Change: The Affordable Care Act and Commercial Real Estate by David Spencer
When I was asked to write the monthly blog for Shannon Waltchack, I cringed, knowing this would require doing something similar to writing a college English term paper—which was not my forte during my tenure in Tuscaloosa. Asking myself what I could write about that relates to commercial real estate, the Affordable Care Act immediately came to mind. Since this will affect every single person in this country, I began to consider the potential direct impact on my field of commercial real estate.
Some people in my office have individual healthcare plans and others have family plans. As some of us had been discussing for months what type of change our healthcare plans will bring come January 1, 2014 (most importantly cost), one individual received notice from his insurance company as to the change in his policy. His monthly premium was going to increase $450! (I’m not going to lie, I started laughing and that individual did, too). Then I said to myself, That right there is $5,400 in discretionary income that is no longer available to his family in 2014.
That’s money that will not be spent at a local retailer, restaurant, etc. So the trickle-down effect now begins: 1) less revenue generated by the local retailers and restaurants, 2) which may cause those retailers and restaurants to lay off employees to cut costs, and 3) may force the retailers and restaurants to shut down stores. This will curtail growth plans for the foreseeable future, and they’ll possibly request a rent reduction from the landlord, as seen during the Great Recession. Should these changes occur, less inventory will be required for those stores, creating less need for distribution warehouse space to keep the retailers supplied with inventory at a moment’s notice. That’s something to think about, isn’t it?
At the end of the day, we are creatures of habit, at least I am. So change is something that is difficult to get accustomed to. We all agree that some type of reform has been long overdue to our nation’s healthcare. We shall see in the years ahead how this change (Affordable Care Act) affects everyone—good or bad—even where we might have least expected it.