In my prior blog post I shared the risks of the fiscal cliff and the potential impact to Boston commercial real estate. This week I will share a few gems within the White House budget proposal that could prove advantageous!
According to the Tax Policy Center of the Urban Institute and Brookings Institution, the President’s 2013 budget proposal includes the following provisions:
- Temporary tax relief and incentives for job creation and growth
- Tax relief for small businesses
- New tax incentives for regional growth
- Incentives for expanding manufacturing and insourcing jobs in America
- Enhance and make permanent the research and experimentation tax credit
- Double the allowance for expensed start-up costs
Of course there are some business tax hikes in the proposal, namely:
- Increased taxation of international income
- Repeal last-in, first-out method of accounting for inventories
- Tax carried interest as ordinary income
- Increased taxes on financial and insurance industry institutions and products
What the budget proposal could mean to Boston Metro commercial real estate:
Our thriving biotech industry could certainly benefit by the enhanced R&E tax credit. Our growing information technology industry would also reap the benefits of improved tax credits.
Incentives for entrepreneurs and small business would be a boon to the graduates of our colleges and universities. Boston’s highly educated workforce could also utilize these incentives.
The Affordable Care Act may also bring higher demand for medical services and the subsequent expansion of medical facilities. Growth, however, could be tempered by any restructuring of the Medicaid and Medicare programs.
Boston’s financial sector certainly won’t be thrilled about the proposed taxes, but these won’t be a game- changer. Of greater importance is a stable, growing economy.
If the budget is passed and works as intended, the incentives should encourage job growth, business expansion and new business start-ups. In turn, this should increase demand for most types of commercial real estate. This could certainly drive up costs per square foot.
One area that is less likely to see a boost is our manufacturing industry. Our economic logistics in the Boston area make manufacturing operations a challenge.
Please keep in mind that everything discussed above is based on a proposal that has not yet been passed at the time of this post. These what-if scenarios are offered to help you explore the “big picture” of commercial real estate in the Boston area.
As your experienced commercial real estate agent in Boston’s Metro area, I can provide you with excellent options for property leases and purchases. Contact me today and I’ll find the ideal location to suit your business needs!