Major metro centers could experience an extension of economic growth once the effects of recent tax reform take hold. In strong knowledge-center markets such as New York, the San Francisco Bay Area, Seattle, Boston and Raleigh-Durham, additional investment could result in rent growth and spillovers into other real estate asset classes, according to a recent Cushman & Wakefield report.

“The overall economies and commercial real estate outlook of both high- and low-tax states and regions will benefit from tax reform,” Cushman & Wakefield Head of Capital Markets Research David Bitner said in a statement.

Most corporations will receive an overall tax benefit of $330B over the next 10 years, which could spur new business creation, additional investment in existing businesses and attract more capital spending into the U.S. from abroad, according to the report. Business investment is expected to rise by 140 basis points this year. Much investment centers around intellectual property, meaning knowledge-center markets, which have prominent universities and a highly skilled employee base, stand to gain an additional influx of investment.

“Knowledge markets continue to be the focus of a lot of capital and where [people] want to live and work,” Bitner said during an interview. “So much economic activity is going to be happening with Silicon Valley and New York at the forefront.”

In the San Francisco Bay Area, this could mean even more expansion within the tech industry. Compared to the national average of about 5% of workers in tech, nearly 12% of workers in the Bay Area are in tech, according to the report. The sector accounted for half of the overall office leases in 2017 with even higher percentages in San Francisco and Silicon Valley. Oakland stands to gain additional tech tenants as it is creating a more affordable option for both multifamily and office rents.

Among the biggest benefits from tax reform will be the repatriation of overseas profits from many tech companies. Apple, Cisco and Google reported over $372B in unrepatriated cash in their last filings. These companies lease and own over 41M SF in the Bay Area. Apple already said it would invest $30B into various operations in the U.S., expand data center operations, hire 20,000 people in the U.S. and add a second U.S. campus.

In New York City, Cushman & Wakefield anticipates additional demand from financial services and technology, advertising, media and information firms, which made up about half of the Big Apple’s leasing activity in 2017. These industries occupy about 9M SF each year in the city.

Financial services, which previously had one of the highest tax rates of 29%, may have the largest increases to its after-tax earnings, which could spur more potential projects and acquisitions during a time when financial services is growing. This sector added 12,000 jobs last year, and increased employment in 2016 led to a 60% increase in leasing activity.

Companies in these major metros also may be able to pay more rent and push for higher-quality space, Bitner said.

“It adds the possibility of new demand at a time with increasing deliveries,” Bitner said. “This could potentially help absorb deliveries and mitigate the risks of declining rent growth.”

He said even though rents in New York and the Bay Area are already high, rents could go higher.

While the Bay Area could benefit from additional investment in tech, pre-existing regional challenges could temper any potential tax reform windfalls, Bitner said.

“If you feed more heat into a system that has some structural flaws, those are going to become more apparent,” he said.

The cost of living and traffic congestion will get worse, he said. The Bay Area has been unable to solve these problems and if they do get much worse, companies will instead consider alternative markets, many of which will benefit from tax reform. These alternative markets, like Seattle and Raleigh-Durham, will also benefit from increased office leasing and a potential spillover into multifamily and other asset classes.

“The Bay Area has the ability to capture a lot more people if it made it possible to live and work here in a reasonable way,” Bitner said. “But decisions are often made in the opposite direction.”

Tax reform is creating fewer incentives for homeownership, which could create an even larger renter population even as more people are choosing to rent than own, Bitner said. This could provide long-term benefits to shift the political tide away from NIMBY homeowners, who often oppose high-density housing projects, to renters who often support more development, he said.

The new tax package will create more incentives for multifamily developers to build more as well given the increased demand from renters. Rents are anticipated to rise as much as 25% for a three-person household with an annual income of $150K. At the same time, renter income is expected to increase to better absorb this eventual increase in rent, according to the report.

“The broader, positive economic effects of the tax package support income and job growth and ultimately presents a tremendous opportunity for multifamily owners and investors,” Cushman & Wakefield Head of Americas Research Revathi Greenwood said in a statement.

Greenwood said to expect greater demand for larger, suburban units and single-family rentals, especially in areas with great schools. Value-add investors will be able to obtain more opportunities to push for high rents through redevelopment and repositioning of assets.