Last time, we began looking at some of the changes that are in store for the commercial real estate industry going forward under President Trump. As we noted last time, even before Trump was elected there was an increase in non-bank lending due to the heavy requirements of the Dodd-Frank Act.
It isn’t clear whether that trend will continue under Trump, but we do know that Trump has expressed disapproval for Dodd-Frank and it is likely that the impact of the law will be reduced, even if the law is not scrapped altogether. There remains some debate as to how far Trump will reverse course on the housing crisis era law. Trump’s nomination for Secretary of the Treasury, Steven Mnuchin, strengthens the assumption that Dodd-Frank will take a significant hit if he is confirmed.
Under Trump, some economists have predicted growth in the real estate sector due to expectations of deregulation, increased economic activity, and new infrastructure programs. Potential reductions in trade and foreign investment may come into play under Trump, though.
Even before Trump was elected, Chinese real estate transactions and investments began slowing down, partly due to Chinese government policies, which have been imposing extra scrutiny on foreign property transactions by state-owned companies. If Trump and Mnuchin pursue an aggressive approach to trade with China, this trend will likely continue. There is also the affect of Brexit and other economic changes in the world economy could also impact the commercial real estate market in the United States. If European currencies become weak, there may be fewer transactions in the U.S. commercial real estate market, which will impact the industry here.
Of particular importance, in all of these possibilities, are potential changes in laws and regulations impacting the commercial real estate industry. Businesses operating in the commercial real estate sector, as well as individuals looking to become involved in the area of commercial real estate, will need to be paying attention to the changes coming through the pipeline in the coming months and years. Working with an experienced attorney is critical to ensure individuals and businesses have proper guidance on legal obligations and that legal risks are properly managed.