Monday Morning Scoop - Why CRE Could Perform Well In Trump 2.0

Why CRE Could Perform Well In Trump 2.0

Property has a long history of proving it can navigate policy changes and continue to perform well, which may be reassuring to the commercial real estate industry as the Trump administration transition proceeds.

President Trump signed a flurry of executive orders during his first hours and days in office. They were primarily aimed to change the country’s direction on several fronts, including on taxes, immigration, trade and energy, said Cushman & Wakefield chief economist Kevin Thorpe in a video analysis. Executive orders are not uncommon. President Biden signed 163 during his first year in office, President Obama signed 147 and President Bill Clinton signed 200.

“It’s difficult to know the precise impact of Trump’s orders because some of them are more symbolic,” said Thorpe. “Some of them will be challenged in the courts and most of them lack important details in terms of how they will be implemented and their timing. We will just have to see how this plays out.”

Thorpe noted that the initial market reaction to Trump’s orders was largely positive. The Dow Jones Industrial Average climbed more than 500 points on the day the executive orders were signed, the 10-year Treasury drifted slightly lower and REITs had a good day, witnessing about a 2% increase.

“It’s important not to read too much into one day of trading, but so far, the markets are digesting the news in a positive way,” said Thorpe.

However, the announcement of DeepSeek, China’s low-cost artificial intelligence assistant that could challenge American dominance in the field, prompted a widespread selloff in the tech sector just a week into Trump’s second term.

But the CRE industry has reasons to be optimistic about Trump’s impact on the market. During his first term before the pandemic, real estate sales volumes climbed to a record $600 billion and property values increased by 18%, said Thorpe. That is on par with the appreciation rates observed under other administrations.

“Property actually did quite well under Trump,” he said. “Past is not always prologue, but it’s important to recognize that property has a long history of proving that it can navigate policy changes and continue to perform well, and I suspect that will be the case again.”

By: Kristen Smithberg
Source: GlobeStreet