With Donald Trump heading back to the White House, the country will once again be helmed by a so-called developer in chief.
President Donald Trump speaks during his first term in January 2021.
Trump has alluded to several early policy decisions that could touch commercial real estate, and he returns to the Oval Office as a delicate recovery takes root in CRE. The first days of Trump’s presidency are expected to include executive orders that will provide both opportunities and challenges for the sector.
Homebuilding regulations could be loosened, but mass deportations could make it harder to find construction labor to build new homes. Questions swirl around what kind of tariffs Trump plans to impose and what they would mean for inflation. Battle lines are already being drawn over remote work for federal employees, while Fannie Mae and Freddie Mac are on the path toward privatization.
Here’s a look at what nine early policy decisions could mean for commercial real estate.
Renewed Opportunity Zones
Opportunity zones were born out of Trump’s 2017 tax reform package, creating an incentive program to invest in economically distressed communities. Developers have put tens of billions of dollars into the nation’s 8,764 qualifying sites in the last seven years, but the program is set to sunset in 2026.
Trump’s win reenergized interest in the program, and investors and developers expect the administration will extend and potentially expand the program. Blake Christian, a tax consultant specializing in opportunity zone investments, told Bisnow he was flooded with calls in December, primarily from investors interested in the tax deferrals offered by the program.
The Trump transition team hasn’t publicly commented about whether it has any plans for the program, and any changes would need congressional approval.
The bipartisan Opportunity Zones Transparency, Extension and Improvement Act was first introduced in the House of Representatives in September 2023. The bill would extend the tax deferrals through 2028, but it has yet to come to the floor for a vote.
With Trump sitting in the Oval Office, the legislation is expected to sail through Congress.
Mass Deportations
Trump promised mass deportations on the campaign trail and this month promised workplace raids to round up unauthorized immigrants.
The size and scope of deportations remains to be seen, but any significant crackdown would have profound impacts on the construction industry, where the share of workers who are immigrants recently hit a record high.
Immigrant labor accounted for 25.5% of the construction workforce in 2023, or around 3 million workers, up nearly a full percentage point over the last two years. Mass deportations are likely to exacerbate the labor shortage already plaguing the sector.
“From an economic point of view, it’s somewhere between economic suicide and a recipe for putting inflation on steroids,” Associated General Contractors Vice President of Public Affairs Brian Turmail told Bisnow in September regarding mass deportations.
The Trump administration is expected to push to bring federal workers back to the office five days a week.
The Fight Over Remote Work
Trump has signaled that he wants the federal workforce back in the office, and he has recruited billionaire Elon Musk and former presidential candidate Vivek Ramaswamy to make it happen.
“Requiring federal employees to come to the office five days a week would result in a wave of voluntary terminations that we welcome: If federal employees don’t want to show up, American taxpayers shouldn’t pay them for the Covid-era privilege of staying home,” the pair wrote in a November Wall Street Journal op-ed.
But unions for federal employees have signaled they won’t give up their hybrid or remote privileges without a fight. In December, the American Federation of Government Employees, a union representing 42,000 Social Security Administration workers, reached an agreement with the SSA commissioner to lock in telework policies until 2029.
The nearly 2 million federal workers are organized through a patchwork of unions, setting the stage for contentious fights over office attendance policies similar to the ones faced by outgoing President Joe Biden when he tried dragging workers back to the office in 2023.
The 2 Sides Of Tariffs
Concerns about inflation and potential trade wars loom as Trump assumes office promising a blanket tariff on all imports, including 60% tariffs on China and 25% on Mexico and Canada.
Demand for industrial outdoor storage shot up after Trump’s electoral win as construction industry players began stockpiling raw materials and equipment, and the push to prioritize American manufacturing could boost industrial markets more broadly.
But Trump’s tariff proposals, along with his plans to cut regulations and taxes, are only expected to fuel inflation and growth, driving up the yield on 10-year Treasury bonds.
Analysts don’t see the 10-year yield moving significantly in 2025 without a major economic slowdown, leaving the cost of debt largely stagnant and presenting a challenge for owners that have opted for short-term loan extensions while hoping for rates to improve.
The Future Of Fannie Mae And Freddie Mac
During his first term, Trump began the effort to release the government-sponsored entities backing the secondary mortgage market from conservatorship.
Under the system, the GSEs are effectively overseen by the Federal Housing Finance Agency. The latest push to end federal oversight began even before Trump won reelection, with allies in his orbit working on plans to privatize the agencies at least as far back as September.
The idea seemingly has bipartisan support, with the Treasury Department announcing it was beginning a process that would ultimately end the government’s control over the agencies.
The central wrinkle for any privatization push is the federal guarantee on all mortgage-backed securities bundled and sold by the GSEs.
“No matter what structure they come up with that they call privatization, the government is going to have to be heavily involved with its balance sheet as a backstop,” Stuart Boesky, founder and CEO of New York-based multifamily lender Pembrook Capital Management, told Bisnow in December. “Otherwise, our whole system of financing will drastically change.”
Scott Turner speaks at the Opportunity Zone Conference at the White House in April 2019.
Cutting Affordable Housing Red Tape
Scott Turner, Trump’s nominee to lead the Department of Housing and Urban Development, spent Trump’s first administration as an advocate for opportunity zones, with the president-elect boasting in his nomination announcement that Turner had helped direct more than $50B into the program.
In addition to being an advocate for a renewed opportunity zone program, Turner has pledged to cut regulations that he says are stifling development. Rolling back recently passed environmental rules alone would create tens of thousands of additional housing units each year, Megan Booth, Mortgage Bankers Association associate vice president of commercial real estate, told Bisnow last month.
If confirmed, he will take the helm at HUD just as the agency adopts relaxed lending standards for affordable housing development. The rules would move the maximum loan-to-value ratio up 3 percentage points to 90%, giving developers access to more government-backed equity on affordable housing developments.
Development Fast Tracks
Trump announced in a Dec. 11 social media post a plan to create rules to fast-track projects valued at $1B or more.
“Any person or company investing ONE BILLION DOLLARS, OR MORE, in the United States of America, will receive fully expedited approvals and permits, including, but in no way limited to, all Environmental approvals,” Trump wrote in a post on Truth Social. “GET READY TO ROCK!!!”
It isn’t entirely clear how Trump plans to get around laws like the National Environmental Policy Act, which mandates environmental reviews, and other regulatory hurdles. But one way under current law would be for the president to compel agencies to “act with alacrity for particular high priority actions,” William Buzbee, a law professor at Georgetown University, told The Hill.
Cryptocurrency Regulation
Fintech investors are hoping that the Trump administration will boost cryptocurrencies by creating a federal framework around transacting with digital tokens.
Trump, who has his own cryptocurrency venture called World Liberty Financial, has helped propel a bull run in bitcoin since his election. The coin soared again Friday on rumors that Trump could sign an executive order calling for a federal bitcoin stockpile.
Real estate brokers, investors and fund operators who are looking for ways to deploy cryptocurrency directly into real estate say that codifying a regulatory framework would make transacting on the blockchain less challenging and more mainstream.
“It’s long overdue that the federal government clarified how this asset is going to be treated,” David Yermack, a New York University finance professor who teaches a course on cryptocurrency, told Bisnow in November.
Dealmaker In Chief
Trump broke with tradition during his first term by opting not to divest from his businesses, instead giving his sons control over The Trump Organization and pledging not to get involved in its deals.
During his first term, Trump did pledge to avoid doing business with any foreign entities, including private companies, but his second-term ethics pledge promises only to avoid doing business directly with foreign governments.
Like his first term, Trump will leave the day-to-day operations of his namesake business to his two oldest sons, and he has committed to having no involvement with deal negotiations or decisions at The Trump Organization.
“There was at least some concern from the Trump administration during the first term about the optics of financial intermingling between Trump’s businesses and the government,” Adav Noti, executive director of Campaign Legal Center, told The New York Times this month. “What we are seeing with the incoming administration is no longer that kind of concern about those optics. There is an impression that the handcuffs are off.”