3 minute read time
December 22, 2020

Executive Summary

  • Congress passed a $900 billion fiscal stimulus package last night, which is expected to be signed into law by President Trump today.
  • The fiscal stimulus provides aid to small businesses and the hardest hit industry sectors, along with direct payments to households and enhanced benefits to the unemployed.
  • The aid is positive for property markets across types and locations.
  • Some near-term risks to the economy remain, with a difficult first quarter expected due to COVID-related restrictions. Nevertheless, this stimulus should ensure worst-case scenarios are averted.
  • CBRE expects that economic growth will pick up in Q2 as vaccines and therapeutics are widely deployed.
  • The overall economy is expected to recover more quickly than property markets, with the hardest-hit sectors—office, retail and hotels—not expected to fully recover for two to three years.

Commercial Real Estate Highlights

  • Office: Fiscal support for the economy will indirectly aid a recovery in office demand next year. Furthermore, support for vaccine distribution and mass transit will help buoy office markets.
  • Retail: Small business aid will support restaurants, while enhanced unemployment benefits and direct payments to households will bolster consumer spending. The law also provides $15 billion for independent movie theaters, live entertainment venues and cultural institutions—all of which play a role in generating retail traffic.
  • Industrial: Demand for industrial & logistics properties has remained strong throughout the pandemic and should continue next year with the aid to consumers and a vaccine-led return to normal economic activity.
  • Multifamily: The COVID-relief package includes $25 billion of rental assistance for people facing COVID-related financial hardship. This will benefit multifamily property owners. Conversely, the federal moratorium on evictions, which can be problematic for owners and financial institutions, was extended at least until the end of January.
  • Hotels: Hotel operators that qualify as a small business may secure additional payroll support under the paycheck protection program. A recovery of the travel industry will be supported by aid for related businesses, such as restaurants, entertainment, cultural venues and airlines.

The Bottom Line

The additional fiscal stimulus is positive for real estate with some sectors, such as retail, benefiting more directly than others. CBRE’s forecast of 4.5% GDP growth in 2021 had anticipated a roughly $1 trillion stimulus package. Consequently, our forecast is unchanged. We continue to expect industrial and multifamily to lead the recovery, while office, retail and hotels will take two to three years to fully recover. The persistent spread of COVID-19 remains the key near-term risk.

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