Despite criticism over the new tax plan, Rene Ramos of Coldwell Banker Commercial Advisors says that it is good news for real estate investment.
Ontario, CA (December 7, 2017) — Whether you are a fan or critic of the recently passed tax plan—which will likely be signed into law—it will likely impact the commercial real estate market. Despite criticism, Rene Ramos of Coldwell Banker Commercial Advisors says that it is good news for the commercial real estate market, and specifically for industrial product. Ramos is a firm proponent of trickle-down economics, and believes the corporate tax cuts provided by the new plan will spur job growth, expansion and development of smaller industrial product, which is currently undersupplied.
“There is going to be a boom,” Ramos, a senior vice president and industrial expert at Coldwell Banker Commercial, tells GlobeSt.com. “We are going 90 miles per hour, and this is going to make us go 110 miles per hour. A lot of real estate is held in LLCs, and now those companies are going to be able to keep more income.”
Ramos says the most impactful benefit will be job growth for warehouses and manufacturers. “Some companies have held back hiring employees because they are trying to be cost-effective, but this is going to boost employment. That is especially true in the Inland Empire, where there are a lot of warehouses,” he says. “This is going to help companies that are on the cusp of expanding but couldn’t afford to, especially if the corporate rate gets pushed down,” he says. “That means that companies working in warehouses will be able to hire more employees and deliver more product. For warehouses, if you are a company that was operating at 110,000 square feet but really needed to operate at 150,000 square feet, now you can. I think that it is going to create a lot of movement.”
The job and company growth will manifest as new user demand and therefore the development of smaller product. “In industrial real estate, this is going to push developers to deliver smaller product,” says Ramos. “With the tax break, developers that would have built one 100,000-square-foot building can now build five 20,000 square foot buildings. With the growth triggered by the tax plan, there will be five other users that can purchase the property. It is going to be a trickle-down effect throughout the industrial market. There are going to be more jobs, more expansion and new opportunities for developers.”
As read in Globe St.