Budget Cuts Threaten Property Gains

Federal spending reductions could boost commercial real estate vacancies.

Reduced federal spending may boost commercial real estate vacancies as tenants lose sales from one of their biggest customers: the U.S. government.

Funding cutbacks would be felt most in such cities as Rockville and Bethesda, Maryland, where defense contractor Lockheed Martin Corp. has plants, and Norfolk, Virginia, home to the largest U.S. naval base, said Chris Macke, senior real estate strategist at CoStar Group Inc. Boston, San Diego and San Jose, California, where technology companies are big employers, also may be affected, depending on the trims made, he said.

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