Financial regulatory overhaul's effects on D.C. commercial real estate

The new financial regulatory overhaul will have a sweeping effect on banks, credit unions, retailers and even stock brokers. CoStar Group interviewed several analysts to get their takes on whether it will benefit or hurt the Washington commercial real estate market:

"While it is early and we are still dissecting the bill, we expect to see growth within several agencies. The Federal Reserve is creating an entirely new entity, the Consumer Finance Protection Agency (CFPA), charged with protecting individual investors' interests. They'll regulate home loans, credit card fees, payday loans and other forms of consumer finance. This new agency initially requires 50,000 square feet, but that could grow to over 180,000 square feet in the next few years.

"Also look for the Department of Treasury, Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Deposit Insurance Corp. to have increased responsibilities and power, which could lead to real estate growth -- but more will be revealed as we move forward.

"Moving forward we will also monitor how the government resolves the issue of derivatives investing, as this could directly impact several broad sectors of the U.S. economy and federal agencies affected by oil, energy and agriculture commodities -- and thus lead to more real estate needs."

-- Joseph Brennan, managing director, Government Investor Services Group, Jones Lang LaSalle, Washington, D.C.

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"Due to the number of jobs that the legislation creates, I expect the legislation to be positive for the Washington area commercial real estate market. The number I heard is that 2,400 jobs will be created. That should translate into the need for a significant amount of office space and hopefully some assistance in lowering the vacancy rates in the D.C. area."

-- Gary Edell, director of leasing of Penrose Real Estate Services, Vienna

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"The most critical aspect of the new regulatory bill is the uncertainty behind the new rules that have yet to be determined and the impact on liquidity in the secondary markets. The regulations and reform will change the life of yesteryear for sponsors, bond purchasers and derivate traders, which will therefore impact liquidity... "There are billions of dollars in loans which were originated in 2001 and 2006 maturing in 2011, the uncertainty behind the new reform and what it will ultimately look like and the corresponding illiquidity issues it may pose will create buying opportunities for some and pain for other commercial real estate owners in the D.C. market ... but it will not be as bad as some of the secondary or tertiary markets.

-- Ari Firoozabadi, vice president investments and director of the National Multi Housing Group, Marcus & Millichap in Bethesda