The past year was one of surprises, upending the expectations businesses, Congress, and the whole country had for what was in store. Now, looking ahead at a new Congress and a new Administration, there are questions of how it will deal with the carry-over issues from last year (COVID-19) and what it will focus on beyond them.

In December 2020, Congress passed a massive “omnibus” spending bill/COVID-19 relief legislation, with the goal of providing aid to individuals, businesses, and boosting the economy. Specifically, it reauthorized the Small Business Administration “Paycheck Protection Program” (PPP), which has provided crucial forgivable loans to small businesses since its creation in April, and improved the forgiveness process for the smallest borrowers to reduce the burdens they face. Additionally, in a non-COVID related section, the legislation makes permanent the 179D Energy Efficient Commercial Building Deduction, while also requiring its standards to be updated and indexing it for inflation.

Looking ahead, the Biden Administration and the newly installed 117th Congress has more work to do. On the COVID front, there is talk of another stimulus round, with more aid for individuals. One of the pieces NAR will be advocating for in this is flexibility for commercial real estate lenders and borrowers to update loan terms in sensible ways to assist the borrowers.

NAR is also monitoring new trends related to the pandemic, and how they may impact commercial real estate going forward. With so many offices switching to full-time remote work, and with people wary to take public transportation, we will be watching to see how leases for office space are impacted, and if more businesses will move out of downtown and into suburban areas where parking is more plentiful. Additionally, barriers—walls and doors—over open concept floor-plans are likely to be highly desirable.

Looking past the pandemic, NAR is especially focused on protecting the Section 1031 Like-Kind Exchange. While the Biden administration has yet to release detailed plans, part of his campaign focused on creating an early-child and elder-care program which would be paid for in part by limiting 1031s to individuals who make less than $400,000 per year. In addition to participating in industry coalitions which are funding economic studies on the positive economic impact of 1031s, NAR has updated its member-survey on 1031s, which provides valuable data for our advocacy efforts. Covering the years of 2016 – 2019, the survey found that 61% of Realtors® had at least one 1031 in the time period, and that 84% of the properties exchanged were held by small investors in sole proprietorships or S-corporations—a different story than that these are only conducted by the super-wealthy and massive corporations. Most tellingly, 89% of Realtors® reported that their clients invested additional capital in the replacement property, and 94% reported that they expect property values to decline if 1031s are repealed.

This year brings with it challenges from 2020 and new ones, but new opportunities as well. NAR will continue to advocate for COVID-19 relief which assists businesses and commercial property owners of all types and sizes, and to protect tax provisions—like 1031s—which are so crucial to both real estate and the economy in general.