News Type: Roundtable Weekly

House GOP Unveils Fiscal Blueprint Calling for Trillions in Cuts to Taxes and Spending

Posted on by Trey Jackson

After weeks of discussions, the House GOP and Speaker Mike Johnson unveiled their long-term budget blueprint, which would allow congressional committees to move forward with trillions into tax cuts and spending reductions. However, negotiations to fund the government ahead of the March 14 deadline have stalled.

Committee Advances Budget Plan

  • The House Budget Committee voted late Thursday night 21-16 to advance their budget resolution, which authorizes up to $4.5 trillion in tax cuts and $2 trillion in spending cuts over the next decade. The fiscal blueprint also calls for $300 billion in new border and defense spending and a two-year extension of the debt ceiling. (Politico, Feb. 12)
  • While Speaker Mike Johnson hopes to bring the resolution to the floor later this month, there are a number of details to hammer out that could hinder its passage. Overcoming the GOP’s extremely narrow majority in the House (218-215) will be a challenge.
  • House Budget Republicans secured passage of their resolution along party lines after striking a deal with the Freedom Caucus to win over fiscal hardliners Reps. Ralph Norman (R-SC) and Chip Roy (R-TX). (Roll Call, Feb. 13)

  • An amendment from Vice Chair Lloyd Smucker (R-PA) cemented the agreement by linking the size of a future tax-cut package to spending reductions. Under the modified resolution, the amount of the tax cuts would be reduced if the legislation does not include the full $2 trillion in spending reductions.

Tax Negotiations

  • House Ways and Means Chair Jason Smith (R-MO) also faces a difficult road to extend key provisions in the 2017 Tax Cuts and Jobs Act (TCJA). The $4.5 trillion figure for tax cuts is not enough to permanently extend the TCJA and include President Trump’s other tax priorities. (Politico, Feb. 12)

  • How to come up with the spending cuts to fund a permanent TCJA extension and other priorities remains a fundamental question. The budget package is expected to include significant reductions in Medicaid, which provides health benefits to low-income families and individuals.  President Trump has expressed concern with those health care cuts. (Politico, Feb. 13)
  • Some estimates place the cost of the President’s additional tax priorities as high as $2 trillion. These include exempting tips, overtime pay, and Social Security benefits from tax. Tax-writers must also find a way to pay for any adjustments to the SALT limitation, which are widely understood as needed to secure Blue State Republican votes in the House. 
  • Tax-writers are expected to look for other tax offsets, raising concerns that they could target issues such as the deductibility of state and local property taxes paid by businesses.
  • Limits on the deductibility of property taxes would upend the federal income tax by denying a deduction for a basic cost of doing business. It would severely hurt property values, real estate markets, and the millions of Americans employed directly and indirectly by the real estate industry.
  • “Capping or eliminating the federal deduction for business property taxes would be a major policy misstep,” said Roundtable President and CEO Jeffrey DeBoer. “Property taxes are not optional—they are a fundamental cost of doing business.”
  • “This change would force businesses to pay federal tax on money they never actually receive, placing a heavy burden on real estate investment and development. The impact would be severe for property owners repositioning assets—such as converting office buildings into housing—where property taxes remain due even when rental income is disrupted. Losing this deduction would drive up operating costs, which would ultimately be passed to consumers through higher rents, and hindering economic growth at a time when we should be encouraging investment and revitalization,” said DeBoer.
  • House Republicans are also considering shorter extensions of the expiring tax cuts in a bid to fit them into the budget plan’s constraints.
  • However, in a letter released Thursday, Senate Republican leaders, including Majority Leader John Thune (R-SD), Finance Chair Mike Crapo (R-ID) and seven others, said they would not support a tax package that only provides temporary relief from tax hikes. They said that any extension of the provisions due to lapse at the end of this year “must” be permanent. (Politico, Feb. 13)
  • Meanwhile, congressional Democrats have attacked Republican’s tax and spending cuts as a “betrayal of the middle class,” though they have minimal power to stop the GOP’s budget plan if Republicans are able to align on a strategy. (Politico, Feb. 13)

Reconciliation

  • To avoid the Senate filibuster, the tax and spending cuts will require the House and Senate to pass identical budget resolutions as part of the reconciliation process—and the Senate is pursuing its own budget proposal. (Politico, Feb. 12)

  • On Wednesday, the Senate Budget Committee approved its own budget blueprint, which includes up to $345 billion in funding for border security, immigration enforcement and defense. However, the resolution punts on any sweeping tax and spending cuts. (Washington Times, Feb. 12)

  • Preferring a two-step strategy over the House Republican’s plan, Senate Budget Chair Lindsey Graham (R-SC) said, “To my colleagues in the House, I hope you can pass one, big beautiful bill.” “But we’ve got to move on this issue.” (Politico, Feb. 12)

  • The March 14 deadline to fund the government is fast approaching. House Appropriations Chair Tom Cole (R-OK) indicated that negotiations are ongoing, but with much activity and attention focused on budget resolutions, little progress has been made.
  • If congressional leaders are unable to extend government funding before the deadline, key programs like the National Flood Insurance Program (NFIP) could lapse. (Politico, Feb. 12)

Looking Ahead

While the Senate will be in session next week after President’s Day, the House is out of session until February 24. The Roundtable will continue to follow developments on tax and budget negotiations closely.

Tariffs: CRE Faces Cost Pressures

Posted on by Trey Jackson

President Trump signed a memorandum Thursday directing his advisers to calculate new global tariff levels, a move that could disrupt international trade norms and spark intense negotiations, in addition to his recently increased duty on steel and aluminum.

State of Play

  • The directive considers not just existing tariffs but also foreign taxes, subsidies, and exchange rate policies that Trump views as “unfair.” His goal is to balance trade relationships and push companies to shift manufacturing back to the U.S. (AP News, Feb. 13)
  • The reciprocal tariffs will not be immediately imposed, but will be customized for each foreign trading partner, based on five different areas: tariffs the nation imposes on U.S. products, unfair taxes imposed, cost to U.S. businesses and consumers from another country’s policies, exchange rates, and any other practices the trade representative’s office determines is unfair. (The Hill, Feb. 13)
  • The proposed 25% duty on steel and aluminum announced Monday, set to take effect March 12, 2025, has raised concerns about higher construction costs, supply chain disruptions, and broader economic impacts on commercial real estate. (Bloomberg, Feb. 10)
  • Trump’s trade adviser Peter Navarro said the measures would help U.S. steel and aluminum producers and shore up America’s economic and national security. (Reuters, Feb.11)

Commercial Real Estate Impact

  • Tariffs may present several challenges for commercial real estate, including increased construction costs, potential project delays, and heightened uncertainty among investors.
  • Higher tariffs on Chinese steel and aluminum will increase structural material costs, while tariffs on Canadian lumber will impact framing and finishing costs.
  • Additionally, any trade disruptions with Mexico could further strain budgets by limiting access to affordable cement, steel, and glass. (Capright, Feb.5)
  • Many commercial real estate projects depend on materials imported from Canada, including softwood lumber for framing and steel for structural components. With tariffs in place, developers are seeing their material costs surge, leading to increased project costs and delayed developments. (InvestinginCRE, Feb.7)
  • The National Association of Home Builders (NAHB) projects that these tariffs could raise the cost of imported construction materials by $3-4 billion, depending on the specific rates. This increase may affect builders’ ability to deliver new projects and could have implications for housing affordability. (NAHB | GlobeSt, Feb.11)
  • Tariffs are expected to raise construction costs, potentially by up to 10%. This increase could lead to higher project costs and may affect the feasibility of certain developments. (GlobeSt, Feb.12)
  • In an NAHB housing market index survey published last week, 64% of builders said they expected higher material costs to be an issue for them in 2025. (NationalMortgageNews, Feb.11)

Looking Ahead

  • Commerce Secretary nominee Howard Lutnick, and trade representative Jamieson Greer, will evaluate within 180 days whether “remedies” are needed for reciprocal trade relations in a country-by-country report.
  • The Office of Management and Budget nominee Russell Vought will submit a report on the fiscal impact of these measures within the same timeframe.
  • Lutnick said the measures could be ready as soon as April 2. (NYT, Feb. 13)

The Real Estate Roundtable will continue to engage with policymakers to reduce regulatory burdens and eliminate other obstacles that are impeding development and expand America’s housing infrastructure. We will continue to provide updates as the global trade situation evolves.

Scott Turner Confirmed as HUD Secretary, Eyes Major Housing Policy Shifts

Posted on by Trey Jackson

Scott Turner was confirmed Wednesday as Secretary of Housing and Urban Development (HUD) and outlined his top priorities, including privatizing Fannie Mae and Freddie Mac, streamlining HUD operations, reducing regulatory barriers to lower housing costs, and expanding opportunity zones to drive investment in underserved communities.

A HUD Overhaul

  • Privatizing Fannie and Freddie: Turner has identified the privatization of Fannie Mae and Freddie Mac, the government-sponsored entities that guarantee most U.S. mortgages, as a top priority. (WSJ, Feb. 5)
  • His department will collaborate with the Treasury Department and Congress on the process, though a clear timeline and level of commitment from the White House remain uncertain.
  • While privatization could encourage more market competition, skeptics warn of potential disruptions in the $12 trillion mortgage market, including the risk of higher borrowing costs.
  • Supply-side housing solutions: Turner has signaled a shift towards increasing housing supply to address affordability concerns, stating in his confirmation hearing that the U.S. “needs millions of homes” across all types of housing, including multifamily, single-family, and manufactured homes.
  • The administration is expected to ease regulations that developers say have inflated construction costs, potentially rolling back Biden-era policies and implementing new incentives for affordable housing development. (Bisnow, Feb.6)

Opportunity Zones Revival

  • Turner previously led the White House Opportunity and Revitalization Council (WHORC), and played a key role in driving the Opportunity Zones Initiative, and has committed to continuing this work. (AP News, Feb.5)
  • The Roundtable has long championed Opportunity Zones (OZs) as a transformative tool to stimulate economic growth and increase the supply of affordable housing in low-income areas. By creating tax incentives for investments in designated low-income census tracts, OZs have channeled investment into areas most in need.
  • RER has called on Congress to improve and extend the program, which is set to expire along with other key provisions of the TCJA at the end of this year.
  • Sen. John Barrasso, (R-WY) highlighted Turner’s work on opportunity zones, saying he had helped bring $50 billion to 8,700 distressed neighborhoods. “These investments helped to revitalize many forgotten communities,” Barrasso said on the floor before the confirmation vote. (Roll Call, Feb. 5)
  • Turner’s confirmation signals a significant shift in federal housing policy, emphasizing market-driven solutions, regulatory rollbacks, and public-private partnerships.

The Roundtable continues to encourage policymakers to enact measures that will expand America’s housing infrastructure.  We also remain engaged in potential reforms to the GSEs to ensure that they continue to meet America’s housing finance needs. 

Oral Arguments Heard in Sirius Solutions v. Commissioner Case

Posted on by Trey Jackson

This week, the Fifth Circuit heard oral arguments in Sirius Solutions v. Commissioner, a pivotal case that could redefine the self-employment (SECA) tax obligations of many partners in real estate and other limited partnerships.

At issue is the longstanding statutory exception from SECA taxes for limited partners and recent efforts by the IRS to restrict the scope of the limited partner exception to only passive investors. 

Why It Matters

  • The Fifth Circuit’s ruling in Sirius will set a precedent for future SECA tax cases, There are more than 441,000 limited partnerships in the U.S., with over 10 million partners. Nearly half of these limited partnerships are real estate partnerships.
  • If the IRS position prevails, it could result in widespread tax increases on limited partners who engage in any level of activity, directly or indirectly, with respect to the partnership and effectively raise the tax burden on real estate businesses.

Roundtable Advocacy

  • In August 2024, The Roundtable submitted an amicus brief to the Fifth Circuit and argued that the IRS’s interpretation, upheld by the Tax Court, is flawed, pointing to decades of state law that allows limited partners to provide services and still retain their limited partner status. (Roundtable Weekly, September 6)
  • The brief emphasized that pre-1977 state court decisions and the IRS’s own 1994 proposed regulations contradict the government’s position.  The passive investor test is found nowhere in the statute and rests on a fundamental misunderstanding of state laws that Roundtable members and others have relied on for decades.  

Oral Arguments

  • The latest oral arguments on Feb. 6 suggested some judicial skepticism about the IRS’s position. (TaxNotes, Feb. 7).
  • The three-judge panel in the Fifth Circuit Court of Appeals raised the lack of statutory basis for a passive investor test under Section 1402(a)(13) and questioned whether taxpayers had adequate notice of the IRS’s evolving position. 
  • The panel also challenged the workability of the IRS’s multi-factor test used to determine whether a partner is active or passive.  Judge Andrew Oldham noted that IRS forms and guidance have never mentioned a passive investor requirement and called into question whether taxpayers were ever clearly told how the government interprets the law. (Oral Arguments)
  • The Roundtable brief was cited during the oral argument when Judge Oldham asked whether a taxpayer could be both a general partner and limited partner in 1977.

A decision is expected in the next few months. The Roundtable remains committed to protecting entrepreneurs’ ability to flexibly organize in partnerships and other pass-through entities that promote capital formation, risk-taking, and economic growth, and it will remain engaged as the SECA dispute moves forward.   

GSA Considers Massive Lease Reductions, Sales of Federal Properties

Posted on by Trey Jackson

This week, the General Services Administration (GSA) announced its plan to sell half of the federal properties it leases—a decision that compounds President Trump’s return-to-office mandate and Elon Musk’s “buy out” offered to federal workers. (Newsweek, Feb. 5)

Why It Matters

  • In 2024, GSA owned or leased more than 360 million square feet of space across more than 8,000 buildings nationwide, according to its most recent annual report.
  • Just as federal workers are returning to offices—prompted by a Trump Executive Order —the “cumulative damage” of canceling federal leases under a Department of Government Efficiency (DOGE) led initiative “would be severe.” (GlobeSt, Jan. 30).
  • A recent Trepp analysis quantifies the impact of GSA-leased space in the Chicago, Dallas, Los Angeles, New York City, Washington, DC, and other metro areas where federal tenancy accounts for significant percentages of total office inventory. (Roundtable Weekly, Jan. 31)
  • If enough termination clauses are exercised, these markets could face economic disruption, with no guarantee of equivalent replacement tenants. (GlobeSt., Jan. 30)
  • Last week, a memo was sent from GSA headquarters in Washington, DC instructing regional managers to begin terminating leases on all of the roughly 7,500 federal offices nationwide. Recently appointed acting GSA administrator Stephen Ehikian also announced two of the agency’s properties, including their headquarters building at 1800 F Street, NW,  will be listed for sale in a ‘first step’ to cutting real-estate expenditure. (AP News, Feb. 4).
  • GSA recently appointed Michael Peters as commissioner of the Public Buildings Service (PBS), which will play a role in managing cost-effective workspace solutions for federal agency customers. Peters told staff in an email that non-Defense Department federal building space — both owned and leased — “should be reduced by at least 50%.”  (GlobeSt. Feb. 4)

What to Watch

  • The extent of the GSA’s leased and owned property inventory will be affected by any reductions in the federal workforce.
  • A federal judge on Thursday extended the deadline for government employees to decide on the Trump administration’s “buyout” offer, delaying the original cutoff until Monday amid uncertainty over the evolving terms of the “Fork in the Road” email. (Axios, Feb. 6)
  • As of Thursday, roughly 50,000 federal workers had accepted President Trump’s deferred resignation offer ahead of the original deadline. (Washington Post, Feb. 6 )
  • DOGE, led by Elon Musk, estimates the push for “deferred resignations” could shrink the federal workforce by 5% to 10%. (AP News, Jan. 28) (Axios, Jan. 28)
  • The administration argued the delay was unnecessary and would disrupt workforce expectations, but said it would comply with the order.

The Roundtable will continue to keep members informed about further developments as the administration’s policies evolve.

White House Imposes Tariffs on China, Delays on Canada and Mexico

Posted on by Trey Jackson

Over the past week, new developments have emerged regarding tariffs affecting China, Canada, and Mexico. As the situation continues to evolve, industry leaders are closely monitoring the status of these executive orders and their impact on affordable housing and the cost of essential construction materials.

State of Play

  • Tariffs on these three nations went into effect on February 1. Currently, tariffs on imports from Canada and Mexico are on a 30-day hold, while the additional duties on Chinese goods are in effect. (WSJ, Feb. 4)
  • Shortly after the announcements, President Trump reversed course and paused the tariffs on Mexico for one month following a conversation with Mexican President Claudia Sheinbaum. (ABCNews, Feb. 3)
  • As part of the arrangement reached with the U.S., President Claudia Sheinbaum of Mexico said her country would deploy to the U.S.-Mexico border 10,000 members of the Mexican National Guard to focus on curbing the flow of fentanyl and illegal migrants into the U.S.  (New York Times, Feb. 3)
  • After negotiations, Canadian Prime Minister Justin Trudeau and President Trump also agreed to a 30-day pause on the tariffs. Trudeau posted on X that the pause would occur “while we work together,” stating that his government would name a fentanyl czar, list Mexican cartels as terrorist groups and launch a “Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering.” (APNews, Feb. 3) 
  • Chinese and U.S. officials have yet to arrive at a similar agreement as Canada and Mexico. Beijing is readying an opening bid to try to head off greater tariff increases and technology restrictions from the Trump administration. (WSJ, Feb. 3)
  • The Customs Tariff Commission of China’s cabinet, the State Council, imposed 15% tariffs on U.S. coal and liquefied natural gas imports, while raising levies on crude oil, agricultural machinery and certain vehicles. (WSJ, Feb.4)

Commercial Real Estate Impact

  • Higher tariffs on Chinese steel and aluminum will increase structural material costs, while tariffs on Canadian lumber will impact framing and finishing costs.
  • Additionally, any trade disruptions with Mexico could further strain budgets by limiting access to affordable cement, steel, and glass. (Capright, Feb.5)
  • The National Association of Home Builders (NAHB) has raised concerns about how tariffs on materials like Canadian softwood and Mexican gypsum could significantly increase construction costs, thereby raising new home prices. (Axios, Jan. 31)
  • Sixty-four percent of a home’s construction cost is building materials—27% of which are supplied by China, 11% by Mexico and 8% by Canada, according to data from the NAHB. (GlobeSt, Feb. 6) (Bloomberg, Feb.3)
  • Imposing additional tariffs on these imports will raise material costs, ultimately driving up housing prices as the U.S. works to rebuild from natural disasters and address a severe housing supply shortage.

Tariffs and Clean Materials

  • Congressional Republicans have joined Trump in exploring a possible carbon-specific clause in future rounds of tariffs, with the goal being to leverage data showing that the United States produces certain materials “cleaner” than foreign adversaries—namely China—and impose a fee on certain imports.
  • Recently, Sen. Bill Cassidy (R-LA) proposed a bill, the “Foreign Pollution Fee Act,” that would impose a “foreign pollution fee” on imported carbon-intensive products—including construction materials. (RW, Jan.17)
  • The Roundtable submitted comments on the Foreign Pollution Fee Act last month. The letter raises concerns regarding the impact of a carbon tariff on affordable housing construction, rebuilding after natural disasters, and technical issues on calculating “indirect emissions” associated with product manufacturing. The letter suggests forward-thinking refinements to the bill’s language.

As attention now shifts towards the new March 1 deadline, The Roundtable will continue to provide updates as the global trade situation evolves.

Tax Policy This Week in Washington: Carried Interest and Budget Talks

Posted on by Trey Jackson

As budget negotiations continued this week in the House and Senate, President Donald Trump met with Republican lawmakers on Thursday to discuss his tax priorities.

Tax Talks

  • White House Press Secretary Karoline Leavitt told reporters that during a Thursday meeting with Republican lawmakers, President Trump outlined his tax priorities, including closing the “carried interest tax deduction loophole,” along with other provisions he wants included in a sweeping tax bill this year. (Bloomberg, Feb. 6 | Axios, Feb.7)
  • President Trump also reiterated ideas he promoted on the campaign trail, including ending taxes on tips, overtime and Social Security payouts, as well as adjusting deductions for state and local taxes.
  • Appearing on Fox Business this week, Treasury Secretary Scott Bessent rejected the idea of a short-term extension of President Trump’s tax cuts, emphasizing they should be made permanent. (Fox Business, Feb. 5)

The Roundtable’s Position

  • Since carried interest and its tax treatment first emerged as a controversial political issue in 2007, The Roundtable has consistently opposed legislative proposals to tax all carried interest at ordinary income rates.
  • “The proposals would penalize entrepreneurs, slow housing production, and reduce economic mobility,” said Roundtable President and CEO Jeffrey DeBoer.  “The tax code has never, and should never, limit the reward for risk-taking only to deep-pocketed investors who have cash to deploy.” 
  • “Real estate partnerships of all sizes across the country, small and large, use carried interest.  It is not compensation for services, and it is not comparable to wages. Carried interest is granted for the value a general partner adds beyond routine services, and it is a recognition of the risks a general partner takes, such as funding predevelopment costs, guaranteeing construction budgets and financing, and exposure to potential litigation,” said DeBoer. 
  • Reversing well-established tax law and ending carried interest would raise little revenue. It would, however, reduce construction activity, especially higher-risk and much-needed projects like affordable housing, commercial developments in long-neglected neighborhoods, and the cleanup of contaminated land. 
  • “Today, construction costs are higher than ever and financing remains challenging.  Now is not the time to raise taxes on U.S. real estate,” said DeBoer. 

Senate Proposal

  • Senate Budget Chair Lindsey Graham (R-SC) announced today that his committee will convene Wednesday and Thursday to debate and vote on his budget resolution, setting the stage for a future vote on a bill focused solely on border security, defense, and energy. (Politico, Feb. 7)
  • Their decision comes ahead of a meeting with President Trump at Mar-a-Lago today, where they also plan to discuss budget reconciliation. (Politico, Feb. 5)
  • “This budget resolution jumpstarts a process that will give President Trump’s team the money they need to secure the border and deport criminals, and make America strong and more energy independent,” Graham said in a statement.
  • With a 53-seat majority, Senate Republicans have a bit more flexibility than the House, but still need to unite their party, as some members demand significant spending cuts.
  • Senate GOP leaders plan to revisit the extension of the TCJA 2017 tax cuts later this year through a second reconciliation package.

House Proposal

  • Several House Republicans met with President Trump on Thursday to resolve intraparty spending disputes. House Majority Leader Steve Scalise (R-LA) said the meeting was designed so House Republicans could “get in a place” where they could advance their stalled budget blueprint “next week.” (Politico, Feb. 7)
  • Speaker Mike Johnson had aimed to release a framework today but now says Republicans will be working all weekend to finalize it.

GOP leaders have warned members that full details won’t be available until Monday, and a topline spending agreement remains elusive.

Federal Reserve Opts Out of Cutting Rates

Posted on by Trey Jackson

The Federal Open Market Committee (FOMC) held the federal funds target range steady at 4.25% to 4.50% on Wednesday, as widely anticipated, during its first meeting of 2025. This decision marks a departure from three consecutive rate cuts, which collectively lowered the target range by 100 basis points since September.

Fed’s Decision

  • Chair Fed Jerome Powell indicated that inflationary trends are headed in the right direction. The Fed maintained its assessment that the risks to its dual mandate—promoting a strong labor market and controlling inflation—remain “roughly in balance.” (ConnectCRE, Jan. 29)
  • The country’s inflation rate remains somewhat elevated above the Fed’s target of 2%. In projections released at last month’s meeting, most officials signaled they expected the Fed to lower rates in the year ahead, but were less certain over how many times the central bank would cut.
  •  Most of them penciled in two rate cuts this year, down from four cuts in projections released last September, assuming progress in lowering inflation continued. (CoStar, Jan.29) (WSJ, Jan.29)

Looking Ahead

  • Powell highlighted that future decisions will be guided by “real progress” in bringing inflation down toward the Fed’s target or “some weakness” in the labor market. (ConnectCRE, Jan.29) 
  • President Donald Trump’s plans to cut taxes, impose hefty tariffs on key imports and deport millions of immigrants who lack permanent legal status have generated unusual uncertainty about the course of the economy, inflation and interest rates. (USAToday, Jan. 27)
  • Thomas LaSalvia, Moody’s head of commercial real estate economics, told CoStar News in an email that “all eyes are now shifting away from Fed action and towards economic consequences of new administration policies.” He added that “moving forward, the extremity of those policy actions will be more influential on economic health.” (CoStar, Jan.29)

Pressure From The White House

  • Trump says he will “demand” lower interest rates in a virtual address last week to the World Economic Forum in Davos, Switzerland.
  • When asked about the comments, Powell, sought to stay above the fray. “I’m not going to have any response or comment whatsoever on what the president said. It’s not appropriate for me to do so,” he said. “The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals.” (USNews, Jan.27)
  • In the wake of the Fed’s interest rate announcement, President Trump took to Truth Social: “Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing, but I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!” (TheHill, Jan.29)

What to Watch: Tariffs

  • White House Press Secretary Karoline Leavitt told reporters today President Trump plans to move forward with a 25% tariff on imports from Canada and Mexico starting tomorrow, and an additional 10% tariff on Chinese imports. (USA Today, Jan. 31)
  • Howard Lutnick, Trump’s Commerce Secretary Nominee, told the Senate during his confirmation hearing this week, that he advised Trump to impose country-by-country tariffs to restore trade “reciprocity” and vowed to tighten restrictions on China’s access to advanced AI technology. (Reuters, Jan. 29)
  • These tariffs could have significant repercussions for the U.S. economy, including housing affordability. Any tariffs on imported materials like steel, aluminum and lumber are likely to drive up costs for developers and impact efforts to address the housing shortage. (Roundtable Weekly, Jan. 24 | Nov. 27)

The Roundtable will continue to track coverage on interest rates and tariffs, and the implications for commercial real estate.

White House Moves on Plans to Slash Federal Funding, Staff, and Office Leases

Posted on by Trey Jackson
The White House

Funding freezes, employee buyouts and scrutiny of the federal office lease portfolio were among the actions taken by the White House and its Department of Government Efficiency (DOGE) this week, as the Trump Administration acted on promises to shrink the federal government.

Federal Funding

  • On Monday, the Office of Management and Budget (OMB) issued a memo implementing a “Temporary Pause” on certain federal financial assistance programs. (Politico, Jan. 28)
  • This directive aimed to stop federal loans and grants “implicated” by seven recent executive orders pertaining to areas such as clean energy, DEI initiatives, transgender rights, and foreign aid.
  • By Wednesday, OMB issued a 2-sentence memo rescinding the temporary pause, with the goal to moot the lawsuit filed in the interim that resulted in a federal court restraining order placing the spending freeze on ice.  (NYT, Jan. 28) (The Hill, Jan. 29)
  • OMB’s reversal does not lift previous holds on funding of programs disfavored by the administration. Underlying Executive Orders remain in effect regarding the U.S. withdrawal from the Paris climate treaty, “unleashing” American energy resources with a preference for oil and gas development, and abandoning federal DEI programs.
  • The administration may also issue future spending freezes. (Politico, Jan. 29) The administration will continue to reshape federal spending policies through executive action, raising significant constitutional issues that could reach the U.S. Supreme Court. (ABA Journal, Jan. 29).

Federal Workforce

  • The Office of Personnel Management (OPM) announced a buyout program offering federal employees severance equal to eight months’ salary if they resign by February 6. (The Hill, Jan. 30)
  • Employees who stay do not have a guarantee of their job – but must return to full-time, in-office work as per an executive order signed by Trump on inauguration day. (Washington Post, Jan. 23)
  • DOGE, led by Elon Musk, estimates the push for “deferred resignations” could shrink the federal workforce by 5% to 10%. (AP News, Jan. 28) (Axios, Jan. 28)
  • Meanwhile, Trump has ousted Democratic appointees of the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC) before the expiration of their terms. Litigation challenging these firings is highly likely. (Federal News Network, Jan. 28).    

Federal Office Leases

  • DOGE is also reportedly focused on reducing federal government leases in private-sector buildings. Musk has installed “longtime associates” at the General Services Administration (GSA) to reduce the footprint of U.S. owned and leased real estate. (NextGov, Jan. 30)
  • Musk’s visit yesterday to GSA headquarters could “presage more cost-cutting efforts” to “right-size the Federal real estate portfolio of more than 7,500 leases.” (New York Times, Jan. 30)
  • A recent Trepp analysis quantifies the impact of GSA-leased space in the Chicago, Dallas, Los Angeles, New York City, Washington, DC, and other metro areas where federal tenancy accounts for significant percentages of total office inventory.
  • Just as federal workers are returning to offices—prompted by a Trump Executive Order signed after his inauguration—the “cumulative damage” of canceling federal leases under a DOGE-led initiative “would be severe.” (GlobeSt, Jan. 20).

Looking Ahead

  • Ongoing budget reconciliation discussions on Capitol Hill suggest that further government funding cuts remain a possibility as part of broader fiscal policy negotiations. The situation remains fluid, with potential implications for various federal programs.
  • On Wednesday, House Republicans outlined their budget blueprint, setting fiscal targets and potential cuts as they prepare to draft a reconciliation package next week. (Politico, Jan. 29)
  • However, Republicans remain divided on strategy for advancing President Trump’s agenda. House Republicans favor a single-bill approach, while Senate Majority Leader John Thune indicates that his conference has developed an initial budget as part of a two-step plan to pass border security measures, tax cuts, and other priorities. (Politico, Jan. 29)

The Roundtable will continue to stay informed about further developments as the administration’s policies evolve.

Momentum Grows for In-Person Work Across Public and Private Sectors

Posted on by Trey Jackson

President Donald Trump’s executive order requiring federal employees to return to in-person work, combined with similar legislative efforts in Congress and private-sector return-to-office mandates, could significantly impact Washington, D.C.’s commercial real estate market.

Federal Mandate May Upend Greater Washington Market

  • On day one of his second term, President Trump signed a mandate requiring all federal workers to return to full-time in-person work. (Washington Post, Jan. 23)
  • “Heads of all departments and agencies in the executive branch of Government shall, as soon as practicable, take all necessary steps to terminate remote work arrangements and require employees to return to work in-person at their respective duty stations on a full-time basis, provided that the department and agency heads shall make exemptions they deem necessary,” the executive order reads. (BisNow, Jan. 20)
  • The order could significantly affect the office market in the Greater Washington region, which is still grappling with economic challenges in the commercial real estate sector and a sluggish recovery in downtown activity post-pandemic. This past summer, D.C. recorded its highest-ever office vacancy rate. (WJLA, Aug. 12)
  • The executive order coincides with reports that the administration is considering selling two-thirds of the federal government’s office portfolio to the private sector and terminating millions of square feet of leased commercial space. (WSJ, Jan. 21)

Mandate Follows a History of Legislative Attempts

  • This executive order aligns with similar efforts from Republicans in Congress to legislate return-to-work mandates for federal employees.
  • On January 16th, Rep. James Comer (R-KY), chairman of the House Oversight and Government Reform Committee, reintroduced the SHOW UP Act, aimed at returning the federal workforce to pre-pandemic telework levels. The bill cleared the House along party lines early in the last Congress, but the Senate didn’t take up the companion bill. (FNN, Jan. 17)
  • Rep. Andy Biggs (R-AZ) has reintroduced the Return to Work Act, a bill that—similarly to the SHOW UP Act—would return federal employees to the telework schedules they had before the COVID-19 pandemic. (FNN, Jan. 17)
  • RER has consistently emphasized that federal policies promoting remote work undermine the health of cities, local tax bases, and small businesses, and urged policymakers to end government policies that encourage remote working arrangements for federal employees. (Roundtable Weekly, Dec. 2023)

Private Sector Efforts

  • Leaders in the private sector are also driving the return-to-office momentum.
  • In a January memo, JPMorgan Chase announced that all employees would be required to return to in-person work by March. ‘Now is the right time to solidify our full-time in-office approach,’ CEO Jamie Dimon and other executives wrote in the company-wide message, emphasizing that they believe this approach is the most effective way to operate the business. (Bloomberg, Jan. 7)
  • Amazon also began 2025 by requiring its nearly 350,000 corporate employees to return to in-person work, including those at its Seattle headquarters and the newly established HQ2 in National Landing. (WMTV, Jan. 2)

Looking Ahead

Despite hesitations, the return-to-office mandates sweeping across both the public and private sectors signal a notable industry shift for commercial real estate and a potential revitalization of urban office hubs. RER strongly supports return-to-office efforts as critical to thriving cities and communities, and looks forward to working alongside our public and private sector partners to drive vibrant downtowns and economies across the country.