How could a government shutdown affect your commercial purchase?

On Behalf of | Mar 11, 2022 | Commercial Real Estate

Each year, the government goes through the motions of approving a budget for the next fiscal year. Unfortunately, it’s not always an easy task, and the budget may not be agreed upon on time.

When that happens, the government faces a shutdown. In a significant government shutdown, the U.S. dollar can be affected. People can lose their jobs, and the real estate market can be affected, too.

The government shutdown can impact residential real estate markets easily, but did you know that it also has a significant impact on the commercial real estate market?

How does the government shutdown impact the commercial real estate market?

The government shutdown affects the commercial real estate market in a few different sectors including the multifamily, commercial and retail markets. In the multifamily sector, the Department of Housing and Urban Development may become short-staffed and be unable to process loans. For the retail market, retailers may see less spending and may see their own buildings drop in value.

Essentially, a government shutdown creates the risk of economic uncertainty. That uncertainty can put entire transactions on hold as people wait to see how their investments are impacted or if they will be able to move forward with a sale.

What should you do in a tough commercial market?

If you are selling property or looking to buy in a touch commercial market, you’ll likely be affected by changes in the economy. It’s important to have solid contracts that are legally binding in place, so you can protect yourself and your business interests.

If there are issues that occur during the sale of a property, such as the buyer backing out because of investment problems, a good contract may help you avoid significant financial losses from that action.

A major economic event is something that you should try to prepare for. When you prepare to sell your property, or if you’re interested in buying one, being sure of how that purchase or sale will be financed is the first step. Having strong legal support will make sure the transaction continues forward as intended or is stopped responsibly.