect, what’s coming up, and how they impact commercial real estate.

Federal measures

As the COVID-19 pandemic continues to create chaos in economies around the world, the US government and Federal Reserve are moving quickly to mitigate the effect of COVID-19 on the nation’s economy and the commercial real estate industry. 


The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law by President Trump on March 27, 2020. With $2 trillion in economic stimulus, the CARES Act was designed to boost the US economy using grants, loans, and fiscal stimulus equal to nearly 10% of the GDP to help individuals, small businesses, and the commercial real estate industry:


  • One-time tax rebate of $1,200 for single tax filers with an AGI (adjusted gross income) of up to $75,000 and $2,400 for joint tax filers with an AGI of up to $150,000 plus $500 for each child.
  • Pandemic unemployment assistance for self-employed individuals or independent contractors who are unable to work due to the impact of COVID-19.
  • Tenants may not be evicted for nonpayment of rent or fees by a property owner whose mortgage is backed in any way by a federal agency such as HUD, Fannie Mae, or Freddie Mac.

Small and mid-size businesses

  • Small business paycheck protection program creates a forgivable loan program with up to $350 billion in low-interest loans to support payroll and operations of small business (those with 500 employees or fewer) during the COVID-19 pandemic, with another $250 billion being requested due to surging demand.
  • Mid-size companies (between 500 and 10,000 employees) may be eligible for a non-forgivable extendable secured loan program with certain restrictions on employment levels, executive compensation, and stock buybacks.
  • Payroll tax credit for employee retention available to certain businesses affected by COVID-19 and employer share of Social Security payroll taxes for 2020 wages may also be deferred.

CRE investors

  • Qualified improvement property such as TIs (tenant improvements) is eligible for immediate depreciation.
  • Net operating losses (NOLs) accrued in 2018, 2019, or 2020 can be carried back for five years preceding the NOL.
  • NOL deduction limit is increased to 100% for income accrued in 2020.
  • Limit on deductions for excess business losses is removed for 2018 through 2020 for non-corporate taxpayers.
  • Corporations with previous unclaimed AMT (alternative minimum tax) credits may now claim them immediately.
  • Multifamily property owners with federally backed mortgage loans may be able to forbear payments temporarily.

By extending safety net programs for individuals, assisting small and mid-size businesses, and simulating the commercial real estate industry, the CARES Act will stabilize the economy and help prevent further damage.

Fed rate cuts

Even before the COVID-19 pandemic struck, the Federal Reserve was proactively doing its part to shore up the economy by lowering the Fed funds rates:

  • August 1, 2019 – lowered rates to 2.25%
  • September 19, 2019 – 2.0%
  • October 31, 2019 – 1.75%
  • March 3, 2020 – 1.25%
  • March 15, 2020 – 0.25%

State and Local government measures 

In addition to the Federal government, state and local governments are also doing their part to bolster their local economies:

New York State and City


Other States

Local newspapers in Louisiana and Ohio, and the NCSL (National Conference of State Legislatures) list how some of the other states and governments across the country are helping citizens and business to battle the pandemic:

  • Arizona appropriates $50 million to create the Crisis Contingency and Safety Net Fund for individuals and small businesses.
  • Louisiana Loan Portfolio Guaranty Program is offering loans of up to $100,000 to small businesses.
  • Kentucky excludes the income of disaster response firms and employees from local tax.
  • Ohio has no moratorium on rent payments, but the Greater Cincinnati and Northern Kentucky Apartment Association is asking its members to work with renters.
  • Massachusetts provides a moratorium on evictions and foreclosures during the pandemic.
  • New Jersey urges financial institutions to offer forbearance to mortgage borrowers during the COVID-19 epidemic.
  • South Carolina prohibits an eviction proceeding for nonpayment of rent within a certain number of days grace period.

How government stimulus affected CRE

There’s an unprecedented amount of money being deployed to help battle the COVID-19 epidemic and stabilize the economy. To get an idea of how effective the CARES Act might be, here’s a look at how past government stimulus helped the economy and the commercial real estate industry.

Stimulus worked well in the past

TARP (Troubled Asset Relief Program) of 2008 was a $700 billion program that was used for initiatives such as the Home Affordable Modification Program and Home Affordable Finance Program, helping 5 million homeowners to avoid foreclosure.

ARRA (American Recovery and Reinvestment Act) of 2009 was a $787 billion stimulus package that raised GDP by between 1.7% and 4.5%, lowered the unemployment rate by between 0.7% and 1.8%, and increased the number of people employed by between 1.4 million and 3.3 million.

TCJA (Tax Cuts and Jobs Act) of 2017 has had a direct positive impact on commercial real estate investors in the areas of capital gains and 1031 exchanges, step-up basis rule, depreciation, operating expense deductions, pass-through entities, and carried interest. Although the TCJA wasn’t technically called a stimulus package, investors will note that these changes have been a boon to the CRE industry.

Stimulus helps everyone win

Without the various COVID-19 stimulus packages on a federal, state, and local level, it’s easy to see how conflicts between tenants, landlords, and lenders could quickly augur the commercial real estate industry into the ground.

Lenders with trillions of dollars of outstanding property loans would quickly threaten to foreclose on borrowers. At the same time, landlords try to squeeze rent money out of tenants whose businesses are operating in the red and people who are unemployed.

The CARES Act and other stimulus programs help provide relief to all real estate stakeholders. But even with temporary relief, communication between tenants and landlords is still vital. 

To avoid getting into a situation where nobody wins, the CCIM Institute suggests:

  • Landlords consider rent deferrals, reductions, or abatements, credit security deposits toward unpaid rent, or convert past due rent into a loan payable over time.
  • Tenants should explain to their landlord exactly how COVID-19 is impacting their business, understand what concessions they need in best- and worst-case scenarios, and explore various government relief programs that are available.

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Shanti Ryle
Shanti Ryle

Content Marketing Manager

Shanti leads Crexi's content marketing strategies with 7+ years of content development experience, creating everything from blog posts to award-winning podcasts. Previously, she worked on content teams at Snapchat, Weedmaps, and HopSkipDrive as well as developed copy, articles, and media for freelance publications.

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