“Fiscal policies centered upon reduced taxes could accelerate short-term economic growth and intensify inflationary pressure,” according to the report. It's also possible that we'll see a more hawkish stance on the part of the Federal Reserve to prevent the economy from overheating.

Furthermore, it's important, says Marcus & Millichap, to grasp the effects of potential trade policies that restrict the flow of domestic goods to foreign markets. “Stringent policies could reduce the commercial space needs of companies involved in international commerce,” according to the report. Among these are warehousing and transaction clearing. However, prior to president-elect Trump taking office and actually implementing these and other policies, there's not sufficient clarity to base decisions on them.

The expected changes aren't likely to make a dramatic impact on the underlying drivers that are supporting commercial real estate performance, the report states. Nonetheless, “an anticipated increase in the cost of capital and potentially substantive tax consequences were sufficient for many to reconsider the deals currently in process.”

At the same time, though, Marcus & Millichap notes that the proposed policy changes of the new administration “have inspired numerous economists to boost their growth forecasts for 2017.” This augurs well for commercial real estate performance and fundamentals.

However, in the near term there's a new hurdle for overseas investors in the form of a stronger US dollar, obligating them to “now reassess any transactions they had in process,” says the report. Although foreign capital still comprises a relatively small portion of the US commercial property buyer pool, “a temporary pullback in activity by these investors because of their loss of purchasing power could influence total transactional counts for the fourth quarter and affect asset pricing.”

CALABASAS, CA—The unexpected outcome of the presidential election may lead to a reduction in fourth-quarter transaction activity as commercial real estate investors take stock, says Marcus & Millichap in a special report. That's in contrast to the final three months of 2015, when Q4 investment sales hit a post-recession high.

“A rapid 60-basis-point increase in the yield on the US 10-year Treasury followed the election, combining with expectations of changes to the tax code in 2017 to inspire many commercial real estate investors to step back and reassess their strategies,” the report states. “Some transactions that were targeting a 2016 close will likely be delayed or canceled as investors and lenders recalibrate their underwriting assumptions.”

Deal volume was already moderating from last year's peak, according to Marcus & Millichap, but “the rapidly evolving 2017 outlook under a new president has added an additional element of un-certainty for some investors. Prospective modifications to fiscal, monetary, regulatory and trade policies brought on by the new administration could hold significant implications” for CRE investors.

Among these modifications, a reduction in capital gains taxes, a lowering of corporate tax rates and reductions in the number of personal tax brackets could have “significant implications for investors,” says the Marcus & Millichap report. Other changes, including the elimination of the carried interest loophole, could affect specific segments of investors, including developers and some investor syndicates.

“Fiscal policies centered upon reduced taxes could accelerate short-term economic growth and intensify inflationary pressure,” according to the report. It's also possible that we'll see a more hawkish stance on the part of the Federal Reserve to prevent the economy from overheating.

Furthermore, it's important, says Marcus & Millichap, to grasp the effects of potential trade policies that restrict the flow of domestic goods to foreign markets. “Stringent policies could reduce the commercial space needs of companies involved in international commerce,” according to the report. Among these are warehousing and transaction clearing. However, prior to president-elect Trump taking office and actually implementing these and other policies, there's not sufficient clarity to base decisions on them.

The expected changes aren't likely to make a dramatic impact on the underlying drivers that are supporting commercial real estate performance, the report states. Nonetheless, “an anticipated increase in the cost of capital and potentially substantive tax consequences were sufficient for many to reconsider the deals currently in process.”

At the same time, though, Marcus & Millichap notes that the proposed policy changes of the new administration “have inspired numerous economists to boost their growth forecasts for 2017.” This augurs well for commercial real estate performance and fundamentals.

However, in the near term there's a new hurdle for overseas investors in the form of a stronger US dollar, obligating them to “now reassess any transactions they had in process,” says the report. Although foreign capital still comprises a relatively small portion of the US commercial property buyer pool, “a temporary pullback in activity by these investors because of their loss of purchasing power could influence total transactional counts for the fourth quarter and affect asset pricing.”