That’s according to a recent analysis by the research arm of the Bay Area Council. It also estimated deportations could result in lost tax revenue totaling $23 billion annually at the local, state and federal level.
While issues like immigration are extremely multifaceted and certainly can’t (or shouldn’t) be looked at through the economic lens exclusively, those are worthwhile numbers to consider. We already know immigrants make up a significant share of the workforce of industries like construction, and while it’s tough to know how many of those workers are undocumented immigrants, it’s safe to say those industries — already facing big labor shortages — will be hit hard if deportations happen at a rate expressed by the president.
Why CRE execs feel more bullish about H2
Commercial real estate is notoriously optimistic, so it’s perhaps not surprising that so many professionals in the field feel the second half of 2025 will be a busier time than the first six months of the year.
Industry surveys and economist reports suggest while the second half of 2025 will still have a fair amount of choppiness to navigate, investors may be more willing or able to move forward on deals amid another “new normal.”
A survey of Avison Young real estate professionals found 51% of respondents have a more positive outlook for the U.S. commercial real estate landscape in the second half of 2025 compared to their sentiment at the end of 2024. Forty-four percent indicated they felt the same, while 5% felt less optimistic.
“I think part of it is how to deal with uncertainty,” said Harry Klaff, principal and U.S. president at Avison Young, on why the outlook for H2 is perhaps more positive.
Tim Bodner, U.S. real estate deals leader at PricewaterhouseCoopers, told me while transactions in some of the traditional commercial real estate asset classes — office, multifamily, retail and industrial — have been softer in the first months of 2025, alternative asset classes have proven popular. And yes, that extends beyond data centers.
HQ deals come with cheers — and drama
We’ve talked ad nauseam about how Sun Belt metros are frequently the winners of big investments and corporate relocations. That’s still the case, but the Phoenix metro provides an interesting case study of sorts about the pains that come with growth.
To start, fast-growing coffee chain Dutch Bros said last week it is moving its headquarters from Oregon to Phoenix — a move not necessarily surprising, as the company last year spent tens of millions to relocate much of its workforce and key operations to the Arizona city.
Christine Barone, CEO of Dutch Bros, said the move would “provide significantly easier and faster access to our rapidly expanding set of markets across the U.S.,” citing Phoenix’s airport specifically, reports Demi Lawrence at the Portland Business Journal.
But perhaps the more interesting headquarters story unfolding in the Phoenix area is happening in one of the market’s suburban cities: Scottsdale. There, locally based tech-and-weapons developer Axon has been battling locals over its plans for a new $1.3 billion headquarters, a fight that recently had Axon withdrawing from negotiations, reports Jorge Ramos at the Phoenix Business Journal.
The Taser manufacturer said it withdrew from further negotiations over its 70-acre headquarters project because of what it called an untenable internal political situation and a clear schism forming within Scottsdale City Council.
The plan is for Axon to still move ahead on the 250,000-square-foot headquarters — which also includes about 1,900 multifamily units and a 435-room hotel — because Arizona Gov. Katie Hobbs signed a law in April that allowed Axon to sidestep a local referendum effort. More-recent negotiations have been an effort for the company to “be a good partner” to the city, according to President Josh Isner.
The beef: Residents have said the plans — in particular, the housing units — would create too much traffic. To earn rezoning approval last year, Axon scaled back its initial residential plans and made other changes, including a major road realignment to offer a buffer to a nearby neighborhood, but residents were still fiercely opposed to the project.
You can almost copy-paste the arguments in the Axon project to any big economic-development project coming to any fast-growing metro in the United States.
Some apartment markets are seeing rent cuts
The Sun Belt, which has seen a big multifamily building boom in recent years, is also the likeliest place to see apartment rent cuts right now.
Apartment-analytics company RealPage found while occupancy among the nation’s 50 largest metro areas in May stayed steady month-to-month, at 95.7%, monthly effective rent growth clocked in at 0.26% in May — about half of what was seen in May 2024, reports The Business Journals’ Joanne Drilling.
Rent cuts: In May, Austin, Texas’ rents declined 8% on an annual basis, followed by Denver (with a decline of 5.4%), Phoenix (4.9%), San Antonio (3.7%) and Jacksonville, Florida (2.8%).
Rent gains: San Francisco experienced some of the highest rent hikes among major apartment markets, with an annual effective growth rate of 6.2%. That was followed by Chicago (5.5%); New York (4.1%); Cincinnati (3.9%); San Jose, California (3.9%); and Kansas City (3.8%).
Source: “The National Observer: Real Estate: CRE Industry Outlook for the Rest of 2025“
