One pressing question in commercial real estate is what impact a Trump presidency will have on the industry. According to Oxford Economics, the impact could be significant but in the short term, the yields on the 10-year will be what to watch.
Anytime the presidency changes hands, there will likely be effects that flow out by the nature of different beliefs and policies. Oxford starts with two general assumptions.
First, the Republican-led Congress will extend the 2017 tax cuts. On that basis, Oxford projects a higher level of GDP through 2030. That should, says Oxford, support CRE occupier demand and rental growth for sectors like industrial and multifamily with low vacancy. Despite spending cut talk from the so-called DOGE duo of Elon Musk and Vivek Ramaswamy, Oxford projects higher federal government spending, particularly on defense. That would help increase GDP.
Second, Trump will reduce immigration and impose tariffs on Mexico, Canada, China, and the EU. The immigration actions would probably mean policy changes like lowering refugee admissions and returning to the “remain in Mexico” strategy. This could have negative economic impacts with reduced labor forces, particularly in lower-wage jobs, increasing competition for labor in industries like construction, hospitality, and manufacturing. Impact on CRE might be “gradual and isolated to specific locations and sectors," according to Oxford.
Increased tariffs on China, Mexico, Canada, and the EU over the next two years will have inflationary impacts starting in 2027. These hurt directly hurt the economy through higher prices. Many households will reduce consumption. Corporate profit margins will be hurt. Retaliatory tariffs will hurt U.S. exports. The effects on CRE will be “broad-based and enduring.” In the short term, a rush to bring in products ahead of tariff increases could boost the need for warehousing.
Now comes the impact of tighter CRE yield spreads. As inflation feels upward pressure, particularly in 2026, the Federal Reserve will become more cautious about lowering the federal funds rate, ultimately raising rates. Oxford is projecting bond yields to increase by 50 basis points by the end of 2025 and the 10-year to remain elevated over the next five years. CRE financing costs will increase because of the resulting higher risk-free rate.