The economics and business team at towers of ilium stayed up past midnight calculating the impact of the new tax legislation on architecture and construction. The following conclusions have been drawn;
-The lowering of the corporate tax rate gives companies an incentive to invest in more trophy buildings for management and executive staff. Some firms may even use the extra cash to dabble in commercial real estate, which could inflate prices in non-distressed regions. In sum, San Francisco, New York, and Boston will experience high end churn, flips, and development, e.g. more of the same
-Luxury homebuilders may suffer some setbacks in high-tax areas, but the overall residential building market will continue to expand in areas that are willing to permit development.
-Architecture firms will have more incentive to consolidate further and expand services into construction and property management.
This sounds like good news, but extra cash has a way of generating trouble, particularly when many urban markets are already overpriced. Another single-family bust is unlikely for a while, but bubble in commercial property could go sideways in a bad way.
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