‘Everyone’s Tired’: CRE Readies For The Ballot Box, And Whatever Comes Next

Tuesday is Election Day, the culmination of the most expensive presidential campaign in history and, according to polling data, one of the closest.

With more than $10B spent on campaign ads this year deluging an increasingly polarized, insular country, the race between Vice President Kamala Harris and former President Donald Trump has been inescapable. 

“Both personally and professionally, we're all ready for the noise from the election to be over,” said Robert Habeeb, the CEO of Chicago-based Maverick Hotels and Restaurants. “I think people are just burned out.”

The election is also considered one of the most consequential in American history, with cavernous differences between the two candidates' campaign proposals, including those that would directly and indirectly impact commercial real estate.

As a developer focused on historically disinvested communities, Urbane principal and CEO James Johnson-Piett has reasons to support either candidate in this year’s election. 

Harris’ platform would benefit developers like Johnson-Piett, who rely on government subsidies to build affordable housing and community facilities. But Trump is a builder himself, who is “not afraid” to discuss the industry’s role in economic development, Johnson-Piett said.

“There are so many tentacles here that could have a really direct impact on deals that are in the pipeline right now, all the way up to 10, 15, 20-year strategies for investors and developers,” Johnson-Piett said. 

As president, Trump created opportunity zones, a program of tax incentives to encourage real estate investment in low-income communities. Since it began, total equity raised by funds investing through the program topped $38B. He also slashed the corporate tax rate.

This time around, Trump’s proposed housing policy is focused on reducing regulations, protecting single-family zoning and allowing development on federal land. He maintains a deep base of support in the industry where he made his billions, but among commercial real estate, donations to the candidates are evenly split. 

Both Trump and Harris have raised approximately $17M from real estate industry sources, according to a partial list of donations by industry from Open Secrets. Real estate is Trump’s seventh-biggest source of revenue by industry and Harris’ 11th-biggest source, according to a Bisnow analysis of campaign contributions. Harris has comfortably outraised Trump overall. 

Habeeb said that though publicly it seems that the business community is rooting for Trump — Trump has the support of Wall Street, with $203M raised from the securities and investment sector compared to Harris’ $63M — behind the scenes, there is more hesitation now compared to the 2016 election.

“​​Philosophically, if you look at the two candidates and their approach to business, there's no question that Trump lines up more favorably, but he brings a lot of baggage with him,” Habeeb said. “I think people worry about that baggage.”

The Biden-Harris administration has ratcheted up its scrutiny of corporate merger activity, mandated stronger climate disclosures and moved to ban noncompete clauses.

“There's just been a regulatory onslaught. This kind of war against commerce. It's just incredibly costly. It effectively raises the cost of capital of the country,” Arena Investors CEO and Chief Investment Officer Dan Zwirn said. “It's just violently anti-commercial, and so I think there's a good prospect in the Trump situation with significantly easing off of that. It's a costless way to materially improve an environment that's been really brutal.”

But the housing affordability crisis has become an increasingly important issue to voters, and developers in that space who spoke to Bisnow said Harris' proposals would be more likely to deliver solutions.

She vowed earlier this year that her administration would develop 3 million new housing units in her first term, fueled by tax incentives for first-time homebuyers and expanding the Low Income Housing Tax Credit to spur more projects.

Margaret Stagmeier, an Atlanta-based affordable housing developer, said she’s hopeful that a Harris administration would also cut some of the red tape associated with applying for and obtaining tax credits.

“I think that she will at least sustain what’s in place, if not expand,” Stagmeier said. “She’ll look for ways to create more efficiencies in the programs, which are actually needed. It’s almost as expensive for the compliance as it is for the housing benefit.”

She said Trump could possibly cut funding that would go toward affordable housing and social service programs, leaving states with having to foot the bill if they want to increase the attainable stock of housing. As president, Trump proposed slashing billions from the Department of Housing and Urban Development, including eliminating the Community Development Block Grant.

“I think he is going to challenge a lot of federal programs, which is very much the Republican agenda,” Stagmeier said. “I don’t think he’ll completely ax [the Low Income Housing Credit]. He’s too much of a landlord. But I do think he’ll modify it.”

It’s not just the election that the real estate industry has to worry about this week. The Federal Reserve's next meeting starts Wednesday, with the decision about interest rates to be announced Thursday afternoon.

Following September’s 50-basis-point rate cut, the business world has been praying for continued reductions. Economic indicators, including falling inflation rates, have caused that optimism to fade, although Friday’s weaker jobs report revived some hope of another 50-point cut. 

“I had not really digested the fact that the Fed meeting is literally the next day,” RLTYco CEO Briggs Elwell said.

Trump repeatedly criticized Fed Chairman Jerome Powell throughout his presidency, threatening to fire or demote him while calling for huge rate cuts. This cycle, he has suggested several plans to influence monetary policy. The next president can appoint a new Fed chair when Powell's term expires in 2026.

"I think I have the right to say I think [the Fed] should go up or down a little bit," Trump said in an Oct. 15 interview with Bloomberg News, citing his background as a businessman. 

The first developer-in-chief could seek to influence Fed policies to benefit commercial real estate owners like himself, but that would go against the independence of, and potentially undermine confidence in, the central bank, industry voices said.

“There has been this notion of can he fire the guy? Or could he install a shadow head of the Fed?” Zwirn said. “The Fed has been politicized enough. That would certainly accelerate that notion and really reduce the credibility of the Fed lower than it is already.”

In the short term, “the perception of stability” is most important, Quadrum Global Managing Director Jared White said.

“The economy as a whole is, generally speaking, like a big cruise ship,” White said. “Just because there's a new captain of the ship and they want to take the ship in a different direction, it doesn't turn from going north to going south immediately.”

When it comes to the capital and debt markets, who occupies the White House is less impactful than which party controls Congress, said Greg Friedman, CEO of Atlanta-based real estate investor and lender Peachtree Group. 

But, he said, stiffer regulations under Democratic control could scare off banks from lending to the real estate market, while looser rules could spur more debt availability. 

In either scenario, there are ways savvy real estate investors can benefit, Friedman said. Less bank activity means groups like Peachtree will become more popular as alternative lenders, and in the other scenario, equity bets look more appealing.

The weeks before a presidential election tend to come with a slowdown in real estate transactions, and the chance of a protracted and contested election — one that could sow chaos in the financial markets — heightens the uncertainty.

“We could probably have a contested election. That could cause social unrest and could cause challenges and issues,” Friedman said. “That could be the worst outcome. I want to see an election where either Harris or Trump wins decisively.”

While the economy and business climate remain a central issue in the election — eight in 10 registered voters cite the economy and inflation as very important to their vote this election, according to a study by Pew Research Center — social issues like immigration and abortion also weigh heavily on the minds of those in the industry, said Brittany Rose, co-founder of the group Women In Real Estate.

“Being a woman, and especially a woman of color, which most of our members are, is what takes the cake,” Rose said. “You can make money if you're good at what you do. But if your health is compromised, if your rights are compromised, if your family is compromised, we can't operate in that environment.”

The intensity of the election can hit close to home.

“My household is split and you don’t discuss it at the dinner table,” Stagmeier said. 

In the weeks leading up to the election, Harris and Trump have heavily campaigned in swing states. In Pennsylvania, where Johnson-Piett has projects, he’s felt the buzz. 

It’s not just because he’s taken meetings next door to Harris' running mate, Minnesota Gov. Tim Walz, hosting a campaign visit, he said. The buzz is in barber shops, corner stores and restaurants, where the small business owners he works with are weighing the pros and cons of both candidates. 

But there’s also been some burnout. 

“Everyone's tired,” Johnson-Piett said. “You know what you're buying at this point.”

He has made up his mind, too, already casting an early vote for Harris.

“There are certain points, as a business owner, developer, that would help me out if I voted for Trump, but those don't outstrip the kind of world that I want my daughter and my son to grow up in,” Johnson-Piett said. “I can make enough money. I have no problem paying taxes. That's not my drive.”