“The cost of land and building in New York has caused many developers to build for-sale housing since the costs have not made sense to build rental housing. So, we most likely will see a decline in new housing construction in New York,” says Wieder.

Revathi Greenwood, head of Americas research, Cushman & Wakefield, acknowledges the fears of negative consequences for coastal areas with high costs of living and high taxes. However, he says as a “holistic package,” the tax plan will have broader, positive economic effects, support income and job growth and present a tremendous opportunity for multifamily owners and investors.

“We expect to see greater demand for larger, suburban units and single-family rentals, particularly in areas with great schools,” says Greenwood. “For value-add investors, this means greater opportunities to secure higher rent through redevelopment and repositioning strategies.”

The Cushman & Wakefield report also predicts the TCJA will increase office rents, particularly in the tech and financial services industries. It says the Bay Area's office market, highly leveraged to the technology sector, will continue to thrive. Fourteen of the top 20 tenants who occupied the most space in 2017 were tech companies. It notes prior to the tax reform, the Bay Area's tech sector's effective tax rate was only 18.5%—with energy companies and real estate pass through entities having even lower tax rates. Thus, the tech companies would likely benefit less from the reduced tax rate, compared to financial firms at a 29% rate and industrial at a 29.7% rate.

However, the report states that tech companies will highly benefit from the tax plan's facilitating repatriation of overseas profits—Apple, Cisco and Google, alone, had over $372 billion. It points out that repatriated funds could go to new investment projects, wage increases, bonuses and returning capital to shareholders—who could then reinvest these proceeds further expanding the tech sector. In the Bay Area, these three companies alone take up 41.1 million square feet of office space.

Cushman & Wakefield also reports New York's financial and TAMI (technology, advertising, media and information) firms accounted for 51% of the new leasing activity in Manhattan last year. The financial services sector faced average effective tax rates of 29% but the reform lowers the corporate federal tax rate to 21%.

Wieder was a bit skeptical about the prospects of office expansions in these sectors jumpstarted by the tax reform. He says in both California and New York, residents already have high income taxes, real estate taxes and cost of living. He sees the tax plan will have the effect of discouraging the workforce to move to these states.

The report points out changing jobs and moving are expensive and concludes it would be exceedingly rare that the effects of the tax cuts would motivate individuals, thus commercial tenants, to relocate.

He points out that it will not be until 2019 when companies and individuals file their 2018 tax returns will they will see the law's impact on their disposable income. Yet corporations such as Walmart, AT&T, Boeing, Comcast and Wells Fargo, and others gave bonuses to employees right after the tax legislation passed. He questions whether this was a public relations move, taken before the corporations actually realized any savings.

“Will they continue to do this each year and therefore stimulate the economy? What are they going to do with the savings they do not share with their employees? Will they buy back their stock? Will they increase dividend? Will they expand business in the US? Will they increase compensation of their officers?” asks Wieder. “Time will tell whether this will actually stimulate the economy and job growth.”