CRE Leaders Assess President Trump One Year In
Nearly a year has passed since Donald Trump took the oath of office and stepped from his role in real estate and reality television into the most powerful position in the world.
A year ago, Bisnow asked commercial real estate leaders what they expected under the leadership of Trump when it came to the industry, the economy and the years ahead for the nation. We revisited the question a year later to see whether Trump's presidency has followed the path they anticipated or taken a different turn.
Here is what they had to say.
Red Apple Group CEO John Catsimatidis
In Trump’s hometown of New York City, many in the real estate and development community hoped it would be an asset to have a developer and member of their social circle in the White House.
Billionaire John Catsimatidis told Bisnow in July 2016 that he was not sure if Trump or Clinton would be best for America, alluding to his close ties to both candidates. He formed an allegiance to the now-president, making several donations to his campaign and attending the inauguration. In September, he was spotted attending a Republican fundraiser at New York’s Le Cirque restaurant, where a $100K donation allowed access to the president, according to Bloomberg.
“I think he has done a tremendous job for the country, he has put us in a position where our country will lead again instead of following,” Catsimatidis said this week. “Business people don’t feel they are the enemies of Washington anymore … the banks feel like Washington isn’t there to punish them anymore.”
In regard to the tax reform bill, Catsimatidis told the New York Times last month that everyone in the city is groaning. Still, he told Bisnow he believes Trump is not to blame.
“I can understand what happened. The GOP senators had him by the testicles … he wanted to get a tax bill done and he did certain things their way,” Catismatidis said. “I think he said, ‘I could make 44 states happy and six states unhappy.’”
The Davis Cos. founder and CEO Jonathan Davis
Bisnow hosted a Trump Era Forecast event in Boston in early 2017 when there was still uncertainty about how the new administration would tackle a variety of issues. Panelists recognized tax reform of some kind was a guarantee, and Boston developer Jonathan Davis was concerned.
“The last time we saw radical changes in our tax policy was during the Reagan administration, and I think we all know how that ended in 1989,” he said, referencing the financial crisis of the late 1980s.
Nearly a year later, Davis is still cautious of the ramifications of how the administration is proceeding with fiscal policy.
“I am very concerned about the kind of ‘make it up as you go’ that’s going on with tax policy,” he said.
Along with Trump’s first win with the new tax law, reports suggest he is doubling down on his campaign promise to crack down on immigration. He has ended Temporary Protected Status for migrants from Sudan, Nicaragua, Haiti and El Salvador. The administration has also cut the number of refugees allowed into the U.S. to the lowest level since 1980, which concerns Davis.
“Our society has benefited enormously from its ability to assimilate new immigrants, give them opportunity and allow them and their children to learn, grow and succeed,” he said. “The current administration is slamming the door on a lot of that. That’s a real concern and will have significant long-term impact on our economy and our country.”
Transwestern Senior Vice President and Senior Director Industrial/R&D
Transwestern's Ed Mendence said he originally anticipated a resurgent gross domestic product growth of about 3%. Following Trump’s inauguration, GDP growth rose 3.1% in Q2 and Q3.
“The 3.3% Q3 growth rate is especially amazing given that the major, historic hurricanes which slammed into Texas and Florida were expected to significantly dampen GDP growth,” he said.
He said 2017 was the first time since 2004 when the U.S. achieved three consecutive quarters of 3% or greater GDP growth. Since Trump was elected, the Dow Jones and stock market set 86 records, including its highest-ever closing on Dec. 18, according to Mendence.
The U.S. unemployment rate of 4.1% is the lowest since 2000, and the consumer confidence index reached 129.5 in November, the highest in 17 years. In the first 10 months of the current administration, over 2 million new jobs were created.
He said based on these indicators and several others, Trump has far exceeded his initial expectations.
Following the passage of tax reform, Mendence said he expects his November 2016 projection to materialize.
“I anticipated huge portions of the $3.5 trillion to $4 trillion in U.S. corporation profits now held overseas in foreign countries — due to long-standing uncompetitive U.S. corporate income tax rates currently being the highest in the world — to become repatriated back to the U.S. for massive ongoing investment in plant and equipment of U.S.-located industries and businesses, and related sustained U.S. economic expansion,” he said.
Beacon Economics founder and economist Chris Thornberg
Economist Chris Thornberg did not mince words when asked how Trump fared in his first year.
He said Trump is out of touch with reality and needs to learn restraint. Thornberg last year forecast Trump’s tax cuts would have a good short-term impact and growth, but would increase the federal deficit and widen the trade deficit.
“He basically passed a tax package that is moderately stimulative for 2018 but he’s taking the deficit situation that's already scary and making it worse,” Thornberg said. “The immediate harm has been avoided, but in the long term, we will pay the piper.”
Akridge founder Chip Akridge
Before Trump’s inauguration, D.C. developer Chip Akridge expressed optimism that the new administration would usher in positive change.
"It gives me hope that there's a different paradigm of governing, where people who do get things done — business people — can work with some of these professional politicians who are interested in one thing: getting re-elected," Akridge said at Bisnow’s Economic & Political Forecast event in January 2016. "I think with some different quarterbacks calling the plays, we'll see some substantial changes."
But 12 months later, Akridge said he does not think the administration has sparked the fundamental shift he had imagined.
“I still have hope,” Akridge said. “But the reality is that the quarterback hasn’t had much of a difference. If anything, he’s made it worse. It’s disappointing. I thought there was a real opportunity here to create a new paradigm for the private sector and government to work together for better outcomes for all, and we’re just back into petty bickering and playing politics and trying to make sure we stay elected.”
Akridge said he has not always been proud of Trump’s behavior and rhetoric, but he said Trump has not strayed from the overall policy goals he set out to achieve during his campaign.
“He certainly has not projected the image I would prefer to see for a U.S. president,” Akridge said. “But he’s a different cat and he’s pursuing the basic agenda he said he was going to do for the people who voted for him and got him elected, so it’s hard to fault him for that. It’s just a different way to run a railroad and something people aren’t used to.”
Colliers Executive Vice President Kitty Wallace
Los Angeles broker Kitty Wallace last year was bullish on Trump, hoping that if he could live up to his promise of creating 25 million jobs, it would be good across all industries.
So far, she likes the direction of the economy. She said the stock market is up, people are employed and making more money and that is good for the real estate market. It is still too early to tell, she said, but Trump’s tax plan may impact the multifamily sector, with some people perhaps opting to rent rather than own.
She worries about the long-term impact of Trump’s policies and is concerned about having a greater national debt. But things right now are OK, she said.
“While there may be some debate on certain issues, economically there’s a large preponderance of people in the U.S. that are going to benefit with his tax plan,” Wallace said. “Right now the stock market is good, basically, our job unemployment rate is down. So far so good.
“Every day is a new day with this president," she added.
CORRECTION, JAN. 20, 9:04 A.M. PT: An earlier version of this story had an incorrect quote from Colliers' Kitty Wallace. Wallace said that unemployment was down. The story has been updated.