The great tax race : How the world’s fastest tax reform package could impact commercial real estate

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On November 16, the House of Representatives passed its version of the tax reform bill. A Senate tax reform proposal was passed on December 2. Cushman & Wakefield, along with other market observers anticipate that a version of tax legislation reform has an 80% chance of enactment by year-end 2017, with immediate implications for financial reporting.

The tax incentives and breaks that the CRE industry enjoys are a lubricant (or friction cost) for the transaction market, but often not a key driver of transactions themselves or investment performance. A Goldman Sachs analysis notes that in May 2003, REITs outperformed the rest of the market despite an adverse tax change that disadvantaged them.

The economy is currently growing, with upward revisions to real GDP growth forecasts (expected to be an annualized 2.5% in the fourth quarter of 2017). The CRE industry is likely to benefit from a prolonged economic cycle. These factors will continue to drive investment decisions and transaction volumes.

Source : Cushman & Wakefield

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