President targets federal workforce and housing affordability shortly after taking office.
President Donald Trump wasted no time after his second inauguration, signing a flurry of executive orders on his first day back in the Oval Office. The sweeping actions include policies directly impacting the real estate sector as part of Trump’s ambitious second-term agenda.
The president, outlining his plan to roll back many Biden-era policies, remarked on his growth since his first term.
“People used to say, ‘Who’s worse, a politician or a vicious real estate developer?’ And I’d always say the real estate developer’s far worse,” Trump mused. Three months into his presidency, he changed his mind, deciding real estate professionals were “quite nice” by comparison.
If you’re in real estate, here’s what to watch for:
1) Federal Workforce Orders Could Shrink Office Space Demand
Among Trump’s new orders were directives focused on restructuring the federal workforce. These include:
- Establishing the Department of Government Efficiency, led by Elon Musk, to reduce government waste.
- Mandating the return of federal employees to the office.
- Freezing hiring and implementing stricter regulations to overhaul the government’s hiring process by eliminating considerations of “identity politics.”
Trump’s push for a leaner federal government may impact the government’s office footprint, potentially reducing demand for commercial office spaces.
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2) Housing Costs in the Crosshairs
Trump signed an order addressing the affordability crisis in the housing market by targeting regulatory costs and expanding the housing supply. According to the order:
“Many Americans are unable to purchase homes due to historically high prices, in part due to regulatory requirements that alone account for 25 percent of the cost of constructing a new home.”
The directive claims that Biden-era rules imposed nearly $50,000 in costs per household, contrasting sharply with Trump’s first-term policies, which he said reduced costs by $11,000 per household.
Trump’s goal: “Restore purchasing power to the American family and improve our quality of life.” His figures appear to align with reports from the Committee to Unleash Prosperity, a group that supports trickle-down economics.
3) Energy Policy and Data Centers
Declaring a national energy emergency, Trump pledged to boost energy production, particularly in the Northeast and West Coast regions. While specifics are still unfolding, the move could significantly impact the energy-intensive data center industry.
Natural gas could emerge as the big winner, as suggested by Karthik Subramanian, an analyst at Lux Research.
“With the Trump administration coming in, I am expecting a lot of natural gas-based incentives and a focus on gas power generation,” Subramanian noted.
This could alleviate energy constraints that investors like Blackstone have cited as barriers to new data center development.
4) Jay Clayton Joins as U.S. Attorney for SDNY
Trump’s selection of Jay Clayton, former SEC chair, as U.S. attorney for the Southern District of New York signals another policy shift. Clayton, known for his “pro-business approach,” has shared insights on commercial real estate challenges, particularly for smaller banks heavily exposed to the sector.
In February, Clayton remarked:
“We are going to have problems—if rates continue to stay where they are and office occupancies stay where they are—at a number of small banks.”
The timing of Clayton’s appointment coincides with Trump’s calls for investigations into individuals connected to his legal battles, such as New York AG Leticia James and Judge Arthur Engoron.
Trump’s new policies indicate significant shifts for the real estate landscape. Whether they spark industry growth or exacerbate challenges, one thing is clear: the second-term agenda is in motion.
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