What the One Big Beautiful Bill Act Means for Businesses, and Why It Matters to Commercial Real Estate

Congress recently passed H.R. 1, known as the One Big Beautiful Bill Act (OBBBA), introducing significant tax and spending changes. Whether you own, lease, or invest in commercial real estate, from individual assets to institutional portfolios, understanding how the OBBBA may affect various industries can help you make informed decisions about your properties and strategies. This blog shares my professional perspective on how the OBBBA could bring both opportunities and challenges to commercial real estate, with the goal of helping property owners, institutional investors, and industry professionals anticipate potential impacts and adapt their strategies accordingly.


INDUSTRIES THAT COULD SEE A BOOST

Defense & Advanced Manufacturing (Industrial, Flex, Office)
The OBBBA provides $150 billion in additional defense spending, particularly on drones and unmanned systems. This could lead to increased demand for industrial and flex spaces, as well as specialized office facilities, in areas supporting defense contractors and aerospace supply chains.

Border Security & Security Tech (Industrial, Office, Flex)
The bill allocates $70 billion for border security infrastructure, potentially supporting businesses involved in security systems, surveillance technologies, and related services. These firms may require additional warehouse, logistics, and office space.

Consumer Spending (Retail, Restaurants, Hospitality, Self-Storage)
The OBBBA temporarily raises the State and Local Tax (SALT) deduction cap to $40,000 for 2025, with annual 1 percent increases through 2029 before returning to $10,000. This change could result in greater disposable income for homeowners in high-tax areas during this period, which may support short-term spending on retail, restaurants, hospitality, and self-storage. However, the phaseout for incomes above $500,000 limits this benefit to certain households.

Extending the 2017 tax cuts and expanding the Earned Income Tax Credit (EITC) may also increase disposable income for lower-income households, generally those with earned incomes below approximately $60,000 annually, depending on family size and filing status. This could contribute to stronger retail sales in the near term, particularly in communities with many EITC-eligible families.

Compliance & Consulting Firms (Office)
As the OBBBA adjusts eligibility rules for Medicaid and SNAP, businesses assisting individuals, nonprofits, and agencies in understanding these changes may experience higher demand, potentially increasing the need for office space in administrative and professional sectors.


INDUSTRIES THAT COULD SEE A CHALLENGES

Healthcare Providers Relying on Medicaid (Medical Office, Skilled Nursing Facilities)
Hospitals, clinics, and skilled nursing facilities dependent on Medicaid reimbursements could see reduced patient volumes due to stricter eligibility criteria. This may lead to closures or consolidations, affecting medical office buildings.

Grocery & Food Retailers Dependent on SNAP (Retail, Distribution Facilities)
Retailers and suppliers relying significantly on SNAP recipients may experience reduced sales if benefit changes limit recipients’ purchasing power, potentially impacting grocery stores and distribution centers in affected areas.

Nonprofits & Social Services (Office, Specialized Facilities)
Organizations providing services to low-income communities could see increased demand without corresponding funding increases, which may strain their finances and affect their ability to lease office or specialized community facilities.

Affordable Housing Operators (Multifamily, Affordable Housing Communities)
Reductions in benefits could lead to higher rates of missed rent payments among the lowest-income renters, which may increase risks for owners of affordable housing properties.

KEY TAKEAWAYS

  • The OBBBA’s defense and border security funding could increase demand for industrial, flex, and office properties connected to these sectors.

  • Consumer spending may see a short-term boost from tax changes, but longer-term purchasing power could be affected when benefits phase out.

  • Medicaid and SNAP eligibility changes could impact occupancy and rent stability for healthcare, affordable housing, and SNAP-dependent retail properties.

  • Significant tax incentives for manufacturing, including immediate expensing for new facilities and enhanced credits for semiconductor projects, could drive localized demand for industrial and flex properties in key markets.

  • The OBBBA’s projected $3.4 trillion increase in the federal deficit could result in higher interest rates over time, raising borrowing costs for property acquisitions, developments, and refinancing across CRE sectors. However, if economic growth accelerates or global investors continue to view U.S. debt as a safe haven, it can temporarily suppress rates despite rising deficits.

HOW THIS COULD AFFECT YOUR CRE STRATEGY

  • Industrial Owners & Investors: Consider how new tax incentives for manufacturers and chipmakers may drive localized demand for industrial and flex space in areas positioned to benefit from these credits.

  • Retail Landlords: Monitor consumer spending trends to anticipate potential opportunities or risks.

  • Healthcare & Housing Operators: Review tenant profiles for exposure to benefit-related payment risks.

  • Office Owners: Be aware of potential increases in demand from compliance-related tenants, but also of financial pressures on nonprofits.

  • Investors & Developers: Plan for the possibility of rising interest rates, which could impact financing strategies and capital costs over the coming years.

BOTTOM LINE

The One Big Beautiful Bill Act introduces significant changes with the potential to reshape leasing, occupancy, and property values across multiple sectors. Understanding these impacts early can give you a strategic advantage. Whether you are an owner, investor, or advisor, our team is here to help you navigate these developments with tailored insights and actionable strategies designed to protect and grow your portfolio. Let’s connect to discuss how these changes could affect your properties and investments.

Disclaimer:
This blog is for informational purposes only and is not intended as legal, tax, or investment advice. Readers should consult with their own advisors before making decisions related to their specific circumstances. The analysis provided reflects the author’s professional perspective on potential commercial real estate impacts of the One Big Beautiful Bill Act and does not constitute advocacy for or against the legislation.

Gary Martinez