Introduction

The real estate landscape is shifting once again as the Trump administration rolls out policy proposals that will significantly impact commercial real estate (CRE) investors. From Opportunity Zone extensions to tariffs affecting construction costs, these changes could influence investment strategies in the coming years. While some policies aim to stimulate growth and streamline approvals, others introduce risks that investors must navigate carefully.

At Faris Capital Partners, we stay ahead of market trends to ensure our investors are well-positioned. Here’s a breakdown of the key policies to watch and how they could shape the real estate landscape in 2025 and beyond.

1. The Revival and Expansion of Opportunity Zones

The Opportunity Zone program, which has driven over $75 billion in investments since 2017, is back in the spotlight. Trump has signaled strong support for extending the program beyond its 2026 expiration and may expand it to new areas. This could create fresh tax-deferral opportunities for investors looking to deploy capital in economically distressed regions.

What this means for investors:

– More tax incentives for US investors could make multifamily and mixed-use projects in designated zones even more attractive.

– Increased competition for prime Opportunity Zone deals, especially in high-growth secondary markets.

– Due diligence is key—while the tax benefits are appealing, long-term viability matters just as much.

2. Federal Workforce Changes & the Office Market

A full return-to-office mandate for federal employees could impact nearly 2 million workers. This might increase demand for government-leased office space, particularly in Washington, D.C., and other federal hubs. However, the administration is also exploring ways to reduce federal office footprints, which could offset some of the demand surge.

What this means for investors:

– Federal leases could stabilize office markets in D.C., Virginia, and Maryland.

– If government agencies consolidate space, older office buildings may face higher vacancy risks. The administrative has also signaled plans to reduce their office space footprint meaning many aged, out-of-date buildings could flood the market putting further pressure on the already struggling office sector.

– The broader office market will still struggle with secular shifts to hybrid work.

3. DEI Policy Rollbacks and Their CRE Implications

The administration’s decision to end DEI (Diversity, Equity, and Inclusion) policies for federal agencies marks a significant shift in government hiring and contracting. While private CRE firms have invested heavily in DEI initiatives, many will likely stay the course to maintain workforce retention and meet investor expectations.

What this means for investors:

– Federal contracts tied to minority- and women-owned businesses could decline.

– Institutional investors may continue prioritizing ESG (Environmental, Social, and Governance) commitments despite policy changes.

– Firms with long-term DEI strategies could stand out in an increasingly divided political and social environment.

4. Housing Affordability & Development Incentives

Trump’s HUD pick, Scott Turner, is focused on reducing regulatory red tape rather than expanding federal funding for housing. However, HUD has raised loan-to-value limits for affordable housing developments to 90%, offering more financial flexibility for developers.

What this means for investors:

– Streamlined permitting could make multifamily development more attractive in the right markets.

– Zoning remains a local battle—federal policies won’t override local governments’ stance on density and new construction.

– With affordability challenges persisting, workforce housing and Class B/C apartments will remain strong investment opportunities.

5. The Impact of Tariffs on Construction Costs

Trump’s proposed tariffs on imports—25% on Mexico and Canada, and 60% on China—could dramatically increase construction costs. Materials like steel, lumber, and aluminum would become more expensive, leading to higher project budgets and longer timelines for new developments.

What this means for investors:

– Multifamily developers will need to adjust renovation and construction budgets accordingly.

– Industrial real estate may see stronger demand as tariffs push more manufacturing back to the U.S.

– Investors should factor in supply chain disruptions and seek cost-efficient renovation strategies.

6. Privatizing Fannie Mae & Freddie Mac: Multifamily Lending in Question

The administration has renewed efforts to privatize Fannie Mae and Freddie Mac, which currently back 50% of all U.S. mortgages. While this move would reduce government oversight, it also introduces risks of higher borrowing costs and stricter underwriting for multifamily financing.

What this means for investors:

– Potentially higher interest rates on agency-backed multifamily loans.

– Private capital may step in, but lending standards could tighten.

– Investors should consider alternative financing strategies to hedge against uncertainty.

7. Environmental Regulations: Federal Rollbacks, Local Pushback

Trump has reversed climate policies and withdrawn from the Paris Agreement (again), reducing federal compliance burdens for developers. However, states like California and New York are doubling down on sustainability mandates, ensuring that green building initiatives continue in key markets.

What this means for investors:

– Less federal red tape could benefit developers in business-friendly states.

– State-level climate rules will still drive demand for energy-efficient retrofits.

– Investors should analyze local policies before assuming relaxed regulations apply everywhere.

8. Fast-Tracked Development Approvals: A Boon for CRE?

A new executive order aims to expedite approvals for developments over $1 billion, cutting years of delays often caused by environmental and legal reviews. While this is great news for large-scale developers, there are still open questions around how streamlined the process will actually be.

What this means for investors:

– Faster approvals could accelerate large-scale multifamily and mixed-use projects.

– Legal and environmental hurdles won’t disappear entirely—local governments still hold power.

– Investors should watch for new project pipelines and early-stage deals in high-growth markets.

Final Thoughts: What Investors Should Do Next

The Trump administration’s policies will create new opportunities and new risks for commercial real estate investors. Multifamily remains a strong asset class, but financing conditions, construction costs, and regulatory shifts must be monitored closely.

At Faris Capital Partners, we’re keeping a close eye on these changes to ensure our investors stay ahead of the market. If you’re looking to maximize returns while navigating the evolving CRE landscape, let’s talk.

👉 Schedule a call with our team today to discuss your 2025 investment strategy.