Trump’s Impact: How the Administration’s Policies Will Reshape the U.S. Commercial Real Estate Landscape
With U.S. President-elect Donald Trump entering the White House in a few months, attention is focused on what this will mean for commercial real estate investors and lenders.
Trump’s election is being seen as a good sign for business, with all three major New York stock market indexes closing at record highs on the 6th (local time). Therefore, local media evaluates this as positive news for the commercial real estate industry.
However, as there are positive results as well as some potential concerns, it remains to be seen, according to ‘Commercial Property Executive’, a U.S. real estate media outlet.
housing issues
Trump started out as a real estate developer and knows very well how difficult real estate development is. He cited regulation as a major cause of high housing costs and promised to work with local licensees to make the permitting process less cumbersome and easier.
He also proposed making some federal land available for housing production. And I think that controlling immigration can alleviate some of the pressure on supply.
He also promised to lower inflation, lower mortgage rates and encourage home ownership through tax breaks and support for first-time home buyers. No specific details have been presented yet.
For real estate developers trying to build affordable housing in America’s suburbs, Trump is unlikely to help resolve the ‘NIMBY’ phenomenon.
He promised to preserve suburban real estate values by protecting single-family zoning. We are opposing the ‘affordable housing mandate’ that many communities are facing and opposing.
Economic development and tariff issues
Trump aims to attract new foreign companies to the United States with lower taxes and fewer regulations. Fines will be imposed on American companies that send jobs overseas. These are all driving forces for the growth of manufacturing and logistics facilities in the United States.
His proposal to impose tariffs of 60% on imported goods from China and 10% to 20% on items from other countries could be problematic for the U.S. commercial real estate industry.
“Experience shows that economists agree that tariffs continue to drive up consumer prices,” wrote senior fellows at the Brookings Institution recently. “It will get bigger,” he pointed out.
energy and environment
Part of Trump’s plan to curb inflation is to lower energy costs by investing in domestic production of oil, natural gas and coal and by easing regulations. The United States still has a complex relationship with fossil fuels.
Unlike the previous administration, which made it its mission to combat climate change through stronger regulations, the $300 billion Inflation Reduction Act (IRA), and a bipartisan infrastructure bill, Trump is achieving a clear policy shift.
Trump wants to roll back many environmental regulations and redirect funds from his ‘Green New Deal’ program to much-needed infrastructure improvements. He is specifically targeting programs that encourage the transition to electric vehicles.
However, experts predict that fulfilling these promises will not be easy for Trump. Significant changes to the IRA require support from Congress, and many Republican states are already benefiting from the law in terms of investment and job creation. But the White House could slow down the pace of rulemaking and distribution of funds.
Meanwhile, the Supreme Court’s recent overturn of the Chevron doctrine, which allows federal agencies to implement and enforce regulations based on their interpretation of federal laws passed by Congress, could make IRA and other programs and regulations more vulnerable to lawsuits. However, many building performance standards and mitigation strategies are currently being implemented at the local and state levels to help decarbonize real estate and increase its resilience.