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Jim Lob: “Secession” and Commercial Real Estate

Jim Lob

What a great country. And that freedom of speech thing. Anytime anyone anywhere feels like they have a voice that should be heard … they can be heard! Especially with the social media-driven world in which we live.

So now the state of Texas has a group of people who “want out” and want to secede from the United States. Again. I find the definition of the word “secession” to be interesting, what with that last little bit tagged on at the end:

Secession, derived from the Latin term secessio, is the act of withdrawing from an organization, union, or especially a political entity. Threats of secession also can be a strategy for achieving more limited goals.

So what if Texas did secede? How would that affect commercial real estate? Here few important data points:

• There are approximately 312 million people in the United States and approximately 229 million registered voters.

• Of that 229 million registered voters, only about 113 million chose to actually vote in this last election. So the majority of the people in the United States are always just a recipient of whatever policies/results get enacted, regardless of how they come about.

• Texas paid in approximately $2.74 trillion dollars to the federal government during the 20-year period of 1990 to 2009.

• Of every $1 Texas sends to Washington, it receives about 94 cents back in allotments. (Click on image for larger view.)

So where would we be if we were a state that got much more back from the government than we paid in, like a bunch of states are? And where would we be if we seceded and there were years when, because of who was in political power, Texas got much more than its proportionate share for major road and infrastructure projects—which in turn led to massive commercial real estate increases in value? Think Central Expressway, LBJ Freeway expansion, or “the connector” out by the DFW airport. These are huge drivers of value and growth, including new jobs, taxes, etc.

No one has ever actually successfully seceded from the United States in the past 200 years, what with that Civil War occurrence. So who knows what would really happen? Maybe you would need to pass a security “checkpoint” to get from Texas to Oklahoma. Or vice versa. I know some Longhorn and Sooner fans who would certainly vote for secession if that were the case.

As senior vice president of UGL Services, Jim Lob co-manages the firm’s brokerage operations in Dallas. Contact him at jim.lob@na.ugllimited.com

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