What Trump’s 2nd Term Could Mean for Commercial Real Estate

President Trump’s second term could bring growth opportunities and headwinds for CRE.

Jordan B. & Han-Gwon Lung
January 21, 2025

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Good morning. Donald Trump’s return to the presidency ushers in significant policy shifts poised to impact commercial real estate within his first 100 days. Today, we break down the key trends and executive actions to keep an eye on.

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Trump's Second Term: What It Could Mean for CRE

What Trump’s 2nd Term Could Mean for Commercial Real Estate

Within hours of returning to the Oval Office, Donald Trump unleashed executive orders that could upend commercial real estate. Here are eight key changes to watch.

Opportunity Zone revival: The Opportunity Zone program, which has driven $75B in investments since 2017, is back in focus. Trump is pushing for an extension beyond its 2026 expiration and may expand it further. Investors are already mobilizing, eyeing tax deferrals and benefits in economically distressed areas.

Return-to-office mandate: Trump ordered federal employees to return full-time, affecting nearly 2 million workers. This may increase demand for federal leases, but unions plan to oppose it. Musk’s Department of Government Efficiency is exploring cuts to federal office space, complicating the CRE outlook in D.C.

DEI policies face cuts: Trump ended diversity, equity, and inclusion policies for federal agencies, signaling a shift in government hiring. However, CRE firms, which have invested heavily in DEI initiatives, are expected to stay the course as they navigate public expectations and workforce demands.

Housing affordability: Trump’s HUD pick, Scott Turner, is focused on reducing red tape, not increasing budgets. HUD recently raised loan-to-value limits for affordable housing projects to 90%, giving developers more financial flexibility. Meanwhile, zoning decisions will stay local, avoiding federal intervention.

Impact of tariffs: Trump plans steep tariffs—25% on Mexico and Canada, and 60% on China. While this could boost U.S. manufacturing and industrial real estate, it will likely spike construction costs, especially for steel and lumber. CRE developers relying on imported materials may face higher project budgets and longer timelines.

GSE privatization: Fannie Mae and Freddie Mac, which back roughly 50% of all U.S. mortgages, could be privatized under Trump’s administration. While the move would reduce government oversight, the secondary mortgage market may still need federal guarantees to avoid instability, especially for multifamily financing.

Climate rollbacks: Trump pulled the U.S. out of the Paris Agreement (again) and reversed federal climate regulations, claiming they inflate business costs. Developers may benefit from fewer compliance burdens, but state and municipal sustainability mandates remain, ensuring green retrofits and net-zero projects continue in key markets like California and New York.

Fast-tracked approvals: Trump’s executive order promises to expedite approvals for $1 billion+ developments, potentially cutting years of delays. While this could be a boon for CRE giants, questions remain about environmental reviews and legal challenges under the National Environmental Policy Act.

➥ THE TAKEAWAY

Place your bets: Trump’s presidency could energize segments of the CRE market, particularly OZs, industrial assets, and housing development. However, challenges such as labor shortages, inflation, and geopolitical risks may temper these benefits.

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✍️ Editor’s Picks

Increased scrutiny: The FTC plans to investigate the impact of large-scale single-family rental investors with 1K+ homes on housing costs, seeking public input and company data.
Mixed returns: Brookfield REIT reported a second consecutive annual loss of 0.45% in 2024, but highlighted improving performance since Q2 as real estate valuations stabilize.
Overvalued homes: Wall Street signals US homes are overpriced by 10–35%, as institutional investors scale back purchases and warn of unsustainable valuations driven by tight markets and high borrowing costs.

🏘️ MULTIFAMILY

DC family debut: Clear Investment Group entered the DC market by acquiring Marbury Plaza through a bankruptcy sale in December. The company plans to rebrand the property as Langston Views.
Denver demand: Starwood Capital Group (STWD) capitalized on Denver's strong multifamily market, closing a $103M deal as demand for rental housing in the region continues to surge.
Affordable expansion: Safehold facilitated a ground lease for The Crawford, a 265-unit affordable housing project in Roseville, CA, marking its sixth California affordable housing transaction in 2024.

🏭 Industrial

Data center surge: The global data center sector is set for explosive growth, with a projected 15–20% annual growth through 2027, driven by AI, power solutions, and cooling innovations.
San Diego milestone: Hines’ Britannia Technology Park in San Diego has reached full occupancy after Foxx Development doubled its lease to over 200 KSF, signaling resilience in a slowing market.
Memphis moves: Hillwood sold two fully leased industrial buildings in Olive Branch, MS, totaling 832 KSF, to Robinson Weeks Partners, as the Memphis industrial market grapples with lower sales prices and rising vacancy rates amid strong development activity.

🏬 RETAIL

Auto downsizing: Advance Auto Parts (AAP) is selling over 200 stores and leases across 46 states as part of its broader plan to boost profitability, with Hilco Real Estate managing the disposition.
Reset: The retail sector in 2025 is adapting to consumer shifts, economic challenges, and limited new supply, with grocery-anchored centers and flexible, community-focused spaces emerging as key growth drivers.

🏢 OFFICE

Bigger footprint: JPMorgan Chase (JPM) is expanding its lease at 560 Mission Street in San Francisco by 60 KSF, putting its workforce into one tower as it returns to a 5-day in-office work policy.
Philly lifeline: American Real Estate Partners secured a 4-year loan extension for the PNC Bank Building in Center City as the post-pandemic office market struggles to rebound.