The Tax Cuts and Jobs Act, signed into law in late 2017, is likely to have broad positive effects on the economy and commercial real estate. These effects, however, will not be evenly distributed across all markets and property types. We believe a lower corporate tax rate, deductions for pass-through entities, and accelerated depreciation schedules should all prove broadly positive to the economy and commercial real estate, but the story around personal taxes is more nuanced. In many markets, changes to the personal tax code should result in additional disposable income that likely will translate into consumer spending, fueling demand for retail and industrial real estate. For taxpayers in other markets, the effects are likely to be mixed because the after-tax cost of homeownership will rise. We believe the multifamily sector is set to be a prime beneficiary of this.

The new law lowers personal tax rates and eliminates the personal exemption in favor of nearly doubling the st