In a Divided Congress, EB- 5 Program Up in the Air
WASHINGTON, DC—As Congress continues to
debate President Obama’s jobs bill, a much
quieter piece of employment legislation is
also taking the floor: the renewal of EB- 5.
The program, administered by the US
Citizenship and Immigration Services,
makes visas available to immigrants who
invest in commercial enterprises. But with
the program set to expire in 2012, industry
members are concerned about EB- 5’s fate
amid a divided government.
“Congress is so divided that they can’t
get anything through,” Rick Spees,
Washington, DC-based shareholder and
chair of Akerman Senterfitt’s National
Government Affairs and Public Policy
Practice Group, tells Real Estate Forum.
He adds that despite overwhelming industry support, political and economic volatility could leave the program in limbo.
Congress initially passed the law as part
of the Immigration and Nationality Act of
1990. The original program allowed foreign investors to secure a preferred visa
category status by funding a business that
benefits the US economy or saves at least 10
full-time jobs for American workers. The
law, subsequently expanded in 1992 to
allow creation of regional centers (legal
entities akin to a state or private entity),
seeks to promote growth by coordinating
foreign investment into a targeted geographic region. The required investment
for a regional center is around $1 million.
The USCIS is proposing several changes
to the regional center program by expediting applications that are development-ready and streamlining the review process
through a new decision board.
But the program itself can have its posi-
tives and negatives, says Julia Yong-hee
Park, principal attorney at Julia Park LLC
in New York City. Approximately 158
regional centers in 38 states have been cre-
ated, but long wait times and red tape could
slow the permitting process. “You have to
think of it in the view of the investor,” she
says. “They want a green card and they walk
into a sort of supermarket, with shelves of
all these products. If they pick a good one
and get the job, they get their permanent
green card two years later.”
Spees says he would like the legislation
to be added to the appropriations bill by
the end of the year in order to avoid fed-
eral gridlock. “My concern is that it’s
going through a normal process in a
Congress where the normal process isn’t
working,” he says. “If they bring it up as a
judiciary bill, there’s no judiciary bill that
has to pass, so it can get bogged down.
Any one of the 100 senators can put a
hold on it.”—Jacqueline Hlavenka
Downtown DC Market Tops the List
All real estate eyes and ears are on the federal government’s budget activity and will
remain there as we enter a presidential election year. At the same time, attention is
focused on the Downtown Washington, DC real estate market, where three interrelated
factors are fueling conversation: investment sales, the General Services Administration’s
real estate activity and potential expansion by law firms.
The DC market continues to attract both domestic and offshore investors resulting in
continued sales of trophy buildings exceeding $800 per square foot at a sub-6% cap rate.
In fact, market exuberance for well-located trophy assets remains healthy. We probably
won’t see $1,000 per square foot by the end of 2011, given the turbulence in the economy and stock market, but I wouldn’t bet against it.
Investors who are allocating funds to real estate have placed
Washington, DC at the top of the list for a number of reasons,
including its built-in infrastructure, exceptional transportation, the
federal government and low unemployment rate, among others.
Just one example of an offshore
investor attracted to this market is Qatari
The federal government’s debt-reduction initiative remains a key factor that could
potentially impact the local market. GSA is focused on pursuing initiatives that will result
in real estate efficiencies, which in turn is creating an interesting dynamic. I predict that
a number of federal agencies will seek to locate closer to Capitol Hill and the agencies’
funding source. Moreover, while GSA focuses on teleworking (telecommuting), younger
GSA employees like the idea of teaming and collaboration. It’s difficult to do both, since
teaming is better executed in person.
Some at GSA believe the government “contraction” is a short-term adjustment and
that expansion will resume, especially as urban areas and US population continue to
grow. It’s an encouraging sign that the Senate Environment and Public Works Committee
recently approved 22 GSA prospectus-level leases, many in the DC metropolitan area.
Law firms, which are one of the larger private-sector occupiers in Washington, DC, are
busy with the government’s talk of debt ceilings and debt reduction, as well as potential
reduction in government services and regulatory changes. More resources are being
deployed within law firms that have regulatory and lobbying practices.
These firms may be taking more efficient space but are willing to pay higher dollar
for better space. Though their space requirements remain office intensive due to the
confidential nature of legal work, less space is being allocated to libraries, which are
now digital. Open areas for “living room environments” with cafes, espresso bars and
dedicated collaboration areas are being added. While growing law-firm profits have
not yet translated to hiring, many in the legal industry predict this will change once
the economy stabilizes.
By Ernest Drew Jarvis
Ernest D. Jarvis is a senior vice president at First Potomac Realty Trust in Washington, DC. He
may be reached at email@example.com. The views expressed here are the author’s own.
Vital Signs...Posting over 1 MSF of absorption and sub-10% availability in Q2, Lehigh Valley, PA outpaces neighboring submarkets.—CBRE