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As the Trump rally goes, real estate goes the other way: Except maybe this

Home » Real Estate » As the Trump rally goes, real estate goes the other way: Except maybe this

As the Trump rally goes, real estate goes the other way: Except maybe this

“E-commerce is creating voracious demand for warehouse that’s closer to deep-pocketed consumers,” said Alex Klatskin, general partner at Forsgate. “There’s no demand for suburban office right now, they are dinosaurs roaming the Earth right now.”

REITs may also benefit next year from potential tax cuts promised by President-elect Donald Trump. Proposed changes could lower the effective rate for REIT income for top earners from nearly 40 percent to 16.5 percent, according to Edward Mills, an analyst with FBR, who also warns that REITs fare worse with a reduction in corporate tax rates.

“We acknowledge that a reduction in the corporate tax rate, as the Republicans propose, would make the REIT structure less advantageous. Additionally, there is a fear that REITs will become less attractive in a rising-rate environment. However, this ignores that some REIT structures will fare better than others,” wrote Mills.

For warehouses in particular, a growing economy and more consumption are key. So, too, is trade, one of Trump’s most tempestuous topics.

“I know there’s a lot of talk about pressures on trade and the like, but trade is not going away, let’s not kid ourselves, and we’re part of a very important global economy,” said Moghadam. “The rhetoric is exciting. I don’t know how the math is all going to work between cutting taxes and infrastructure spending and the like. If the economy can really grow at 2.5 to 3 percent, I think that would be really exciting for our business.”

— CNBC producer Stephanie Dhue contributed to this report.

Correction: This story was revised to correct that e-commerce represents just under 10 percent of Prologis’ industrial real estate portfolio and about 30 percent of its new development activity.