Now halfway through 2023. The community recovery environment is beginning to take shape. Municipalities are evaluating how best to support commercial real estate to ensure a future tax base while meeting the needs of all its citizens. We know there is no silver bullet solution nor a one size fits all approach to community building. We also know that IDA members have keen insight and unique knowledge regarding the challenges each of their cities faces.
The next couple of years will remain tumultuous. The post-pandemic decline in office values threatens the financial health of municipalities that rely on property taxes for approximately 70% of their tax revenue. Over the next two years, an estimated $1.5 trillion in commercial real estate loans will come due in the US real estate market alone. Higher interest rates, and the changing nature of the workplace has fundamentally altered the demand for office space and dramatically influences the potential for restructuring real estate debt. This makes for a very uncertain future, where municipal resources will most certainly decline and demand on place management organizations to backfill lagging municipal service will clearly increase.
Simultaneously, our communities are facing an extraordinary lack of attainable housing. Nationwide, the 15-year underproduction of housing has resulted in the United States needing to build 4.3 million more units by 2035 to meet the demand for rental housing. And meeting the needs of all residents at every socioeconomic level has never been more important.
Yes, the years ahead will be challenging, but not all hope is lost. Most importantly because I continue to witness IDA leaders tirelessly striving to integrate recovery efforts that leverage the roles of private sector commercial real estate and critical municipal services investment, while fighting to address the needs of citizens in the greatest need.
Here in Washington DC, the public, private, and civic sectors are uniting behind the Mayor’s Comeback Plan to establish D.C.’s Downtown Action Plan led by two IDA member districts, the Golden Triangle BID and the Downtown DC BID along with the Federal City Council. I am honored to support the effort as a member of the Steering Committee.
Similar programs are underway or have been completed in cities throughout North America, and place management leaders need to be at the center of these collaborative leadership initiatives. I know IDA members are never short of commitment, energy, and vision. I know the IDA network is the most supportive professional resource to all its members, and this network will be tested in the months ahead as innovative solutions are explored for continued recovery of our communities. I urge you to continue leaning in to solve the challenges ahead. Remember to lean on your peers across the IDA network for counsel and support. Equally important, however, is to lean back and take the restorative time away from the day-to-day work activities to vacation and relax so you can remain at peak capacity for your organization, your team, and your community. I hope to see you in Chicago!