Market Summary 7.14.25

Recently, commercial real estate investors faced uncertainty as new tax laws were introduced in mid‑July 2025. Headlines focused on shifting depreciation schedules and changes to Opportunity Zones, prompting some to pause major moves. Our client, a seasoned CRE investor group, hesitated—uncertain how the adjustments would impact returns.

We guided them to dig into the details—beyond the headlines and into the mechanics:

• The 2025 tax bill permanently reinstated 100 % bonus depreciation for qualifying CRE assets placed in service after January 19, 2025, and raised the Section 179 cap to $2.5 million—tools that can meaningfully bolster early‑year cash flows

• Key investment tax provisions remained intact: 1031 exchanges, carried interest relief, and the QBI deduction—all still available

• Opportunity Zone policies were refreshed—extended deferral timelines and new rural tracts offered added upside for long‑term plays

• The SALT deduction was increased to $40 k (beginning 2025), though its benefit phases out for high earners and expires in 2030

As clarity emerged, the mood shifted. Armed with precise projections, we modeled enhanced first‑year cash flow thanks to bonus depreciation and opportunity zone step‑ups. We positioned the client to act—not defensively but opportunistically.

Fast forward to now: The client proceeded with a strategic 2025 acquisition in a growing suburban office node. Leveraging the bonus depreciation and QBI provisions, the deal’s unlevered IRR exceeded underwriting expectations, and early‑year after‑tax yields are outperforming forecasts by 2–3 points.