In the near term, controlling COVID-19 could matter more than policy.
President Trump and former Vice President Biden have wildly different economic agendas.
Under a Biden presidency, investors can expect a larger stimulus package to boost job creation, consumer spending and rent payments in 2021. That would improve the financial stability of small businesses and local governments, according to Marcus & Millichap’s 2020 election analysis. Still, the new tax incentives and industry-specific investment could have market-by-market benefits.
Taxes could also rise on corporations and high net-worth individuals under Biden. Marcus & Millichap claims the capital gains tax rate could change investor behavior and drive accelerated sales before policy implementation.
“Owners of management-intensive assets will likely look at news of a 1031 repeal as their last chance to sell their assets and transition into triple net properties without having a major tax implication and completely defer taxes,” Chris Pappas, associate director of Marcus & Millichap’s net lease division stated in an earlier interview with GlobeSt.com.
With a Trump second term, investors can expect a stimulus targeted at the most affected industries, including small businesses, but having less impact on 2021 growth. Marcus & Millichap predicts that investors’ tax burdens will likely remain the same, but deduction limits could continue to influence market migration. Additional tax cuts are possible, but unlikely.
In a Trump second term, Marcus & Millichap suggests “less clarity on strategies to combat COVID-19 and manage foreign policy” could create some uncertainty for investors. The firm notes that the progression of COVID-19 will have more of a near-term impact than either candidate’s policy goals. Under Biden, Marcus & Millichap expects to see increased funding for health services, including COVID-19 testing and tracking.
While the Trump and Biden policies might have a dramatically different impact on investors, they may ultimately matter little to CRE performance, according to a report from Newmark Group.
Over the past 40 years, annualized total returns averaged 9% under Democratic presidents and 8.2% under Republican presidents. Newmark says that economic and geopolitical factors likely have a more significant influence over office or apartment fundamentals than which political party is in charge.
“The outside events that are not directly controlled by American public policy, tend to have a much greater impact on the commercial real estate market than the specifics that come out of Washington,” Sandy Paul, senior managing director of national market research at Newmark Knight Frank’s Washington DC office, told GlobeSt.com in an earlier interview.
Source: “What Trump vs. Biden Means To Investors“