As Funding Cuts Loom, Can Real Estate Owners Rely on Disaster Relief?

• Can’t get no relief: Cuts in federal funding have left some worried that much needed disaster relief could be slow or non-existent.

• Abandon ship: The economic situation has hit the construction sector particularly hard as construction delays, pauses, and cancellations have hit a record high.

• Secure space: The government pullback from office space has created an opportunity for co-working spaces that are cleared for high-level security.

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Federal Policy

As Funding Cuts Loom, Can Real Estate Owners Rely on Disaster Relief?

Federal disaster funding cuts aren’t just political—they’re a seismic shift that’s rewriting the risk map for commercial real estate. As the Trump administration slashes FEMA and NOAA budgets, property owners face more than crumbling infrastructure—they’re grappling with weakened safety nets, inconsistent weather modeling, and the real possibility that federal relief won’t be there when needed.

But risk isn’t evenly distributed. Inland markets like western North Carolina vividly illustrate how historic events—like last year’s Hurricane Helene—expose the disparity in recovery capacity. Macomber at Harvard Business School underscores that it’s not just property that gets damaged—it’s the entire economic ecosystem: bridges, power grids, consumer confidence. As regions wait months for reimbursement, hard-hit areas shoulder mounting costs and delayed recoveries—a scenario that reverberates far beyond immediate losses.

That’s why a pivot to localized resilience planning isn’t just wise—it’s inevitable. Tech platforms like Lessen are already coordinating rapid, boots‑on‑the‑ground responses, while forward‑thinking public–private coalitions (Boston’s $5–$10 billion sea‑level defense idea) signal a new blueprint for disaster readiness. The critical question now: will commercial real estate step up to fund collective protection, or risk standing by as the next disaster strains fragmented systems beyond repair?

Overheard

Private Construction Project Abandonments Hit Record Highs in May

Private developers scrapped more construction projects in May than in any month since tracking began, according to ConstructConnect. The firm’s Project Stress Index, which tracks delays, pauses, and cancellations, rose 11.4% in May, pushing overall project stress 22.8% above 2021 levels.

Fueled by high interest rates and shaky market conditions, private sector abandonments are now up 92.2% year-over-year, hitting the highest level since mid-2019. Since the end of 2024, total abandonment activity has surged 66.5%.

Meanwhile, delayed bids have increased by 4.3%, and on-hold activity has decreased by 18.5%. In stark contrast to the private sector, public project abandonments remained steady, while on-hold activity declined by 15.2% over the past year.

The clean energy sector has been especially hard-hit, with roughly $8 billion in projects canceled or scaled back in the first quarter of 2025, including a $1.2 billion plant in Arizona and a $2.6 billion battery factory in Georgia. The data paints a troubling picture for the near-term health of private construction.

Changes to Government Office Facilities Create Opportunity for Secure Co-Working Spaces

The federal government has been canceling office leases and selling underutilized office buildings in an attempt to cut spending. In a perfect world, federal employees could work from co-working spaces and eliminate the need for dedicated offices. But there is a hitch: many government workers and defense contractors need facilities that are designed for secure communication.

Co-working providers are starting to get security clearance to help solve this problem. One of these companies, Nooks, has been set up to serve startups that have been selected for testing by the military. But this could be only the beginning. As more government agencies plan on dropping their office space, they could find a better option in secure co-working sites.

Getting security clearance is not easy, so these secure sites would only be viable in places with highly concentrated government or military industries. Co-working properties that do get this clearance would be able to benefit from limited competition and a stable client base…at least until the next President is elected.

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