Don Peebles: 'Like Him Or Not, Donald Trump Will Be Good For Real Estate'
Politics is not about friends or enemies — just interests, according to developer Don Peebles, who is simultaneously an active Democrat and bullish on President Donald Trump's impact on commercial real estate.
Peebles, the chairman and CEO of the largest African-American-owned real estate development company in the United States, The Peebles Corp., said his approach to politics is akin to Henry Kissinger’s philosophy of American foreign policy: Relationships are fluid, but interests are permanent. The mindset is why the lifelong Democrat (he served on President Barack Obama’s National Finance Committee) met with Trump to promote his wide-ranging agenda.
Peebles is focused particularly on boosting access to development for minority- and women-owned businesses. Of the 200M SF of property leased by the federal government, less than 500K SF of the leases are with minority developers.
“That’s got to change, and I think he’s poised to do that and also poised to do great things for our industry, which is a positive sign,” Peebles said at Bisnow’s Trump Era Forecast event in Boston Tuesday.
Peebles, whose company will develop the Viola on a Mass Pike air rights parcel adjacent to the Hynes MBTA station, walked away from the meeting feeling optimistic on the impact Trump’s agenda will have on CRE. Plans for tax reform and deregulation, as well as the president’s history in real estate, will strengthen the industry, Peebles said.
“He’s proposing tremendous tax reform, which there should be,” Peebles said. “Like him or not, Donald Trump will be good for real estate.”
Developers are sticking to luxury condo developments in bigger gateway cities due to domestic banks being burdened with a source of repayment under current laws, making luxury condos a lower-risk investment. Coupled with bank regulations demanding perfect credit, it is nearly impossible for first-time homebuyers to get a home unless they are in the top income bracket.
Peebles sees merit in the president's push for relaxing these regulations both as a way to opening homeownership to more individuals and to get American banks investing in more than just condos. He said international lenders are making more hotel and office loans due to their ability, under less restriction, to become long-term investors.
Peebles sees the president using the looming wave of General Services Administration lease expirations as a way to keep his campaign promise of revitalizing inner cities.
With 100M SF expiring across the country in the next three to five years, the GSA could mimic nationally what it is doing in greater Boston. The GSA chose MIT to redevelop its Kendall Square Volpe Transportation site in a $750M deal. MIT is proposing 1,400 residential units and 1.7M SF of office and labs at the underutilized, 14-acre site.
“There’s an advantage of having a real estate developer in charge of the country,” Peebles said. “I see him using the GSA to target economic redevelopment across the country.”
He conceded international tensions are a dark spot on the president’s record. Gateway cities like New York City and Miami that depend heavily on foreign markets are seeing daily room rates and occupancy drop due to international tourists being turned off by America.
Miami, which relies on foreign buyers for its residential supply, has gone from a six-month backlog of condo supply to an almost 30-month backlog in a short period of time, Peebles said. Recognizing that international visitors and buyers want to come to a hospitable environment, he hopes the president moves forward in light of court challenges to both his proposed travel bans.
“He’s got to bring to closure this issue in terms of what he’s going to do about travel,” Peebles said. “There’s some instability he’s got to close the door on and move forward, and I think he recognizes it.”