As the Federal Reserve’s latest Beige Book reveals, the U.S. economy is continuing to adjust to shifting conditions, with commercial real estate leaders focusing on strategies to navigate ongoing uncertainty and emerging opportunities. (The Fed, June 4)
Beige Book Findings
The Beige Book published this week, reported that “all Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions.”
The report, based on surveys and interviews conducted through May 23, noted that the overall outlook remains “slightly pessimistic and uncertain,” unchanged from the prior report. (Bloomberg, June 4)
Nine of the 12 Federal Reserve districts reported either a contraction in economic activity or no change in growth; only a few districts, including Richmond, Atlanta, and Chicago, experienced modest growth. (Market Watch, June 4)
Commercial construction and real estate activity also declined overall, with the office sector continuing to lag. In San Francisco, construction activity remained subdued due to uncertainty over trade policy and rising material costs. (The Fed, June 4)
Tariffs were mentioned 122 times in the report, compared to 107 times in April, reflecting rising concerns about inflationary pressures. (CNBC, June 4)
In Boston, the Fed noted deals took longer to close, and “foreign investors grew generally skittish about investing in the United States.”
Economic Conditions & CRE
This week, during Lument’s webcast, “Turning Point: Multifamily Strategies Amidst Policy and Economic Shifts,” RER’s President & CEO Jeffrey DeBoer discussed how federal policies, including tariffs, liquidity, and the ongoing tax debates in Washington, are reshaping investor strategies.
DeBoer also emphasized that uncertainty and volatility are hindering investment decisions, mirroring the Beige Book’s findings of delayed business spending.
RER’s Q2 Sentiment Survey reflected similar caution, with the index falling to 54 as executives cited policy uncertainty, rising costs, and muted investor confidence—echoing the Beige Book’s insights on slowing activity and elevated economic risk. (Roundtable Weekly, May 23)
On Wednesday, the administration doubled tariffs on steel and aluminum imports from 25% to 50%, adding further pressure on construction costs and heightening unpredictability. (BisNow, June 4)
In the May edition of ULI’s Economist Snapshot, RER’s Senior Vice President Clifton E. “Chip” Rodgers Jr. weighed in on how rising tariffs and trade tensions are impacting U.S. commercial real estate—from delayed development timelines to increasing construction costs and reduced foreign investment. (ULI, May 13)
What’s Next
The Fed will consider the Beige Book findings at its June 17–18 meeting as it navigates a delicate balancing act between persistent inflation risks and ongoing trade tensions.
With Congress back in session this week, Senate Republicans got to work on ironing out the details of their version of the budget reconciliation package. Members of the upper chamber are signaling a number of changes to the House’s bill, which could complicate Speaker Mike Johnson’s (R-LA) fragile coalition.
State of Play
Majority Leader John Thune (R-SD) met with President Trump at the White House on Monday, initiating a series of calls from Trump to individual GOP senators to discuss their concerns for the House-passed reconciliation package. (Punchbowl News, June 4)
The Senate GOP caucus met Wednesday afternoon to speak about the portions of the legislation that had already been or are on the cusp of being released. Among the most contentious issues: Medicaid, the state and local tax (SALT) deduction cap, and Inflation Reduction Act (IRA) energy tax credits. (Politico, June 3)
Finance Committee member Sen. Thom Tillis (R-NC) is one of several GOP lawmakers who has voiced interest in adjusting the phaseouts of certain IRA energy tax credits with a more “targeted” approach to protect U.S. businesses—including real estate—that are already invested in existing projects. (NBC News, June 6)
Fiscal hawks Rand Paul (R-KY) and Ron Johnson (R-WI) have already expressed opposition to the bill because it doesn’t contain enough spending cuts or do enough to address budget deficits. (WSJ, June 4)
Potential SALT & Business Tax Changes
On Wednesday, Senate Finance Committee members met with President Trump to discuss possible changes to the tax section of the bill. During the meeting, Senators briefly touched on their intention to try to revise the House’s proposal to raise the cap on SALT deductions for individuals to $40,000.
Speaking to reporters outside the White House, Majority Leader Thune said he and his colleagues “start from a position that there really isn’t a single Republican senator who cares much about the SALT issue.” Thune went on to concede that he and other GOP senators “understand that it’s about 51 and 218, so we will work with our House counterparts and with the White House.”(Politico, June 4)
“We are sensitive to the fact that, you know, the speaker has pretty narrow margins, and there’s only so much that he can do to keep his coalition together. At the same time it wouldn’t surprise people that the Senate would like to improve on their handiwork,” Sen. Todd Young (R-IN) told reporters. (Politico, June 4)
The bulk of tax writers’ Wednesday meeting with the president, however, focused on a different issue: Trump is not sold on making several proposed business tax breaks permanent, including 100 percent bonus depreciation for equipment, machinery, and nonresidential property improvements.
Trump told Sen. Johnson and other members of the Finance Committee that it could be better for economic growth to make the provisions temporary, providing a more immediate incentive for businesses to take advantage of them. (Politico, June 5)
Section 899
Another area of debate that has emerged among Senate tax writers concerns Section 899, which would impose steep retaliatory taxes—up to 50 percent—on foreign taxpayers from countries that discriminate against U.S. businesses through their own tax regimes. (Roundtable Weekly, May 30)
If enacted in its current form, in addition to taxing foreign companies, Section 899 could raise tax rates on passive foreign investment in the U.S. (CNBC, June 2; Kirkland and Ellis, June 5)
Congress’ Joint Committee on Taxation has asserted that the “retaliatory tax” could in effect lead to a decline in foreign demand for U.S. assets and lower U.S. tax revenue (Bloomberg, May 30)
In the short term, however, the provision is projected to raise significant revenue—$120 billion over the first five years. (Politico, June 4)
Senators are reviewing potential changes and modifications to section 899 to address concerns. “There’s a lot of nervousness about how it could be used,” Sen. James Lankford (R-OK) told reporters, indicating that Republicans “want to make sure there’s not some unintended consequences.” (Semafor, June 4)
Implications for CRE
Senate tax writers, thus far, have not signaled significant interest in changes to priority issues like the deductibility of property taxes (business SALT) or carried interest.
The Senate is considering potential Roundtable-backed improvements to the House-passed Opportunity Zone provisions, as well as reforms to the low-income housing tax credit, the new markets tax credit, and a longer extension for provisions related to bonus depreciation and business interest deductibility.
An RER working group is analyzing Section 899’s impact on real estate and working to ensure policymakers understand its potential unintended consequences, which could include deterring foreign investment in large-scale, capital-intensive real estate and infrastructure projects in the U.S. (Roundtable Weekly, May 30)
Looking Ahead
While a few Senate committees have already released their sections of the bill, the Senate Finance Committee is expected to share their draft of the tax portion next week. RER will continue to update its members on key changes and their impacts on the commercial real estate industry during what will surely be an eventful month in Washington as the Senate works toward passing their reconciliation package by July 4.
Today, The Real Estate Roundtable (RER) joined a broad coalition of manufacturing, consumer technology, retail, and real estate allies in a letter to Congress urging continued federal support for the overwhelmingly bipartisan ENERGY STAR program. (Letter, June 6)
Cross-Sector Advocacy Push
The coalition letter emphasized that ENERGY STAR has delivered hundreds of billions of dollars in energy savings since its inception—approximately $40 billion in annual savings alone for American consumers, families, and businesses.
More than 30 leading organizations signed today’s letter including RER, many real estate partners, and manufacturing, consumer products, and retail groups. They include theAir-Conditioning, Heating and Refrigeration Institute (AHRI); American Chemistry Council (ACC); Consumer Technology Association (CTA); National Association of Manufacturers (NAM); National Retail Federation (NRF); National Electrical Manufacturers Association (NEMA); and the Retail Industry Leaders Association (RILA).
The multi-industry letter also highlights ENERGY STAR’s brand as a highly successful, non-regulatory, and bipartisan public-private partnership that promotes energy efficiency and consumer trust across industries that drive the U.S. economy.
The industry letter stated that ENERGY STAR is fundamental to an “all of the above” energy strategy, crucial for accommodating growing electricity demands from artificial intelligence, crypto assets, and advanced manufacturing. (Letter, June 6)
Real Estate Sector Support
The real estate industry previously sent letters to Congress, the Department of Energy (DOE), and the Environmental Protection Agency (EPA) explaining the importance of ENERGY STAR focusing on U.S. commercial and residential buildings. (Roundtable Weekly, May 23) (Letters: May 23, May 14, and April 4)
In response to indications that the Trump Administration might eliminate ENERGY STAR as federally managed, RER President and CEOJeffrey DeBoer commented the program “is integral to the U.S. real estate industry. Its software is embedded in the fabric of how profitable, energy efficient buildings are run and managed in all markets across the nation.”
“ENERGY STAR provides the key tools for families and business to save money on their utility bills,” DeBoer continued. “Owners and developers rely on ENERGY STAR to attract investment capital so U.S. building infrastructure can compete with the best real estate assets in the world.” (Roundtable Weekly, May 9)
Press Coverage
A recent op-ed in The Hillmade the economic case for ENERGY STAR, arguing that its elimination would raise operational costs, disrupt performance standards, and weaken a public-private partnership that delivers measurable benefits to businesses, consumers, and the environment. (The Hill, May 31)
A former Republican EPA Administrator who helped create ENERGY STAR in the 1990s commented that the energy efficiency and waste avoidance goals of the program “should make a DOGE bro swoon.” (Washington Post, May 14).
RER will continue to advocate with aligned groups in the real estate sector and across industry lines to preserve ENERGY STAR as a voluntary, federal public-private partnership.
The One Big Beautiful Bill Act approved by the House of Representatives last week would raise tax rates on foreign governments, firms, partnerships and individuals from any foreign country that imposes “unfair foreign taxes.”
Proposed Section 899
The so-called section 899 “retaliatory tax measures” legislation was a significant topic at this week’s Real Estate Roundtable Tax Policy Advisory Committee (TPAC) meeting. A discussion of the legislation was led by Baker McKenzie partner Alexandra Minkovich. (Proposed Section 899 Presentation)
Unfair foreign taxes are broadly defined in the legislation to include digital services taxes, diverted profits taxes, and certain tax rules adopted by countries pursuant to OECD model rules for taxing multinational businesses (“Pillar 2”), as well as taxes that the Treasury Secretary determines are extraterritorial, discriminatory, or intended to be born disproportionately by US persons.
The legislation would raise the applicable treaty or non-treaty tax rate by 5%/year, up to the maximum statutory tax rate plus 20%. (WSJ, May 30)
Countries or regions widely considered targets of the legislation because of their adoption of either digital services taxes or Pillar 2 undertaxed profits rules include the U.K., Canada, the E.U., Australia, and Japan.
Implications for CRE
If enacted, the legislation could have implications for U.S. real estate because of its application to sovereign wealth funds, foreign insurance companies, and passive investors that provide an important source of equity investment for large-scale, capital-intensive U.S. real estate and infrastructure projects. It could have a chilling effect on inbound investment decisions.
According to CBRE, foreign investment in U.S. real estate increased by 40 percent between the second half of 2023 and the second half of 2024. (CBRE, March 2025)
Chye-Ching Huang with the NYU Tax Law Center recently told the New York Times that the legislation would “create a new front in the U.S. tariff war with its closest economic partners, extending that to taxes and investment.” (New York Times, May 21)
The provisions in the House bill draw heavily from legislation introduced by House Ways and Means Chairman Jason Smith (R-MO). They are estimated to raise $116 billion over 10 years. It is unclear whether they have the full support of key Senators. Also, because they implicate foreign relations and treaty commitments, they could face parliamentary challenges under Senate rules.
At the TPAC meeting this week, Committee Chair Josh Parker (Chairman & CEO, Ancora Group Capital), announced the formation of a working group to analyze the legislation’s impact on real estate and ensure policymakers fully understand the potential unintended consequences of the bill.
After nearly 17 years in government conservatorship, Fannie Mae and Freddie Mac may be heading for a significant shift. President Donald Trump recently indicated he is considering taking the government-sponsored enterprises (GSEs) public, renewing efforts to release them that began during his first administration.
GSE Reform
Trump emphasized that any transition would retain the federal government’s implicit guarantees. “I am working on TAKING THESE AMAZING COMPANIES PUBLIC, but I want to be clear, the U.S. Government will keep its implicit GUARANTEES, and I will stay strong in my position on overseeing them as President,” Trump said in a post on Truth Social. (Axios, May 27)
The GSEs have been in federal conservatorship since 2008, and the administration has not yet detailed how the proposed transition would work.
Congressional action would likely be required to change their legal status.
“Interestingly, the president has not said anything that he wants to end conservatorship,” Federal Housing Finance Agency (FHFA) Director Bill Pulte said during a CNBC interview. “We’re studying actually potentially keeping it in conservatorship and taking it public.” (Barrons, May 29)
Pulte said he would be meeting with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick about potential options for the two entities. (Bloomberg, May 29)
Experts warn that without careful implementation, privatization could increase mortgage rates. Both Bessent and Pulte have said they will not support a GSE release that results in higher costs for borrowers.
The limited government guarantee is critical to attract private capital without spiking borrowing costs, and support for affordable and underserved housing must remain a priority, regardless of ownership structure, say the National Multifamily Housing Council (NMHC) and the National Apartment Association (NAA).
RER supports sensible GSE reform that preserves and strengthens America’s housing infrastructure, ensuring financial stability and continued liquidity for ownership, rental housing, and underserved markets. (Roundtable Weekly, May 23)
View from the Hill
While no active GSE reform legislation is under consideration in Congress, lawmakers from both parties are seeking more clarity from the administration.
Senate Banking Committee members have signaled interest in a structured release, with Senate Republicans expressing cautious optimism and Senate Democrats raising concerns about potential disruptions to an already stressed housing market. (CBS News, May 27)
Sen. Mark Warner (D-VA) expressed support for a “smart release plan that wouldn’t disrupt the market.” (Punchbowl News, May 27)
“You do this the wrong way, you’re going to screw up a housing market that’s already teetering because of lack of supply,” said Warner. (PoliticoPro, May 23)
Sen. Kevin Cramer (R-ND) stated, “I’d want to see the plan, I’d want to talk about transition.”
House Financial Services Committee Chairman French Hill (R-AR) noted that “certain important reforms are only possible through statutory changes,” reinforcing that Congressional involvement will likely be necessary.
RER will remain actively engaged on GSE reform through our working group and housing and coalition efforts. We encourage members to provide input as we continue to monitor developments and advocate for policies that support liquidity, stability, and affordability in the housing finance system.
With Congress back in session next week, the Senate is gearing up to take on the House’s reconciliation package and potentially make significant changes to the bill. Meanwhile, the Trump administration is expected to release further information on its FY2026 budget.
Senate to Take Up One Big Beautiful Bill Act
“This bill is far from over, but we are pleased the House bill maintains current law on business property and income tax deductibility, carried interest, and Section 1031 exchanges, while also improving Opportunity Zones, the Low-Income Housing Tax Credit, and taxation of pass-through entities,” said Jeffrey DeBoer, President and CEO of The Real Estate Roundtable (RER). “As the Senate takes up this bill we plan to work to preserve these provisions. We are also highly focused on eliminating the ‘retaliatory tax’ on foreign investment, as well as improving other aspects of the bill.”
The Senate is back in session Monday and eager to put its mark on the massive reconciliation package. The next four weeks will involve crucial tax negotiations on a variety of key provisions, including Inflation Reduction Act (IRA) energy tax incentives, state and local tax (SALT) deductions, Medicaid, and more. There are also procedural hurdles that the Senate bill must overcome.
Speaker Mike Johnson (R-LA) implored his Senate colleagues to avoid making major changes to the bill, saying, “If it wasn’t obvious for them, I wanted them to know the equilibrium that we reached is so delicate… My hope and my encouragement to them is – fine tune this product as little as possible.” (Punchbowl News, May 26)
Difficult compromises based on countless hours of negotiations were made to get the House bill across the finish line. If the Senate makes drastic changes, it could force negotiators back to the drawing board on certain issues and make it more difficult to meet the GOP’s goal of getting the reconciliation bill to President Trump’s desk by July 4. (Punchbowl News, May 29)
Expected Changes to the Reconciliation Bill
Early reports indicate that Senate leadership will seek only minor modifications to the House’s bill, rather than sweeping changes. But some senators are pushing for much more. (Punchbowl News, May 23)
Procedural changes: The Senate’s Byrd Rule requires that only budget-related items are included in the reconciliation process. As a result, some minor provisions could be stripped out. (Axios, May 28)
Tax additions: The Senate is also expected to switch the bill from a “current law” to a “current policy” baseline, allowing the Senate to permanently extend key tax cuts expiring this year. This would give Senate tax writers more space to include other tax provisions, including the Tax Cuts and Jobs Act’s (TCJA) 100 percent bonus depreciation.
Energy tax incentives: Multiple GOP senators have advocated for protecting the IRA energy tax incentives, including Sens. Lisa Murkowski (R-AK) and Thom Tillis (R-NC), who sits on the Senate Finance Committee and wants to moderate the House’s rollback of the tax credits. (Politico, May 23)
These modifications could include extending some tax credits that the House bill proposed eliminating, or expanding the timeline for their phase-out to ensure that the change does not strand energy projects already in progress.
Other Potential Changes
Medicaid cuts: Sens. Josh Hawley (R-MO), Susan Collins (R-ME), and others have taken issue with the House bill’s Medicaid cost-cutting measures, including expanded work requirements and other changes. (The Hill, May 28)
Deficit debate: A group of deficit hawks, including Sen. Ron Johnson (R-WI), are pushing for far deeper spending cuts than the House bill proposes, and have criticized it for not sufficiently reducing the deficit. Sen. Rand Paul (R-KY) also called the spending cuts in the House bill “wimpy and anemic.” (Axios, May 25)
Pressure from President Trump was crucial to getting deficit hawks in the House to back down from their opposition to the lower chamber’s bill. It remains to be seen whether conservatives concerned about the deficit in the Senate will put up more of a fight.
Debt limit: The Senate could increase the debt limit hike in the bill from $4 trillion to $5 trillion, ensuring that the next debt limit fight doesn’t happen until after the 2026 midterms. However, this proposal has also faced opposition from Sen. Rand Paul. (Politico, May 25)
Overall, Senate Majority Leader John Thune (R-SD) has his work cut out for him in order to hammer out the differences in opinion within his caucus. He can only afford to lose three GOP senators. It will take immense effort and deft political maneuvering to meet their aggressive July 4 goal.
Looking Ahead
Trump’s FY2026 budget request is expected to be released next week, kicking off a renewed budget battle after the administration’s skinny budget proposed in early May received pushback from both sides of the aisle. (Reuters, May 2)
RER will continue to engage with policymakers to ensure that the commercial real estate industry has a seat at the table in the critical Senate negotiations to come.
The Real Estate Roundtable’s (RER) 2025 Annual Meeting this week included discussions with public officials and industry leaders on a range of issues affecting commercial real estate, including market conditions, tax policy, the House’s recent passage of the One Big Beautiful Bill Act, tariffs and trade, affordable housing solutions, energy policy, and evolving security threats.
Roundtable Leadership
RERChair Kathleen McCarthy (Global Co-Head of Blackstone Real Estate, Blackstone) opened the meeting by thanking members for their consistent engagement and highlighting the significance of RER’s collaborative efforts in navigating a rapidly evolving policy landscape. (May 2025 Policy Priorities and Executive Summary)
During the meeting, RER members approved the nominees for its FY26 board of directors and policy advisory committee officers, which were announced by RER Nominating Committee Chair Geordy Johnson (CEO, The Johnson Group).
Addressing the membership, RER President and CEO Jeffrey DeBoer emphasized RER’s ongoing commitment to enhancing member involvement through RER’s policy advisory committees and underscored the value of strategic partnerships with other national real estate organizations for proactive policy advocacy. (Meeting Agenda)
Meeting Speakers
The Honorable Kevin Hassett (Director, National Economic Council) presented the administration’s economic agenda, focusing on housing initiatives, factory expensing, and the outlook for growth.
Geopolitical expert John Sitilides (Principal, Trilogy Advisors LLC; National Security Senior Fellow, Foreign Policy Research Institute) gave a presentation titled “Washington & the World: The New Geopolitics of Great Power Competition.” During the session, he discussed the geopolitical implications of tariffs, NATO relations, and strategic U.S. interests, including maritime security.
(L-R): Hessam Nadji (President and CEO, Marcus & Millichap), Martha Gimble (Executive Director, The Budget Lab at Yale University), and Jonathan Pollack (President, Starwood Capital Group) provided macroeconomic insights, reviewed current and future CRE market trends, and spoke about challenges amidst tariff-induced uncertainty. (Hessam Nadji Presentation | Martha Gimble Presentation)
Anna Palmer (Founder & CEO of Punchbowl News) offered her perspective on legislative developments and negotiations, and the rise of influential figures within both political parties.
Policy Advisory Committee Meetings
Each of RER’s policy advisory committees met this week in conjunction with the Annual Meeting for in-depth policy discussions. The committees hosted several congressional staff and regulatory officials.
SPAC Chair Anthony E. Malkin (Chairman and CEO, Empire State Realty Trust, Inc.), Co-Vice Chairs Ben Myers (Vice President, Sustainability, BXP) and Katie Rothenberg (Vice President, ESG, AvalonBay Communities, Inc.) led discussions on EPA’s ENERGY STAR program, grid reliability, clean energy procurement, and nuclear energy deployment. (Agenda & Speakers)
Tax Policy Advisory Committee (TPAC)
TPAC Chair Josh Parker (Chairman & CEO, Ancora Group Capital), Vice Chair David Friedline (Partner, Deloitte Tax LLP), and the Committee discussed the broad range of tax proposals affecting real estate that are working their way through Congress in the budget reconciliation bill. Panelists included senior staff from the offices of the House Speaker, Ways and Means Committee, Senator Tim Scott (R-SC), and Senator Todd Young (R-IN), as well as the Treasury Department. In addition, tax experts from Baker McKenzie, Sullivan & Cromwell, and Brownstein led or moderated discussions concerning potential new taxes on foreign investors, regulatory initiatives, and Opportunity Zones. (Agenda & Speakers)
Sustainability Policy Advisory Committee (SPAC)
SPAC Chair Anthony E. Malkin (Chairman and CEO, Empire State Realty Trust, Inc.) and Vice Chairs Ben Myers (Vice President, Sustainability, BXP) and Katie Rothenberg (VP, ESG, AvalonBay Communities, Inc.) led discussions on (Agenda & Speakers)
Joint Real Estate Capital Policy Advisory Committee (RECPAC) and Research Committee Meeting
D. Michael Van Konynenburg (President, Eastdil Secured) provided an overview of conditions in real estate credit and capital markets.
Following a national policy update from RER’SRyan McCormick (SVP & Counsel, RER) and Chip Rodgers (SVP, RER), ResearchCommittee ChairSpencer Levy (Global Chief Client Officer & Senior Economic Advisor, CBRE) and Darin Mellot (Vice President of Capital Markets Research, CBRE) led a discussion on the evolving post Liberation Day impact of tariffs on commercial real estate markets.
Robert Rubano (Executive Vice Chairman, Head of Equity, Debt, & Structured Finance, Cushman & Wakefield) moderated a capital market roundtable with David Bouton (Co-Head of U.S. CMBS, Citigroup), Jack Gay (Senior Managing Director, Global Head of Real Estate Debt, Nuveen Real Estate), Kathryn Ogden, (Head U.S. Corporate Banking and Global Head, Real Estate Capital Partners (RECP), RBC Capital Markets), and Matt Salem (Partner, Head of RE Credit, KKR). (Agenda & Speakers)
Homeland Security Task Force (HSTF) Meeting
HSTF Chair Amanda S. Mason (Executive Director, Global Intelligence, Related Companies) facilitated a number of discussions on the current threat picture. These discussions included a review of the risks to commercial facilities from lithium-ion batteries with John Frank (AXA XL Risk Consulting). The meeting also included a series of briefs from the FBI regarding the threats from terrorist and transnational criminal organizations that are directly threatening U.S. citizens and commercial facilities. These discussions included updates on the role of the cartels in violent crime, the deaths of American citizens from synthetic opioids, and the facilitation of nearly three million illegal migrant arrivals in 2024, putting U.S. communities at risk. Also addressed were the range of cyber and intelligence threats from China, targeting our critical infrastructure. (Agenda & Speakers)
RER’s 2025 Annual Report will be distributed in July. Next on RER’s FY 2025 meeting calendar is the Fall Meeting, which will take place on October 27-28 (restricted to Roundtable-level members only).
Commercial real estate executives report a decline in market confidence this quarter, as policy uncertainty, rising costs, and investor caution cloud the outlook, according to The Real Estate Roundtable’s Q2 2025 Sentiment Index released today.
Roundtable View
The quarterly Sentiment Index, measuring executive perceptions of market conditions, asset values, and capital availability, declined to an overall score of 54, down 14 points from last quarter. The Current Conditions Index dropped to 50, reflecting a 15-point decline, while the Future Conditions Index decreased by 12 points, settling at 58.
The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.
RER President and CEO Jeffrey DeBoer said, “While respondents note early signs of market stabilization and improved transactional discipline, lingering concerns over U.S. trade policies and other economic headwinds are tempering optimism for the remainder of 2025. The office sector remains under pressure, but is experiencing a gradual rebound as return-to-office trends continue to shift closer to pre-pandemic patterns.”
He added, “Uncertain tariff policies are driving up construction costs and weighing on long-term investment decisions. At the same time, the Federal Reserve’s decision to hold interest rates steady is slowing capital formation and delaying needed transactions. We need pro-growth economic policies that encourage productive investment, strengthen communities, and promote long-term stability. Extending and making the 2017 Tax Cuts and Jobs Act (TCJA) provisions permanent, along with advancing incentives to address our nation’s housing supply shortage, are crucial to help achieve these goals.”
In the May edition of ULI’s Economist Snapshot, RER’s Senior Vice President Clifton E. “Chip” Rodgers Jr. weighed in on how rising tariffs and trade uncertainty are impacting commercial real estate—from delayed development timelines to rising construction costs and reduced foreign investment. (ULI, May 13)
Topline Findings
The Q2 2025 Real Estate Roundtable Sentiment Index registered an overall score of 54, a decrease of 14 points from the previous quarter. The Current Index registered at 50, a 15-point decrease compared to Q1 2025. The Future Index posted a score of 58 points, a decrease of 12 points from the previous quarter, reflecting uncertainty around policy direction, rising costs, and execution risk. While market sentiment remains cautious, respondents are seeing early signs of stabilization and improved transactional discipline. Nevertheless, expectations for improvement have softened compared to last year, and many investors are still hesitant to re-engage.
Market conditions remain mixed, with general uncertainty, along with sector and geographic bifurcation, driving sentiment. 37% of respondents believe that general market conditions are worse now compared to the same period last year, and 37% of respondents believe that general market conditions are better than this time last year.
Close to half (47%) of Q2 survey participants expect general market conditions to show improvement one year from now, while 20% of Q2 participants expect general market conditions to be somewhat worse in a year.
Logistics and high-quality multifamily remain bright spots, while hospitality and office—particularly commodity space—continue to face significant challenges. From a geographic standpoint, the Midwest is showing relative resilience, whereas sentiment around the Sunbelt reflects concern over elevated supply and near-term softened demand.
42% of respondents believe asset values are roughly unchanged compared to a year ago. The remaining respondents are divided, with 22% believing asset prices have increased and 36% believing they have declined. Looking ahead, the outlook is cautious: 38% expect asset prices to remain stable over the next year, while another 38% anticipate a slight decline.
Perceptions of equity capital are widely varied, though 34% of respondents believe the availability of equity capital is better than it was a year ago. Sentiment around debt capital has brightened, as 43% said the availability of debt capital has improved from last year. Looking forward, 45% of respondents believe that equity capital availability will be better in one year and 39% believe debt capital availability will be better in one year.
Data for the Q2 survey was gathered by Chicago-based Ferguson Partners on RER’s behalf. Read the full Q2 report here.
The nation’s housing policy landscape is shifting rapidly as the Trump administration and Congress push forward on multiple fronts—spanning GSE reform, regulatory rollback, and bipartisan legislative efforts to expand affordable housing tools. The Real Estate Roundtable (RER) remains engaged on these developments, reinforcing its priorities through direct advocacy and coalition efforts.
GSE Reform
This week, President Trump said he’s “giving very serious consideration” to taking government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac public—reigniting debate over the future of the mortgage giants. (WSJ, May 21)
“I am giving very serious consideration to bringing Fannie Mae and Freddie Mac public,” Trump posted Wednesday on Truth Social. Trump also said he would consult with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, as well as the GSEs’ chief regulator, Federal Housing Finance Agency head William Pulte. (Politico, May 21)
The GSEs have been in federal conservatorship since 2008, and Congressional action would likely be required to change their legal status.
While no active legislative proposals exist, some GOP lawmakers are discussing the sale of the government’s stakes in the GSEs as a potential offset for extending tax cuts. (Politico, May 21)
RER supports sensible GSE reform that balances taxpayer protection with ensuring financial stability and continued liquidity for ownership, rental housing, and underserved markets.
Roundtable Advocacy
This week, RER joined a coalition of 15 national real estate organizations urging the Department of Labor to repeal and revise its 2023 Davis-Bacon rule. (Letter, May 20)
In the letter sent to Department of Housing and Urban Development (HUD) Secretary Scott Turner and Labor Secretary Lori Chavez-DeRemer, the coalition applauded the administration’s focus on affordability and supply, and called for an end to outdated wage classifications that drive up project costs.
The current rule increases housing construction costs by up to 20% and deters developer participation in federally funded projects.
The letter recommends suspending enforcement and launching a formal rulemaking to streamline compliance and reduce regulatory risk.
In a separate letter, RER voiced strong support for the bipartisan Housing Affordability Act introduced (S.1527) by Senators Ruben Gallego (D-AZ) and Dave McCormick (R-PA) to modernize the FHA multifamily insurance program. (Letter, May 13)
Outdated statutory limits, unchanged since 2003, are suppressing the number of insurable housing units and acting as a barrier to middle-income housing development.
Updating the limits would unlock private capital, free up federal resources, and bring the program in line with modern construction costs.
LIHTC Expansion Clears the House
The reconciliation bill that passed in the House this week includes major provisions from the Affordable Housing Credit Improvement Act (AHCIA), marking the most significant increase in Low-Income Housing Tax Credit (LIHTC) resources in 25 years. (Affordable Housing Finance, May 22)
Although the entire bill was not incorporated into the package, the elements that were included still amount to a significant expansion of the program.
The elements included in the bill—increase the 9% credit volume cap, lower the bond financing threshold to 25% for 4% housing credit projects, and authorize up to a 30% basis boost for rural and tribal developments.
Federal Land Sales to Expand Housing Supply
HUD Secretary Scott Turner and Interior Secretary Doug Burgum are advancing the administration’s plan to sell underutilized federal land for new housing construction. (Bloomberg, May 22)
Their coordinated effort aims to unleash more of the government’s 640 million acres for development—particularly affordable and workforce housing. (PoliticoPro, May 20)
RER will continue to advocate for smart, market-based solutions that expand housing supply, reduce regulatory barriers, and support investment across the full spectrum of the nation’s housing needs.
Lawmakers put energy policy under a microscope this week, as Environmental Protection Agency (EPA) Administrator Lee Zeldin appeared before Congress regarding the agency’s FY2026 budget request and addressed concerns over the future of the ENERGY STAR program. Additionally, significant changes to the Inflation Reduction Act’s (IRA) energy tax credits were included in the One Big Beautiful Bill that passed in the House on Thursday morning.
Roundtable Advocacy
This week, The Real Estate Roundtable (RER) joined a coalition of real estate organizations in writing to key members of the House and Senate committees to urge continued funding for the ENERGY STAR program. (Letter)
As House appropriators begin drafting FY2026 spending bills, the letter urged committees to maintain funding for ENERGY STAR—highlighting the program’s bipartisan value and pro-business message. (PoliticoPro, May 21)
The letteremphasized ENERGY STAR’s value as a voluntary, market-based public-private partnership that helps building owners and managers benchmark building performance, reduce utility costs, and bolster grid reliability. (Roundtable Weekly, May 16)
The coalition letter built upon earlier communications RER and partner organizations sent to the EPA and Department of Energy (DOE) opposing a potential phaseout of the program’s foundational benchmarking platform, Portfolio Manager. (Letters: May 14 and April 4)
Hearings This Week
EPA Administrator Zeldin appeared before the House and Senate panels this week to defend the EPA’s FY2026 budget request. (E&E News, May 21)
Lawmakers voiced concerns about EPA plans to wind down or defund ENERGY STAR. (Rep. Paul Tonko (D-NY) Press Release, May 20)
Rep. Darren Soto (D-FL) questioned Zeldin directly about the administration’s plans. In response, Zeldin claimed that ENERGY STAR is not a statutory obligation. (E&E News, May 21). However, the real estate coalition’s letter to Congress this week, cites multiple examples of bipartisan legislation that authorizes ENERGY STAR as a federal program.
On Thursday, Senators Peter Welch (D-VT) and Jeanne Shaheen (D-NH) led 20 colleagues in a letter to EPA Administrator Lee Zeldin and Energy Secretary Christ Wright, urging the Trump administration to reverse its plan to eliminate the ENERGY STAR program—citing its bipartisan support, billions in consumer energy savings, and nearly 800,000 U.S. jobs it helps sustain. (Sen. Welch Press Release, May 21)
IRA Clean Energy Tax Credits
The One Big Beautiful Bill Act passed by the House Thursday would end IRA tax incentives for clean energy projects (like solar and storage) earlier than initially proposed. (Bloomberg, May 21)
Late-night modifications to the bill, accelerate the repeal of the clean energy production (45Y) and investment (48E) tech-neutral credits, limiting their eligibility to only projects that have started construction within 60 days of the bill’s enactment and which are put into service before January 1, 2029. (Utility Dive, May 22)
The initial version of the bill proposed by House Republicans had a longer phase-out time, which would have allowed many of the IRA’s energy tax credits to remain until 2032. (Bloomberg, May 21)
The Senate may take a more measured approach. Several Senate Republicans have voiced support for maintaining IRA incentives that bolster U.S. manufacturing, enhance grid reliability, and support domestic clean energy production. (Roundtable Weekly, April 25; Semafor, May 22)
RER supports an “all of the above” energy efficiency, generation, and storage agenda and will continue to engage lawmakers and share member perspectives on effective energy policies that strengthen industry and economic growth.
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