It is no secret that this year’s presidential election is quite unconventional. The campaigns of Clinton and Trump have questioned the potential economic, social, and political future of this country, and now the commercial real estate sector is the next detail of the economy to be brought into question.
Typically, the commercial real estate sector is split between large buildings valued at over $2.5 million and smaller buildings under that amount including small strip malls, stand-alone convenience stores, and small retail spaces.
But presidential elections are not known for cooperating with the commercial real estate sector, as the market fluctuations are known to dramatically change with the presidential polls.
Eric Wohl of Hanley Investment Group explains to GlobeSt.com how many commercial real estate investors are already pulling out of their acquisitions out of fear of the unknown within the next few months. He says,
“Every presidential election creates new uncertainty about the direction of the economy. The goal is to have a clear picture on how each presidential nominee, if elected, will impact the commercial real estate industry. While some policy details may be vague or change, all we can do is to interpret the provided information at this time to the best of our ability.”
The fact that the candidates have such differing views on corporate taxes, capital gains, and tax reforms just adds to the uncertainty in the real estate sector.
Currently, the income tax rate in the U.S. is 35%. Trump proposes to dramatically cut that figure to 15%, while Clinton would choose to keep the figure the same. Trump also wants to streamline the tax process and cut the top marginal rate from 39.6% to 33%. Clinton is proposing a sharp increase in capital-gains tax rate for the highest earners of investments held for less than six years.
Basically, Trump proposes to cut down on all taxes for higher income individuals, while Clinton would like to impose a high tax on any income over one million dollars.
So what does this mean for commercial real estate? A dramatic difference from where it stands now. Only time will tell.