Policy to Property: How the Big Beautiful Bill Will Impact Industrial Real Estate

One Big Beautiful Bill Act 

Signed into law on July 4, 2025, the OBBBA is a U.S. federal statute containing significant tax and spending policies. While the bill has broad economic implications, it specifically and substantially impacts the commercial real estate (CRE) and manufacturing sectors by permanently extending or enhancing key tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA). These changes aim to incentivize capital investment, domestic production, and economic development. For Commercial Tenants, this bill provides substantial opportunities for owned and leased properties including:

Immediate Cost Recovery - Improvements

100% bonus depreciation on qualifying improvements and equipment allows full deduction in year one.

Enhanced Build-Out Negotiations

Landlords gain stronger incentives to invest in tenant improvements.

New Manufacturing Facility Benefits

New production facilities qualify for 100% real estate depreciation.

Improved Market Dynamics

Increased supply and modernized facilities expected to stabilize rental costs.

Strategic Timing Advantage

Benefits available for property placed in service after January 19, 2025 and before January 1, 2031.

Economic Arbitrage

Tenants will need to focus on their lease vs borrow analysis to ensure they receive a fair portion of the incentive versus owning the facility. This will depend upon the tenants ability to utilize the QPP incentive as further defined below. 

Impact on Commercial Real Estate 

The OBBBA revitalizes the commercial real estate sector by providing a more predictable and favorable tax environment for investors and developers.

100% Bonus Depreciation and Section 179 Expensing

A major win for commercial real estate is the permanent reinstatement of 100% bonus depreciation for qualified property placed in service after January 19, 2025. This provision, which had been phasing down, allows businesses to immediately deduct the full cost of eligible assets, such as furniture, fixtures, equipment, and certain interior improvements to non-residential buildings. This accelerated depreciation improves after-tax cash flow and makes capital-intensive projects more financially attractive. Similarly, the bill increases the Section 179 expense limits to $2.5 million, with a phase-out threshold of $4 million, making it a more viable tool for small to medium-sized businesses to expense improvements like HVAC systems and roofs.

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