3 Ways a Second Trump Presidency Could Affect Building Owners and Operators
Donald Trump is headed back to the White House, and with him, he’s bringing a new set of policies that represent a different perspective from the outgoing Biden-Harris administration. Here are three ways that Trump’s second term could affect commercial real estate.
1. Tariffs and Building Material Prices
President Trump has proposed steep tariffs on many imports, including tariffs of 60% on items coming from China, 25% on imports from Mexico, and 10-20% on items from other countries, according to USA Today. Trump’s first term saw the president impose tariffs on roughly 10% of U.S. imports, including products like steel, washing machines, and solar panels.
Tariffs are passed on from importers (who pay tariffs on goods they bring into the U.S.) to the consumers who purchase the imported goods. Commercial real estate owners and operators could see higher operational costs, depending on which types of goods have tariffs applied.
“It’s everything from an air filter used in an HVAC system to the paper and cleaning products we use to maintain the building so it’s a vibrant, healthy workplace for people,” explained Don Davis, BOMA International’s vice president of advocacy and building codes. “We view that cautiously because we believe that all of those expenses are going to increase.”
The commercial real estate industry was hit hard by the pandemic and is still recovering, Davis added. Buildings are still not operating at their full capacity, so adding increased operational costs on top of that would place an extra strain on building owners and operators who need to operate buildings profitably.
2. Taxes, Incentives, and the Pass-Through
Trump aims to cut the corporate tax rate from 21% to 15% and lift the cap on local and state tax deductions, according to Bankrate. What remains to be seen is the fate of the pass-through—allowing some profit from commercial real estate holdings to be “passed through” to the owner’s personal income taxes and taxing those real estate profits at the lower corporate rate. “That’s the area where we’re looking at what they’re going to do,” Davis said. “Are you going to maintain those tax rates? Are you going to maintain the pass-through system we have, and are you going to maintain it at 20 or lower it to 15?”
The tax cut’s “pay-fors” are a potential concern, Davis added. With any change in leadership, priorities shift around what to cut and what to spend money on; all of those things must be paid for somehow. Trump has said he plans to cut taxes, so it’s possible that some programs, such as electric vehicle infrastructure subsidies or solar panel tax credits, could end up on the chopping block.
“How we’re concerned about this is that we have states such as California, New York, and even Kansas and Wisconsin where they have state-based utility energy targets and building performance standards that are going into place,” Davis explained. “The federal government is one place where we’ve been able to get tax assistance, grant assistance, or green loans from SBA to be able to implement these state programs. The states are not funding these programs. What we’re looking at working with is the federal government providing financial assistance to meet the state-mandated requirements. We believe many of these programs are what they’re looking at as pay-fors.”
3. New Priorities Around Energy and Climate Change
Commercial real estate has embraced decarbonization efforts, including looking at grid alternatives for energy distribution. Large-scale renewables and storage technology have helped buildings operate more efficiently and economically. However, rapid changes in national priorities can make it tough for the commercial real estate industry to game-plan for what it wants to achieve by 2035 or 2050, Davis said.
“We were very much moving in the direction of decarbonization and renewable energy, and now we’re very much not. Four years from now, maybe we very much are. It makes it difficult for our industry to plan where we’re going and the targets we’re trying to hit,” Davis said. “There is a lot of technology that needs to be developed, implemented, and put in the field.”
Davis said he’s heartened by recent discussions with both parties on topics like grid redevelopment. “Part of our problem is grid failure and incapacity,” he said. “But when you think about what we’re doing, we’re repairing a grid based on 1903 technology that was built in 1910. We’re not looking at what the future may be. BOMA has done a lot of work on looking at new technologies, like distributed energy systems, which are microgrids connected to storage and renewables.”
2025 Outlook
Policy implementation specifics remain to be seen at this stage, and more details will likely emerge in the coming days and weeks. But one thing is certain, Davis said—the need for policies that support commercial real estate.
“Buildings are central to city centers. City centers are central to a vibrant community, and those communities are central to vibrant economies,” Davis said. “We can’t get everyone back into the office, and the result of that has been that there are so many small businesses that have not been able to succeed since the pandemic because the buildings aren’t reopening.”
Cities aren’t as full as they once were, Davis said, and that affects everything from public transit revenues to the viability of restaurants, shops, and more. “Any kind of policy that’s not supporting the reopening and development of commercial real estate is not good for the industry or the communities they’re in,” Davis said. “We’re not just trading assets—commercial real estate is a key component to the community, and supporting us, whether it’s on energy efficiency, decarbonization, or opening the office, has benefits overall to society. I’d love to see that kind of recognition and policies that would be derived from there that would support the industry for those reasons.”
