Is This the Trump 2.0 Commercial Real Estate Players Expected?

Ten months into his second nonconsecutive term, President Donald J. Trump has confirmed himself as not only “the most disruptive force in the history of American politics,” as CNN’s John King once described him, but also as the most inescapable, dominating and, frankly, all-encompassing chief executive since … well, forever.

Is this what his supporters (and detractors) in commercial real estate expected?

Like in America at large, across the commercial real estate nexus  — where tariffs, interest rates, immigration and tax regulation dominate the agenda — you’ll uncover diverse opinions, though with a bit more market-based nuance, especially when it comes to whether Trump, a native son of the industry, has managed to meet, exceed or fall short of the great expectations that surrounded his stunning political reformation.  

“I think he’s better than ever,” said John Catsimatidis, a New York City real estate developer and former Republican candidate for mayor. “He’s one of us. He’s been in the commercial real estate business, and realizes that low interest rates stimulate more growth, and he is doing the best he can.”

Others point to to the surging stock market (the Dow Jones Industrial Average was up 9 percent on the year as of late October), permanently low taxes on most high earners and larger businesses, a favorable regulatory agenda, refreshingly lower interest rates, and an open-arms embrace of the cryptocurrency industry as markers of a Republican president who not only made, but has kept, his campaign promises. 

“I expected that he’d be pro-development and pro-real estate, but what came as a surprise is the speed at which he did it,” said Adelaide Polsinelli, vice chair at Compass. “It’s not even been a year, and what he’s done in a record amount of time has sent a message of confidence to the markets.” 

However, as with anything concerning Trump, there is a side beyond the jazzy headlines of growth, wealth and success. In the case of his second term, it’s a radical immigration policy, a perceived abuse of power within the Justice Department, a widening of economic inequality, an attack on the independence of American universities and law firms through executive branch demands, and a disruption of the global political and economic order via unilateral tariffs and ad-hoc foreign policy decisions. 

“A million times worse,” David Kramer, president of Hudson Inc., said of Trump’s second term versus his first. “Come for the climate change denial, stay for the cancer grant cancellations.” 

Chad Carpenter, chairman of Reven Capital, admitted that he had high hopes that a second Trump administration, along with Elon Musk’s self-proclaimed Department of Government Efficiency, would actually make a serious dent in the $37 trillion U.S. federal debt. But Carpenter has since accepted that that’s simply not happening under Trump 2.0. 

“I expected him to cut costs from the macro federal budget standpoint because Biden was running a $1.8 trillion annual budget deficit, which is just crazy,” said Carpenter. “But Trump’s continued the spending, and he’s actually on track to spend $2 trillion per year above the deficit, so that was very disappointing.”

Jeffrey Gural, chairman of GFP Real Estate and a longtime Democratic Party donor, said unlike Trump’s first term in office, the president now actually understands how the system works and has installed loyalists across Washington who will do his bidding, however dubious in its ability to withstand legal challenges.   

“There’s very few people in there that anyone would think are the best and brightest, but they are definitely loyal,” said Gural. “On day one this year, he had 22 executive orders on his desk that he signed, whereas on day one in the previous administration he didn’t know what an executive order was.”

Don Peebles, founder and chairman of The Peebles Corporation, admitted that while he’s not a fan of every Trump policy, there’s no question Trump has come into office “with a sense of urgency,” and has benefited from being president once before, so as to hit the ground running in the opening months. 

“With Trump, we got someone who had the experience and knew there’s a window of time to get stuff done,” said Peebles. “I give him credit for jumping on that and using his time effectively.” 

Garett Bjorkman, CEO at investment firm Peg Companies, summed up the commercial real estate industry’s views on Trump 2.0 as a mix of excitement and concern. 

Bjorkman opined that many in the industry expressed optimism following Trump’s second election, given the several years of challenges the markets faced under Joe Biden’s administration, but a combination of uncertain policy outcomes around immigration and tariffs, as well as general dysfunction, have spooked foreign and domestic capital.  

“Ten months in, the thing we’re looking for, and what the market is looking for, is transparency and predictability, and I think that’s something that, quite frankly, has been lacking,” said Bjorkman. “Capital is getting more confident, but the events that are taking place around tariffs, immigration — those matters have introduced additional uncertainty into the markets and have kept capital on the sidelines, and overseas capital from investing into the U.S.”

A big, beautiful depreciation 

Despite the predictable unpredictability under another Trump administration, few in the commercial real estate industry have doubted the benefits the market is likely to accrue following the passage of Trump’s signature One Big Beautiful Bill (BBB) in early July. 

No element of the BBB is expected to benefit real estate development more than the reinstatement of 100 percent bonus depreciation for assets acquired this year, a provision which had previously been in place for six years under the 2017 Tax Cuts and Jobs Act (TCJA) that Trump passed in his first term but which expired under Biden. 

In a nutshell, bonus depreciation creates tax savings by allowing businesses, namely real estate developers and investors, to automatically deduct all of the costs of renovations, improvements and investments on property in the first year of purchase, ideally boosting cash flow through the immediate tax relief. For instance, an owner of a multifamily building who spends $500,000 on building a new pool after acquisition can deduct the cost from the year of the construction work. 

Polsinelli called the depreciation carve-out “probably the single most impactful change made” in the BBB, as it will make the economics around almost any real estate project more attractive. 

“When it comes to renovation and investments, knowing you can depreciate the cost of the items, making those expenses depreciable quickly, can be the difference in a project being viable and worth being undertaken,” she said. 

Glen Kunofsky, founder and CEO of Surmont, a real estate platform, told CO that he spent more time lobbying in Washington for the bonus depreciation to make it into the final bill than on any other legislative carve-out, and argued that it provided “a huge boost to commercial real estate” by stimulating transactions when it first appeared through the Tax Cuts and Jobs Act in 2017. 

“It’s designed to bring commercial real estate back, developing drug manufacturing plants, building data centers, things that take five years to get approved,” explained Kunofsky. “For someone to develop a $100 million facility and take the risk, [bonus depreciation] will have companies and real estate owners wanting to do bigger projects because the risk they’re taking gets paid back quickly through that tax loss.”

The BBB also included making permanent opportunity zones — a policy to spur investment into underserved or disadvantaged rural and urban areas — while also initiating enormous changes to the Department of Housing and Urban Development Section 8 affordable housing tax credits, notably placing billions of dollars in rental subsidies into single block grants administered by states, and initiating a new two-year limit on rental assistance for recipients. Trump has also proposed cuts to HUD that could reach $27 billion. 

Reven Capital’s Carpenter said it’s positive that Section 8 housing credits are getting reeled in, even if it hurts owners like him who have invested in and owned those same properties. 

“It kinda grew to this abusive free-for-all of people getting vouchers or free rent off taxpayer backs, and now that’s coming to an end,” he said. “As a landlord who received it, it’s great when you’re getting checks paid on time, but I think people abused that program for years.” 

Others took a more pithy tone when it came to the exemptions and tax cuts Trump included for the real estate industry in his signature bill. 

“It’s good for commercial real estate because Trump is a real estate guy, and he’s wealthy, so anything he passes will be good for rich people and real estate,” said Gural. “His sons are in commercial real estate, so he won’t pass a bill that negatively impacts them.” 

New tariff in town 

While many in commercial real estate cheered the passage of new tax legislation this summer, just as many went slack-jawed in horror after Trump announced widespread, unilateral tariffs across hundreds of U.S. global trading partners on April 2, thereafter known as “Liberation Day.” 

Almost immediately following the tariff announcement, the stock market dropped and bond markets went into a tailspin. The first three weeks of April saw the S&P 500 and the Dow Jones Industrial Average bleed trillions in value while Treasury yields simultaneously crested close to 5 percent. 

David Schechtman, senior executive managing director at brokerage Meridian Capital Group, told CO that after Trump was re-elected, there was a proverbial “sigh of relief” as the expectation was “here is a pro-commerce guy.” But the Liberation Day fallout, according to Schechtman, has been “a big disappointment across the board.” 

“It’s one of the only things I’ve seen coming out of Washington in my entire career that had an immediate effect on trades,” said Schechtman. “I wouldn’t say it pushed down values, but it definitely chilled volume — a lot of people were saying, ‘I won’t sell or buy anywhere until we see what happens with the tariffs.’ ”

Gural called the tariffs “a terrible policy” that has hurt tourism and the ability to lease industrial space. He recalled losing out on a Turkish autoparts tenant for an industrial warehouse he owns in Newburgh in upstate New York due to the uncertainty around costs. 

“They pulled the plug,” said Gural. “There’s little activity in that market because everyone is on hold with deals that need warehouse space or imported goods. No one knows what they need after the impact on tariffs.” 

Others in CRE took a more sanguine, if not jejune, view on a matter that appears to be solely directed by Trump and that effectively impacts the entire world economy. 

“You take it too seriously,” said Catsimatidis. “I’ve known Trump for 45 years — he throws it out like a union negotiation in New York. He says, ‘We’ll charge 100 percent tariffs.’ He doesn’t really mean it, but he wants people’s attention to sit down to negotiate.”  

Peebles said that, in his view, Trump’s tariffs have had “a negligible impact” on the economy and that the U.S. must have a free-trade system that promotes balance and fairness. 

Taking a wider approach, PEG Companies’ Bjorkman argued the tariff drama has two sides. On one hand, construction costs have increased 5 percent since April, according to an analysis done by CBRE. But the country could also see long-term benefits from reshoring, and increased manufacturing and logistics investments, especially in coastal and Sun Belt states.  

“I’m not sure the tariffs have made as big an impact as we expected at first,” Bjorkman said. “People are starting to see through that, and it may not be an impediment to making long-term decisions.”

Instead, Bjorkman highlighted the threat from Trump’s radical immigration policies, which have included masked U.S. Immigration and Customs Enforcement agents abducting undocumented immigrants and citizens alike off the streets in broad daylight. Those anti-immigrant actions could play into the biggest pressure facing future real estate development: labor scarcity. 

“Labor is the top cost driver in the markets where we’re focused on investing, and wage pressures are tied to immigration and mobility constraints in key metros, so that’s probably the biggest variable in terms of project delivery and cost predictability,” explained Bjorkman. “[Immigration] is absolutely going to have an impact on contractors’ ability to get workers, which will put upward pressure on pricing.” 

Peebles, also a developer, conceded that Trump’s immigration policies have increased costs by reducing the availability of labor, which is so important to construction. But he left open an important caveat.

“At the same hand, we’re a society of laws, and we need an immigration system that respects our laws and doesn’t selectively enforce them,” Peebles said. “If it’s selective, then it puts politicians and the like into picking winners and losers.” 

The Fed dilemma 

Speaking of politics, no aspect of Trump’s second term has been as politically charged as his break from over 100 years of precedent to use the power of the executive branch to exert overt pressure on the Federal Reserve, namely its chairman, Jerome Powell. 

After months of public bullying, Trump has demanded (and received) short-term interest rate cuts from Powell, but has also mused openly about firing the embattled chairman (a potentially illegal move) while also trying to remove one of the seven Fed governors, Lisa Cook, after accusing her of mortgage fraud and initiating a Justice Department investigation (which is ongoing). 

Schechtman said it’s concerning that the executive branch is attempting to pull the Fed and its monetary policies in its own direction, especially in such a heavy-handed manner.  

“Wondering whether you can terminate governors of the Fed is something that has alarmed people across the board, even if they are in favor of rate cuts,” he said. “His intervention, and the manner in which he’s done it, has concerned everybody, even if the net result might be cuts.”

Others noted that while markets can adjust to periodically higher rates, what structured capital can’t price is volatility and an unpredictable Federal Reserve policy that changes with each presidential administration, or even the monthly whims of the sitting president, let alone one as capricious as Trump. 

“Without having a predictable, independent Fed, I think people will start to have a hard time making decisions around long-term investments into illiquid assets like real estate,” said Bjorkman. 

But several others across the CRE spectrum argue that capital markets suffered drastically under the four-year Biden interregnum. That included both short-term and long-term interest rates rising after 2022, the chaos of the 2023 regional banking crisis, a steady increase in mortgage rates, and a stricter regulatory regime on banks, which tightened lending across the board and hastened the rise of private credit.  

“No matter what anybody says, compared to Joe Biden, having Trump in office is a net positive for almost every business except for oil, and there’s nothing but positives for the real estate industry,” said Greg Kraut, co-founder and CEO of KPG Funds, a real estate investment firm. 

More than anything, it is Trump’s statist approach to Powell and the Fed that has drawn the most applause, with many CRE players arguing it’s actually made a material difference in capital markets, as opposed to Biden’s laissez-faire, hands-off policy toward the machinations inside the Eccles Building. 

“The rise in interest rates that we had was unprecedented, and, because of those immediate and frequent interest rate hikes prior to the Trump administration, it had a horrific impact on the commercial real estate market,” said Polsinelli. 

Kraut and Peebles both welcomed Trump’s bullying and pressure on Powell, with Peebles arguing that any Fed chairman “serves at the pleasure of the president,” and Kraut noting that Powell and his governors have operated without any useful oversight for far too long. 

“If anyone looked at how [Powell] handled interest rates after COVID, and what’s happened over the last couple of years, he objectively would get fired,” said Kraut. “I don’t mind changing things up, because if someone isn’t doing their job appropriately they should be terminated.”

Amid either failed or exceeded expectations, commercial real estate is stuck with Trump for at least the next three years, a timeline that will likely bring with it all the chaos, controversy and, yes, juiced U.S. economic activity that characterized the first Trump term.    

“He behaves in political office as though he’s a New York developer: You have some ego, some chutzpah, some negotiating tactics, but I don’t think there’s this constant fear he’ll shatter anything,” said Jim Dillavou, principal and co-founder at Paragon Commercial Group in Los Angeles. “I don’t believe that narrative — he won’t do anything to disrupt business.” 

That remains to be seen. The impact Trump will have on the economy, and by extension U.S. commercial real estate, will be an open question going forward, but what is undeniable is that the nation’s once and current chief executive officer has temporarily altered the role of president and its impact on American society. 

“He’s been in office a little over nine months, but, if you think about the things he’s done, he’s gotten it done very effectively and moved things along,” said Peebles. “It makes you think the man’s been in office for six years.” 

Brian Pascus can be reached at bpascus@commercialobserver.com.