NAR AND COMMERCIAL REAL ESTATE

Commercial Market

• Economic concerns continue to hold back a robust commercial real estate recovery, however NAR foresees continuing, albeit modest, improvement.
• 2011 witnessed the return of positive absorption for core property types, a trend expected to continue in 2012.
• Vacancies are expected to decline for all property types in 2012.
• The multifamily sector is the driving force in the commercial rebound, with single-digit vacancies and positive rent growth.
• For more information, go to REALTOR.org/Commercial.
• The next commercial real estate report from NAR comes out on February 24. Be sure to look for it.

Developing a Covered Bond Market

• NAR recently met with stakeholders to develop a plan of action in support of a bill to develop a covered bond market here in the U.S.
• Already in use in Europe and Canada, covered bonds represent an alternative to securitization that could help refinancing challenges in the commercial real estate sector.
• Since it’s an election year, it’s hard to tell how much headway Washington will be able to make on this issue.
• However, NAR will be doing sign on letters and otherwise trying to keep the ball moving on this piece of legislation during 2012.

Environmental and Energy Policy Issues

• The most pressing policy needs for the commercial real estate industry involve restoring liquidity and improving access to lending.
• This year, however we also anticipate movement on some environmental and energy policy issues that could impact our industry.
• Lead Based Paint in Commercial Buildings
• The first issue has to do with reducing lead paint hazards during renovation, repair and painting (RRP) activities in commercial buildings, similar to regulations put into effect for residential properties.

1. The regulations would require contractors to comply with lead hazard reduction procedures before, during and after remodeling or renovation, to reduce the creation of lead dust.
2. NAR supports property condition disclosure and education and opposes the RRP rule since it would incur costs and additional administrative burdens.
3. We anticipate a proposed rule on RRP activities on the exterior of commercial buildings soon. The rule must be finalized by July 2013.
4. The Environmental Protection Agency (EPA) must issue a proposed rule to address RRP activities for interior of commercial buildings before December 2013, with a final rule due in 2015.
5. To that end, NAR has met with the EPA, and we are working with other stakeholders to ensure our concerns are heard by EPA and Congress.
6. We will keep you posted on both these proposed rules as the process unfolds.

Commercial Asset Rating Program

• We anticipate that the Department of Energy will be releasing a proposal early this year on a commercial asset ratings program.
• A pilot program is scheduled to begin by the spring.
• The Asset Rating Program is meant to assess energy usage and promote energy efficiency in commercial buildings.
• What this program is “generating,” however, is a negative impact on the value of certain commercial buildings, in particular by stigmatizing older buildings that are less energy efficient than buildings more recently built.
• The proposal could also promote labeling and energy reduction mandates during a transaction.
• This is why we support education, resources, and incentives, and voluntary, rather than forced compliance.

1. We encourage enabling real estate professionals to respond to market signals, improve their buildings, and save energy.

• NAR has met with the Department of Energy and is working with other stakeholders to ensure our concerns are heard by the Agency and Congress.
• We will also provide our concerns during the comment phase once the proposal is released.
• We will continue to keep you updated on this issue.

EPA Stormwater Rulemaking

• The Environmental Protection Agency (EPA) considers urban stormwater runoff from developed property to be a major source of pollution.

1. This includes runoff from impervious surfaces, such as parking lots.

• As such, in addition to existing regulations on stormwater flow during a construction build, the EPA is now trying to regulate stormwater flow AFTER construction has been completed.
• This will require very different management strategies and regulatory mechanisms over a much longer period of time.
• The end result would be:

1. Increased costs of developing commercial and residential property;
2. Complications during sales of existing property;
3. Higher maintenance and inspection costs for owners and property managers.

• The EPA is expected to release a proposed rule shortly, with a final rule due by late 2012.
• NAR has met with the EPA and is working with other stakeholders to ensure our concerns are heard by the Agency and Congress.
• We’ll keep you posted on this issue.

REALTOR Party Policy & Advocacy Conference

• NAR’s policy and political governance leaders, along with RVPs and state government affairs directors will gather for a two-day policy and advocacy conference this month in Washington, D.C.
• We’ll be meeting to develop a roadmap for our federal policy agenda and necessary advocacy activities in 2012 and beyond.
• We’ll plant the seeds for some long-term issues that may be on our plate, such as:

1. GSE (Fannie, Freddie) reform
2. Protecting the mortgage interest deduction
3. Ensuring that government plays a role in stabilizing the housing market.

• Be sure to let your state board know the federal policy issues you care about. This is a chance for your voice to be heard.

My REALTOR Party

• My REALTOR Party is designed to leverage our association’s best asset —our grassroots.
• REALTORS do so much more than list and sell property. They are community builders dedicated to improving their neighborhoods, cities, states and America.
• No one understands the importance of this more than a commercial REALTOR.

1. They do this because it’s good for the economic and social well-being of all citizens.
2. They do this because it’s good for business.

• To ensure that each and every REALTOR Association has the opportunity to implement a successful community or political outreach initiative in 2012, NAR is supplying a wide range of services and tools.
• All of them are available to order at the My REALTOR Party website (www.myREALTORparty.com) free of charge.
• From grant programs for housing opportunity classes, to polling tools to gauge voter opinions on key issues, to campaign resources to support REALTOR champions for public office, My REALTOR Party is designed to help each association be successful in its unique advocacy and community outreach efforts.
• Join the 28 state associations and more than 220 local associations that have requested My REALTOR Party resources in 2012.
• For example, the Louisiana Association worked with NAR to become the fourth state to permanently ban real estate transfer taxes.
• There’s still time for REALTOR associations to formulate their plans and submit requests for 2012 resources.
• For more information, go to myREALTORparty.com

Online and On the Road

• For more information on commercial policy issues in 2012, and other tools and resources, you can find us at Realtor.org/Commercial.
• Join the conversation at the NAR commercial blog at Blog.CommercialSource.com.
• NAR Commercial will be at the Keller Williams Family Reunion from Feb. 11 – 15, in Orlando. Stop by and see if us if you’re attending.
• NAR Commercial will also be at the 2012 RE/MAX R4 in Las Vegas, March 5-8.