Now that the shock of the presidential election is over, it’s time to ask the big question: How will a Donald Trump presidency impact the commercial real estate industry?
No one knows the answer yet, of course, but experts are weighing in. And the consensus so far? A Trump presidency, and a Republican-controlled federal government, shouldn’t slow the positive momentum that commercial real estate is enjoying today.
The change in the White House could even provide another boost to that momentum, depending on which forecasts you read.
Marcus & Millichap recently published its own special report looking at the election and what it means to the men and women in the commercial real estate industry. The news was largely positive.
On the plus side, Marcus & Millichap said that the U.S. economy should continue to grow as the new president takes office. As the company says, the U.S. economy is now in its seventh year of a durable but moderate expansion. Marcus & Millichap says that 2 million to 2.5 million new jobs should be added during the next year. The country currently has an unemployment rate of 5 percent and 5.5 million unfilled job openings.
Marcus & Millichap predicts that unless an unexpected surprise hits the country, the economy will continue to grow, something that will result in an increase in commercial real estate construction, leases and sales.
Marcus also predicted that the reduction of cridlock on Capitol Hill — now that the Republican party is basically in charge — should pave the way for even more economic momentum, which will be good for the commercial real estate industry.
Marcus & Millichap says that Congress should be able to pass a new budget under Pres. Trump and increase the debt ceiling when needed, all events that should spur the confidence of real estate developers and investors. The company points, too, to the potential for reduced taxes, an increase in infrastructure spending and business deregulation, all of which could provide another spark to the nation’s economy.
There are some worries, of course. Marcus & Millichap says that faster economic growth could result in inflationary pressure, pushing interest rates higher. Mortgage interest rates have already jumped following Trump’s election, with many economists predicting that the average interest rate on a 30-year, fixed-rate mortgage loan might soon hit 4 percent. Marcus & Millichap also predicted that a volatile stock market — which dropped sharply immediately following Trump’s win and then rebounded quickly — is definitely a possibility.
But overall? Marcus & Millichap’s report predicts a strong commercial real estate market under a Trump presidency. Will that actually happen? Let’s hope so.