WASHINGTON—Representative Lisa McClain (R-MI), Chair of the Health Care and Financial Services Subcommittee of the House Oversight and Accountability Committee, delivered opening remarks today at a hearing titled, “Removing Regulatory Impediments to Ensuring the Health and Continued Strength of the Commercial Real Estate Market.” Chair McClain discussed how the Biden Administration's policies during and after the pandemic have hurt American businesses and put the strength of the commercial real estate market at risk.
Below is the full statement from Subcommittee Chairman McClain.
I will now make my opening statement.
I would like to thank the witnesses who appeared before the Subcommittee today.
We are here to examine the strength of the commercial real estate market and discuss what Congress can do to ensure the fiscal health of this large part of our economy.
The continued health of the commercial real estate industry is important to Americans of all types. From the construction industry that builds and repairs properties, to the people who clean and maintain them, to tenants, both commercial and residential, America needs a healthy commercial real estate industry.
I am concerned that the headwinds are getting tougher and we could be in serious trouble, and I need to hear what policymakers can do to avoid a point of no return. We cannot afford to face another real estate crisis that puts taxpayers on the hook.
There's no denying that the COVID-19 pandemic has significantly altered the commercial real estate market.
Throughout the pandemic, businesses large and small implemented remote work policies and consumers adapted to online retail.
As the world returns to normal, these trends have not changed significantly.
The national office vacancy rate for 2023 reached 19.2%.
In the final months of 2023, the delinquency rate rose to 6.5%.
The increase comes as more than $2.2 trillion in commercial debt comes due between now and the end of 2027. And the refinancing of this debt comes as interest rates soar due to the Biden administration's inflation crisis.
The Democratic spending surge led to soaring inflation that the Federal Reserve was forced to take significant steps to curb it.
Unfortunately, the Federal Reserve’s interest rate hikes are not the only concern the federal government is causing for the commercial real estate market.
The Department of Housing and Urban Development continues to reduce the number of loans it makes to support the commercial housing market.
The Department of Transportation is reporting that developers are taking more than a year from the time their loans are approved to the time they receive payment for eligible commercial real estate assets. This delay is unacceptable.
Across the federal government, agencies are allowing employees to work from home despite lost productivity, a failure to properly regulate critical sectors of the economy, and urgings from Congress.
Even Mayor Bowser told President Biden that his Administration's telework policies are killing local DC businesses.
The Biden administration has offered vague information and statistics to back up its claims that teleworking has been successful since the pandemic.
It took four months and the threat of subpoenas for federal agencies to provide basic information about their telework use to the committee.
I come from the private sector, if you don't come to work you lose your job.
The Biden administration has long allowed federal employees to circumvent lax telework policies.
The commercial real estate market cannot thrive if offices are empty.
Americans cannot prosper as long as federal workers don't show up to work, delay the approval of new medical treatments, stall new infrastructure projects, and refuse to do their jobs, allowing waste, fraud, and abuse to take place.
Congress and the federal government must do more to get out of industry leaders' way and eliminate burdensome regulations and bureaucracy.
Despite these troubling headwinds, there are signs that the commercial real estate market is in good health.
Nearby retail real estate continues to perform well.
Local shopping centers and other brick-and-mortar operators continue to perform well and are experiencing positive rent growth.
Industrial real estate is also showing positive signs, with analysts predicting modest rent increases over the next decade.
Multifamily housing remains strong, with vacancy rates remaining stable.
Getting federal employees back to the office and keeping the commercial real estate market strong is critical.
I look forward to engaging in this very important discussion with you all.
I now turn the matter over to Senator Porter for his opening statement.