As we move through 2024, there are several important federal policies and developments that could have significant impacts on the commercial real estate industry. In this blog, we'll highlight a few key areas that real estate professionals should keep a close eye on.

• Corporate Transparency Act Implementation

The Corporate Transparency Act, which was passed in 2021, will begin being enforced by the Financial Crimes Enforcement Network (FinCEN) in 2024. This act requires corporations, LLCs, and other similar entities to disclose their beneficial owners in an effort to crack down on anonymous shell companies used for illicit activities like money laundering.

For the commercial real estate world, this could introduce new due diligence obligations when transacting with corporate entities. As FinCEN finalizes reporting requirements this year, it will be crucial to understand the implications for real estate investments and transactions involving these types of entities.

• DOJ Antitrust Lawsuit Against NAR

An ongoing antitrust lawsuit brought by the Department of Justice against the National Association of Realtors (NAR) in 2022 is one to monitor. The DOJ alleges certain NAR rules diminish competition among realtors in areas like commission structures and MLS policies.

A ruling against NAR in 2024 could have sweeping effects by reshaping realtor compensation models and MLS rules for both residential and commercial brokerages across the country. This is a case with potentially major ramifications for the industry.

• EB-5 Immigrant Investor Program Reforms

The EB-5 program allows foreign investors to obtain U.S. green cards by investing in domestic projects that create jobs. After a period of declining popularity, long-awaited reforms were implemented in 2022 to increase investment amounts and revise targeted employment area definitions.

In 2024, real estate developers will be watching closely to see if these reforms can reinvigorate the EB-5 program as a viable alternative financing source for projects. There's also potential for additional changes or enhancements to this program down the line.

• Federal Interest Rate Policy

While not necessarily a real estate-specific policy, the Federal Reserve's actions on interest rates will cast a long shadow over the commercial real estate landscape in 2024. Higher interest rates can increase borrowing costs and cap rates, putting downward pressure on property values.

Investors and developers alike will need to carefully monitor the Fed's policy stance, economic projections, and any hints about the future direction of rates. This will be critical in assessing deal viability and returns under various financing scenarios.

• Affordable Housing & Revitalization Incentives

There are currently proposals circulating in Congress to create new tax credits aimed at boosting affordable housing development and incentivizing the conversion of vacant commercial properties into residential or mixed-use spaces.

If any of these proposals get signed into law in 2024, they could provide valuable financing tools and incentives for developers operating in markets with housing shortages or struggling with high office/retail vacancies left in the wake of the pandemic.

These are just a few of the key federal policy areas that could impact commercial real estate activity in 2024. As the year progresses, we'll continue monitoring and analyzing these issues to help our clients stay ahead of the curve. For any of your commercial real estate needs, feel free to reach out to us at info@cbicommercial.com or 310-943-8530.