The Trump presidency, known for its policies focused on deregulation, tax reforms, and infrastructure development, has had significant impacts on various sectors, including commercial real estate. As we consider how this influence may shape the next four years, several key trends can be identified.
Tax Reform and Real Estate Investment
The 2017 Tax Cuts and Jobs Act (TCJA) introduced several changes that benefited commercial real estate, most notably through favorable tax treatments. The reduction in corporate tax rates and the introduction of Opportunity Zones (OZs) to spur investment in economically distressed areas have made real estate investments more attractive to institutional and individual investors alike.
Over the next four years, the commercial real estate industry may continue to benefit from these tax advantages, especially in sectors like multifamily housing, logistics, and office space. Investors seeking tax-efficient avenues are likely to expand development and acquisition efforts, particularly in OZs.
Deregulation and Market Expansion
Trump’s administration was marked by a strong push for deregulation, aiming to reduce bureaucratic hurdles in industries like real estate, energy, and manufacturing. For commercial real estate, this translated into fewer environmental and financial restrictions on development projects, encouraging faster permitting and approvals. While some states and cities may continue to impose their own regulatory standards, a deregulatory environment at the federal level is expected to benefit the sector in areas like construction and land development.
Going forward, if similar deregulatory policies persist, we may see faster growth in commercial developments, particularly in suburban and rural areas. This is important as urban flight and the rise of remote work reshape market demand for different types of commercial properties, including logistics hubs, data centers, and mixed-use developments.
Infrastructure Development
A hallmark of Trump’s policy goals was an emphasis on improving America’s infrastructure. While significant progress on this front remained elusive during his presidency, the emphasis on infrastructure investment, such as roads, bridges, and broadband expansion, has set the stage for future administrations. Infrastructure development could be a catalyst for growth in commercial real estate, particularly in industrial and logistics sectors that rely heavily on transportation networks.
In the coming years, we could see large-scale infrastructure projects that boost commercial real estate in underdeveloped regions, particularly those near major logistics corridors. This could enhance the attractiveness of properties tied to distribution and last-mile logistics, essential in an era of expanding e-commerce.
The Global Trade Environment
Trump’s presidency also involved a strong focus on trade policies and reshaping international agreements. The impact of tariffs, particularly on Chinese imports, had a mixed effect on commercial real estate. On one hand, it raised costs for building materials like steel and aluminum, which put pressure on developers. On the other hand, the emphasis on reshoring and boosting domestic production created opportunities for industrial real estate, as companies sought more U.S.-based manufacturing and distribution facilities.
In the future, if these trade policies remain, we may see continued demand for industrial real estate, particularly in regions close to ports and manufacturing hubs. Industrial and logistics properties are poised to remain a bright spot in the commercial real estate landscape, especially with ongoing global supply chain disruptions.
Remote Work and the Office Market
Finally, the COVID-19 pandemic, which occurred during Trump’s term, accelerated shifts in how businesses operate, particularly with the rise of remote work. This has left the office real estate market in a state of flux. While some major cities are seeing declining demand for traditional office space, suburban office markets are experiencing renewed interest. Investors are likely to be cautious when it comes to traditional office developments, instead opting for flexible and hybrid-use spaces.
Looking ahead, the commercial office market will need to adapt to evolving work patterns. The next few years will likely see continued experimentation with flexible workspaces, coworking models, and a focus on creating office environments that support a hybrid workforce.
Conclusion
The policies from the Trump presidency, particularly in the areas of tax reform, deregulation, and trade, have created a foundation for ongoing shifts in the commercial real estate market. Over the next four years, real estate investors and developers will need to navigate a complex landscape shaped by these factors, with growth opportunities emerging in industrial, suburban, and logistics properties. The pace of urbanization, infrastructure investment, and shifts in work patterns
