CHICAGO—As reported yesterday in GlobeSt.com, the coming to power of Donald Trump has left the commercial real estate world at times hopeful, and at other times worried. But at this point, it's not yet clear which direction the administration will take, and the potential impacts vary greatly for different real estate sectors.

Currently, the legislative proposals from the administration seem stuck, Jacques Gordon, global head of research and strategy at Chicago-based LaSalle Investment Management, tells GlobeSt.com. This is most obvious with the proposal to repeal the Affordable Care Act, a concern to the many institutional investors now involved in the healthcare sector.

But other legislative ideas floating around Washington also merit close attention. Gordon's team just published a report that examines President Trump's policy proposals and the possible impact on real estate markets.

Some in the office market hope the new administration will accomplish the deregulation of the nation's banking and finance sector. The feeling is that many of the regulations enacted during the Obama Administration have held back risk taking, and thereby curtailed the need for office space among these tenants.

But Gordon says the case is not so clear. After all, the compliance officers now needed by in the banking sector take up space. Furthermore, there is the strong possibility that financial services firms needed to downsize anyway, and the recession merely accelerated that trend.

In the past few years, the big engines for the office sector have been things like high tech and life sciences, he adds, neither of which is easily impacted by legislation. “It's not clear that deregulation would provide a big boost to office demand.”

There have also been proposals to limit immigration to the US, both through a border wall and a ban on new visas from certain Muslim-majority countries, but the courts or legislative wrangling have put these in doubt. Gordon says it's possible these efforts could hurt tourism or legal immigration, if foreigners decide the US is unfriendly territory and vacation or go to school elsewhere. However, a subsequent cut in housing demand, or the use of hotels, is likely to have a relatively small impact on the overall economy.

Changes to the US trading system have the potential for more serious effects, Gordon says. However, those concerned about possible changes haven't seen their fears realized. The Trump tax plan announced on April 26 excludes the proposed 20% Border Adjustment Tax, so a major threat to retail sales is currently not expected to be enacted.

And there have been no major changes to US trade policies to date. Still, LaSalle plans to watch these developments carefully, Gordon says. Although import restrictions would lead to increased domestic production, “economists say they would be a drag on consumer demand.”

But whatever happens with all these proposals, Gordon hopes those in real estate don't get too caught up in “the Washington, DC frenzy.” The April jobs report was solid, he points out, and occupancy rates in most real estate sectors have been rising steadily for several years. “If we just muddle along with the status quo like we've been doing, things will be fine.”

Instant Insights /

Trump Changes Stuck in Courts and Congress

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