Georges: After years of historic cap rate compression, we are witnessing a gradual shift in the marketplace. In June, as expected, the Federal Reserve raised the target range for federal funds by 25 basis points to 1.25%. With increased growth and lower inflation projections, we're expecting one additional rate increase before year-end. And while we don't expect dramatic movement in cap rates over the short and/or medium term, cap rates will eventually follow the upward trend of interest rates. In the meantime, investors can continue to defer taxes by leveraging 1031 exchanges as part of a valuable wealth-building strategy.

GlobeSt.com: Where do you advise your clients to buy?
Georges: Geographically speaking, we will always advise our clients to acquire assets in markets where we're seeing growth in population and economies. Cities like Austin, Dallas-Fort Worth, Nashville, and Seattle have been positive areas of growth. And on the East Coast, we're seeing opportunities in markets like Jacksonville, Orlando, Tampa, and parts of the Carolinas, like Charleston, Raleigh, and Charlotte.

NEW YORK CITY—It's possible that Congress and the President could enact tax reform without fully considering the consequences to the commercial real estate industry and the US economy as a whole. So says Tom Georges, a director at Stan Johnson Co., who further chats with GlobeSt.com about 1031 exchange transactions in the Q&A below.

GlobeSt.com: Could 1031 exchange transactions be eliminated by new tax legislation?

Tom Georges: I personally think 1031 exchanges will survive, but I wouldn't bet the house on it. The possibility of a repeal of 1031 is more real than ever before. Intuitively, we'd think, “Trump's a real estate guy—he'll protect 1031 exchanges,” but not all action has been predictable thus far. It's possible that Congress and the President could pass tax reform measures without fully vetting the implications to the commercial real estate industry and the US economy as a whole.

GlobeSt.com: What advice are you giving your clients about current market conditions?

Georges: After years of historic cap rate compression, we are witnessing a gradual shift in the marketplace. In June, as expected, the Federal Reserve raised the target range for federal funds by 25 basis points to 1.25%. With increased growth and lower inflation projections, we're expecting one additional rate increase before year-end. And while we don't expect dramatic movement in cap rates over the short and/or medium term, cap rates will eventually follow the upward trend of interest rates. In the meantime, investors can continue to defer taxes by leveraging 1031 exchanges as part of a valuable wealth-building strategy.

GlobeSt.com: Where do you advise your clients to buy?
Georges: Geographically speaking, we will always advise our clients to acquire assets in markets where we're seeing growth in population and economies. Cities like Austin, Dallas-Fort Worth, Nashville, and Seattle have been positive areas of growth. And on the East Coast, we're seeing opportunities in markets like Jacksonville, Orlando, Tampa, and parts of the Carolinas, like Charleston, Raleigh, and Charlotte.