Stakeholders in the commercial real estate industry should familiarize themselves with the Trump administration’s policy priorities and the actions already taken.
By Michael J. Haas, Michelle Kelban, and Nick Steele
Within the first month of the new administration, the Trump White House has advanced several executive orders impacting the real estate industry, including its investors, lenders, and operators. These executive orders include:
- Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis
- Declaring a National Energy Emergency
These executive orders aim to reduce housing costs and fast-track digital infrastructure development, but their impact may extend beyond those areas. Corporate stakeholders in the commercial real estate industry should familiarize themselves with the administration’s policy priorities and the actions already taken.
Reducing Housing Costs
The Trump administration has prioritized reducing housing costs, largely through a general proclamation to cut regulations and promote housing development. In the executive order “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis,” issued hours after President Trump’s inauguration, the president characterized the historic rise in housing costs as a fault of overregulation and pledged to reduce such costs through executive action.
The executive order does not provide specific policy actions to achieve lower housing costs and deregulation. However, it provides a general directive to the heads of all executive departments and agencies to deliver emergency price relief to lower housing costs generally. The order also appoints an Assistant to the President for Economic Policy to report on the implementation of these measures within 30 days of the order and every 30 days thereafter.
New HUD Secretary
Relatedly, the Senate confirmed Scott Turner, President Trump’s nominee, to serve as the Secretary of the Department of Housing and Urban Development (HUD). Turner is a former Texas lawmaker and affordable housing developer who led the White House Opportunity and Revitalization Council during President Trump’s first term. His nomination likely signals the administration’s commitment to work closely with the affordable housing industry and promote deregulatory reform to encourage affordable housing development.
In this role, Turner is expected to advance President Trump’s policy of significantly reducing the HUD budget and further deregulation in the affordable housing space.
Rising Construction and Labor Costs?
President Trump’s commitment to housing affordability is complicated by his trade and immigration policies. The Trump administration has pledged to impose tariffs on Mexico and Canada, which could raise prices on materials like softwood lumber, crude oil, steel, and aluminum, thereby increasing construction costs. (For more on the tariffs, see this blog post.)
At the same time, President Trump’s policy to deport unauthorized immigrants may reduce the labor pool for construction work, which could lead to higher labor costs. (For more on immigration enforcement, see this blog post.)
As a result, developers may explore domestic sourcing of materials to mitigate the impact of tariffs and will likely have to source labor at higher costs. The potential impacts of these policies could affect institutional investors engaged primarily within the development sector.
Fast-Tracking Digital Infrastructure Development
President Trump announced plans to expedite power plant development for AI data centers using an energy emergency declaration. The executive order “Declaring a National Energy Emergency” aims to streamline the approval process for energy infrastructure projects and reflects President Trump’s recent focus on doubling US energy capacity to compete globally in AI, particularly through co-locating power plants and data centers.
This order is expected to boost the development of data centers and other digital infrastructure projects by reducing regulatory hurdles and expediting project timelines. Recently, at the World Economic Forum in Davos, President Trump stated that he would personally approve projects to avoid lengthy delays, allowing immediate construction — and we have already seen collaborations among private digital infrastructure and the government in respect of the same.
Some estimates show that US data center investments are projected to surpass $1 trillion during this administration. Stakeholders in energy infrastructure stand to benefit from these changes, as they can capitalize on the White House’s commitment to encouraging energy infrastructure development.
Summary
President Trump’s executive actions introduce both opportunity and complexity for the real estate industry. The convergence of a federal deregulatory agenda, together with policies that impact the capital and labor supply, represents a new legal and business environment for real estate investors. (For more on the deregulation initiative, see this blog post.)
In particular, domestic private equity players and real estate operators will likely face a dynamic commercial environment, with potential supply shocks to labor and capital. Meanwhile, foreign investors may face added difficulty navigating a federal government more skeptical of foreign influence in critical infrastructure and the housing market.
As a result, there may be greater opportunity in collaborative transactions, such as joint ventures and co-investments, between experienced domestic stakeholders and foreign investors.