Commercial real estate investors coma into 2018 riding a high following approval of the Tax Cuts & Jobs Act. Yet the latest NREI/Marcus & Millichap Investment Sentiment Survey shows that the bounce in positive sentiment that occurred in the wake of tax reform has now drifted back to levels in alignment with this time last year.
Opportunity Zones, areas in each state where Qualified Opportunity Funds can invest gains from other investments into real estate and businesses to defer and reduce capital gains taxes, were introduced as part of the Tax Cuts and Jobs Act in December 2017.
The highly anticipated tax reform recently signed into law by President Trump retained numerous key commercial real estate provisions. The 1031 tax-deferred exchange, the mortgage interest deduction for investment real estate and asset depreciation had few material changes. This consistency in tax law will enable investors to move forward with most of their existing investment strategies.
Commercial real estate investors look to the coming year with increased optimism thanks in large part to the approval of new tax legislation. Details are still unfolding on some of the finer points of the recently passed Tax Cuts & Jobs Act. The country is still waiting for guidance from the IRS and the Treasury Department on exactly how the new rules will be applied in a variety of situations.
New tax laws hold modest change for investment real estate. The highly anticipated tax reform legislation making its way through Congress could be signed into law by President Trump this month. For real estate investors, the final versions appear relatively benign, with only modest changes to key provisions such as the 1031 tax-deferred exchange, mortgage interest deductibility and asset depreciation. The two versions, one from the House of Representatives and one from the Senate, have… Read More
Broad-based hiring and more than 8.5 million residents are driving significant net absorption in the apartment sector, particularly due to the high cost of single-family homes. As the pace of construction soared, net absorption outpaced new supply every year since 2012, fostering a metrowide vacancy rate that reached 2 percent by the end of 2017. Meanwhile, development will roll over from the cycle high reached last year, providing a tailwind to the overall market. Rent… Read More
Numerous high-wage industries generating stable base of renter households. Powered by a diverse employment spectrum and containing more than 8.5 million residents, New York City benefits from a consistent supply of new households. Due to the extreme price of single-family housing, the vast majority of the households seek rental accommodations, particularly in the core boroughs of Manhattan and Brooklyn where prices are highest. As a result, vacancy rates in these boroughs, and broadly metrowide, have… Read More
Labor market at turning point as wage growth hits recovery high. Meaningful wage growth has been a missing ingredient in the expansion for the past eight years. Yet now, with unemployment holding steady at 4.1 percent, employers are finally feeling the pressure to increase wage hikes to attract and maintain their human capital. Further evidence of tight labor conditions can be found in job openings at or near record levels of 6 million positions over… Read More
Year-to-date employment growth signals economic acceleration. Employment additions in the first four months of 2018 outpaced the previous two years over the same time frame, with 799,000 jobs added. The quickened pace of job growth should accelerate commercial real estate demand across all sector, as companies expand payrolls and operations. Increased employment setting stage for escalating apartment demand. The number of workers unemployed or working part-time involuntarily moved to the lowest level in the expansion,… Read More
Accelerating job creation together with record-high employment openings have boosted confidence among younger workers, convincing many that now is the time to move out on their own. These newly formed households are facing a tight housing market as apartment vacancy is below 4 perfect and single-family housing inventory to purchase sits near an all-time low.