ASU Expert: Why the Real Estate Market Still Sees Promise and Peril in Trump

Article originally posted on Phoenix Business Journal on April 30, 2017

Arizona State University real estate expert Mark Stapp says commercial real estate brokers are optimistic about President Donald Trump’s moves to cut regulations and the push to cut corporate, personal income and investment taxes.

But Stapp said those in the real estate industry he interviewed for a brokers survey report ASU puts out also have some concerns about the impact of Trump’s promise to roll back free trade deals.

That could hurt industrial real estate if Arizona’s trade with Mexico and Canada is hurt and if there are fewer goods from China and Asia coming into the port at Long Beach.

The Phoenix industrial market depends on its proximity to the border and Los Angeles.

Arizona exports to Mexico were down 9 percent in 2016. They were down 10 percent to Canada last year and 4 percent to China, according to the U.S. Department of Commerce.

There are some commercial brokers who counter the Trump trade worries contending more U.S. manufacturers are looking in domestic markets — such as Phoenix — instead of moving those jobs to Mexico and other foreign markets.

Stapp — who is director of the Center for Real Estate Theory and Practice at ASU’s W.P. Carey School of Business — said that trend was already happening before Trump took office.

Stapp did say CRE brokers are optimistic about the economy and market.

“People are upbeat,” Stapp said adding that the market optimism was happening before Trump beat Hillary Clinton in the presidential election.

“We were in great shape anyways,” Stapp said.

The ASU brokers survey was taken before Trump’s latest flirtation with nixing NAFTA. Trump said he would work with Mexico and Canada to amend the trade deal. It was also before disappointing first quarter economic growth numbers showing just 0.7 percent GDP growth in the first quarter.

Stapp said a big global turmoil event such as a conflict with North Korea also remains a concern for the overall economy and real estate market.