| | | | | | | | | | CRE is pretty happy with President Donald Trump’s “One, Big, Beautiful Bill” released by the House of Representatives yesterday. CRE social media is flush with excitement about the bonus depreciation policy, which allows businesses to deduct asset costs in Year 1 rather than over time. That’s an immediate 100% tax write-off for things like interior improvements to property, and the bill carves out extra benefits for manufacturing facilities. It takes effect for anything purchased after Jan. 19 and runs through the end of 2029 with no step-downs. The industry widely expects this to spur investment. | | | | | | | | The bill also calls for the OZ program to be extended through the end of 2033 and for more zones to be designated. Rural areas would get priority in the new wave of selections, and those tracts would get greater tax benefits. The program has been criticized for not focusing on disinvested areas as intended, and the updates drop the maximum allowable area median income in OZs from 80% to 70%. New reporting and transparency rules aim to tackle another major criticism of the program. There is now a smaller overall tax benefit to placing your money in an OZ, including shorter deferral periods and no seven-year step-up. Rules for investment have also changed: While OZ 1.0 was targeted for investors to defer capital gains, the new bill would allow $10K of ordinary income to be invested. One thing CRE isn’t thrilled about: The new protocol would take effect Jan. 1, 2027, which could essentially halt OZ investment from now until then. There’s one big open question: the state and local tax deduction, which CRE was fighting hard to keep uncapped for corporations. The One, Big, Beautiful Bill tripled the SALT cap for individuals to $30K, but it doesn’t specify how this applies to businesses. That could mean the status quo reigns — a sigh of relief for CRE. But this proposal may also be the most contentious in the whole bill, in particular because Republicans in high-tax states think it doesn’t go far enough, and it could be particularly likely to be revised as the Senate takes up reconciliation. — Kayla Carmicheal, Jay Rickey, Catie Dixon and Mark F. Bonner Not getting The First Draft in your inbox? Click here to sign up. Got any feedback or a news tip? Email first...@bisnow.com. CRE News Quiz An Atlanta Culinary Dropout location is the subject of a lawsuit over millions in unpaid rent. The restaurant is part of a group of experimental dining concepts that includes Dough Bird, Fly Bye, Zinburger and Pushing Daisies. What restaurant chain is the parent? (Answer at the bottom.) On Our Radar Big REIT energy meets small GDP vibes. Oxford Economics says the 90-day U.S.-China tariff rollback is a welcome reprieve, but not a game-changer. Tariffs were slashed from 145% to 30% on U.S. imports and from 125% to 10% on Chinese goods — easing supply chain pressure, inflation risks and labor fears. Still, the deals aren’t permanent. The China and UK agreements lack legal teeth and remain vulnerable to politics. Though the developments spurred industrial and lodging REITs to soar, CRE will likely persist in cooling major investments, at least for the time being. Full GDP outlook revisions land on May 21 — don’t expect fireworks. Tariffs spark a warehouse gold rush in Europe. As tariff threats rattle global supply chains, Chinese firms are ramping up logistics operations across Europe to sidestep U.S. duties. Prologis reports surging demand from players like Temu and JD.com, which are doubling warehouse space and accelerating local delivery capabilities. Europe’s industrial market, already cooling, may benefit as Chinese capital and operators shift focus to friendlier turf. But reshoring won’t be swift — experts tell Bisnow it’s more an accelerant to trends already underway. With 15M SF to 20M SF of new logistics demand forecast annually, Europe may emerge as a long-term winner from the global trade fragmentation. Foreign travelers are canceling America — so might your refi. NYC just cut its 2025 tourism forecast by 3.5 million visits, blaming Trump’s tariffs and immigration policies. International visits are expected to drop 17% to 12.1 million. Nationwide, foreign arrivals fell 11.6% in March, and Air Canada reports double-digit booking declines. The U.S. is the only country projected to lose international tourism revenue this year — a $12.5B hit. Hotel owners are bracing: 35% of loans mature in 2025, with $48B in CMBS due by 2027, and 1 in 5 are already delinquent.
On The Charts: Downtown Living | | | | Courtesy of RentCafe | | | | | | | | Apartment developers are heading back to the burbs after a long run downtown. In the decade before the pandemic, 39.2% of all multifamily construction was in downtowns, RentCafe found. That peaked at 44% in 2019 and has fallen to 34.7% now. D.C. has been the biggest downtown living force in the last few years, with 80% of all apartments built between 2020 and 2024 coming in the central business district, the highest share among the 50 cities RentCafe analyzed. That’s 23,000 units built downtown in the last four years. This Morning’s News ECONOMY — Inflation Holds Steady (NYT): The CPI rose 2.3% YOY, slightly less than March’s annual increase and below expectations, the Bureau of Labor Statistics reported Tuesday. Prices rose 0.2% over the month, an acceleration compared to March’s 0.1% decline. Read more here.
RETAIL — Outlook Dims As Shoppers Pull Back, Vacancy Ticks Up (Bisnow): Q1 was the weakest in retail leasing since the pandemic’s lockdown, with 6M SF. Vacancy rose to 5.5% from 5.3% in the fourth quarter of 2024. Read more here.
REITs — Hotels Lead The Pack In Downgrades (Seeking Alpha): Hotel REITs were behind seven of the nine downward FFO guidance revisions among public REITs this earnings season. Read more here.
M&A — Apollo-Backed Builder Merger Forms Powerhouse (Seeking Alpha and Landsea): Apollo portfolio company New Home will acquire Landsea Homes in an all-cash deal valued at about $1.2B, creating one of the 25 largest homebuilders in the U.S. Read more here and here.
| | | | | | | | Bisnow/Kayla Carmicheal | | | | | | | | BANKS — BofA Branches Out With 150 New Locations (Bank of America): Bank of America said it will open 150 new financial centers across 60 markets by the end of 2027, including 40 this year and 70 in 2026. Read more here.
INVESTMENT — Carrier Commits Another $1B To Manufacturing (Carrier): The investment will fund the expansion of existing facilities and construction of a new manufacturing site to support the production of components for heat pumps and battery assemblies. Read more here.
MANUFACTURING — Genentech Heads East With New Site (Greentech): The biotechnology company headquartered in South San Francisco said it will invest $700M to build a new manufacturing plant in Holly Springs, North Carolina. Read more here.
HEALTHCARE — Roche To Pump $550M Into Diagnostics Hub (Roche): Roche is investing $550M to establish its Indianapolis site as the hub for manufacturing its continuous glucose monitoring solution. Read more here.
CONSTRUCTION — Planning Picks Up (Construction Dive): The Dodge Momentum Index grew 0.9% in April, with data centers being the standout in construction planning. Without data centers, the DMI would have dropped 3%. Read more here.
| | | | | | | | Courtesy: T5 Data Centers | | | | | | | | DATA CENTERS — T5 In First Stages Of Multibillion-Dollar JV With QuadReal (Bisnow): A 1.2 gigawatt data center in Georgia and a similar build-out near Chicago are in the pipeline for the data center developer. Read more here.
FINANCE — Prologis CFO Lines Up $6B For Volatile Markets (CFO Dive): Prologis has secured $6B in three different credit lines, each with about 30 banks, with overlapping and staggered maturity dates. Read more here.
RETAIL — Services, Not Shops, Are The Future Of Malls (CNBC): Kimco Realty CEO Conor Flynn said tomorrow’s shopping centers will be anchored less by retail and more by services — think health clinics, dining and pickleball. Read more here.
PEOPLE — New Retail Exec At Northmarq (Northmarq): Bryan Ley has joined Northmarq to co-lead its new National Shopping Center Group. Based in Southern California, Ley spent the past 17 years at JLL and predecessor company HFF. Read more here.
CAPITAL MARKETS — Walker & Dunlop Builds Private Client Bench (Walker & Dunlop): Walker & Dunlop has hired three executives to boost its presence in small and mid-sized markets. Read more here.
HEALTHCARE — Proxy Firm ISS Backs Activist’s Nominees In NHI Board Fight (L&B): Independent proxy advisory firm ISS has endorsed both director nominees from activist investor Land & Buildings for the board of National Health Investors. Read more here.
| | | | | | | | Wikimedia Commons/United States Coast Guard, PA2 James Dillard | | | | | | | | RETAIL — Rush To Import Goods Before Tariff Window Closes? (WSJ): Some CEOs are fast-tracking shipments from China, but leaders at U.S. ports say they don’t expect a huge surge in Chinese imports. Some business leaders say the tariffs are still too high to chart a course forward. Read more here.
CAPITAL MARKETS — Germany Cools On U.S. (NYT): German factories in the U.S. account for 12% of the country’s foreign investments, but recent surveys show German manufacturers pulling back. Read more here.
LEGAL — Can You Run A Real Estate Empire From Death Row? (Bloomberg): Trương Mỹ Lan, the real estate magnate at the center of Vietnam’s largest-ever CRE fraud case, is seeking court permission to manage her vast business holdings from behind bars. Prosecutors had said she needed to repay about $11B to avoid the death penalty. Read more here. *** BTW … Mad Max: Fury Road premiered 10 years ago. Where were you during that incredibly long road trip? Bobby Riggs and Margaret Court faced off in the first “Battle of the Sexes” tennis match on May 13, 1973. Riggs won, but he didn’t get to gloat for long — Billie Jean King famously beat him that September. Grease was the word for Rosie O'Donnell, Megan Mullally and Billy Porter — the cast of the 1994 revival, which premiered on this date in NYC. So You’ve Come For An Answer The Cheesecake Factory. Culinary Dropout is part of Fox Restaurant Concepts, which is owned by the eatery with a 20-page menu and opulent decor. It bought FRC in 2019 for $350M and acts as the restaurant’s “incubation engine.” *** The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from AI. We’d love your feedback! Email us at first...@bisnow.com. | | | | | | | | | | | | | | | | | | | | | |
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