How the World’s Fastest Tax Reform Package Could Impact Commercial Real Estate

Commercial real estate, overall, is a winner and largely exempt from the most significant adverse provisions, namely limitations on interest deduction and 1031x repeals. The proposed tax changes could prompt a flurry of restructuring, with a period of transition and market flux as investors restructure to optimize tax outcomes and markets readjust. History suggests that changes in tax laws, by themselves, are often not a key driver for CRE investment decisions.

Key Takeaways

  • Expect a moderate positive impact on multifamily/renting economics, retail, and industrial and a minimal effect on office.
  • States like California, New York, and New Jersey are likely to be affected, yet negative impacts could be counteracted by robust, underlying real estate fundamentals and job growth in these markets.
  • Real estate investors benefit—some more than others—and much depends on which version of the bill passes.
  • We predict an 80% chance of enactment by year-end 2017.
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The full report is brought to you by Revathi Greenwood (Americas Head of Research), David Bitner (Americas Head of Capital Markets Research), & Rebecca Rockey (Americas Head of Forecasting) of Cushman & Wakefield. Thank you for sharing this report!

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