A sweeping new law is reshaping the landscape of commercial real estate (CRE), and it’s all about buildings. When the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, it set in motion a cascade of changes poised to boost demand for certain types of CRE buildings.
At a glance, the OBBBA extends key tax cuts, incentivizes United States-based manufacturing, and accelerates energy-related credits. For CRE, that translates into new factories, medical facilities, and building retrofits dominating the next investment cycle.
Unlike broad economic shifts that affect markets abstractly, this legislation directly targets the bricks-and-mortar of the industry—from how industrial facilities are built and financed to what upgrades offices and medical buildings might need.
A New Era of Building-Focused Incentives
The OBBBA is a comprehensive package that extends and expands various tax cuts and incentives, many of which directly affect real estate development and operations. For the CRE world, some of the most important features include:
- Domestic production incentives: The bill is designed to boost U.S. manufacturing and industry, offering generous production tax credits, investment tax incentives, and even grants to encourage companies to build factories and facilities on American soil. For building managers, this means anticipating tenant improvement allowances for advanced power systems, robotics-ready layouts, and design features that manufacturing tenants will demand as early as 2025-2026.
- Tax relief for business and investors: The majority of the tax reductions introduced in 2017 were not only extended but also increased. For example, capital gains tax brackets (15%-20%) continue to prevail, and the bill significantly increased the limit for deducting state and local taxes from $10,000 to $40,000, a relief to taxpayers in states with high taxes. CRE owners can expect this relief to trickle into stronger leasing activity in high-tax states, with absorption rates in secondary markets like Tampa, Florida; Austin, Texas; and Phoenix projected to accelerate 15%-20% faster than the national average.
- Energy and infrastructure investments: The bill also affects the built environment, seen in energy-focused bills. It retains some of the clean energy tax credits but advances the phasing out of these credits, essentially setting a clock on renewable energy projects. Expect a retrofit boom in 2026-2027 as building owners scramble to add solar panels; new insulation; and heating, ventilation, and air conditioning (HVAC) upgrades before the credits disappear. Property owners must also reserve retrofit calendars and preschedule capital upgrades well in advance to access incentives.
Healthy Demand with Policy Side Effects
Take medical office buildings (MOBs) and healthcare facilities, for example. The OBBBA's impact on this segment is a bit more nuanced. In practice, this could show up as a more cautious growth strategy among hospitals and clinics that serve large volumes of lower-income patients. Some may co-locate practices or engage in cost-sharing arrangements, such as leasing space on hospital campuses or in retail centers instead of constructing freestanding facilities, if operating margins tighten.
Demographics, especially an aging population and the rise of outpatient care models, will outweigh short-term policy shifts, ensuring steady medical office demand regardless of the bill’s fluctuations.
From a building-management perspective, owners of medical office properties will focus heavily on tenant retention and ongoing improvements. Many medical tenants are expanding services or adapting to new care delivery trends, and they’ll request renovations, such as reconfigured space for new equipment or upgraded ventilation for infection control. Property managers should be prepared to plan capital improvements that make buildings more technology-enabled and patient-friendly.
In addition, energy efficiency projects are being implemented. With the countdown to the expiration of solar credits, an owner of a medical office in a Sunbelt state may take advantage of incentives to install rooftop solar panels or add insulation while the credits are still available. These improvements reduce operating costs and align with healthcare organizations’ sustainability goals.
What’s Next for CRE Buildings?
Given these dynamics, we can make several informed predictions about how the OBBBA will shape commercial real estate in the coming years. The following are three major predictions with timeline, markets, and building-level ramifications:
- Industrial values surge in key regions: Industrial facilities along manufacturing-centric corridors are expected to see their values skyrocket between 2025 and 2028. With companies pouring money into new facilities, land around Midwestern and Southeastern logistics hubs, notably Columbus, Ohio; Indianapolis; Atlanta and Dallas, will become gold. Building managers in these regions should prepare for tenant requests for robotics-ready layouts, upgraded power systems, and expanded loading docks.
- Retrofit and green upgrade wave: A retrofit boom is expected in 2026-2027 as clean energy tax credits phase out. Many owners will rush to install solar panels, upgrade their HVAC systems, and modernize insulation before incentives expire. In cities with older stock, such as Chicago, Philadelphia, and Detroit, repurposing obsolete buildings into competitive, energy-efficient assets will be critical. Managers should budget for higher tenant improvement allowances and stagger retrofit projects to minimize operational disruption.
- Emergence of new hotspots and niches: The CRE landscape is expected to develop new geographic and sectoral hotspots as a result of the bill. Beyond the industrial belt, secondary markets, such as Tampa, Florida; Austin, Texas; and Phoenix, can be expected to experience a medical office absorption rate 15%-20% higher than national averages by 2027. For building owners, this would equate to negotiating leases with flexible TI packages to secure healthcare tenants and designing to support outpatient care models and next-generation telehealth infrastructure.
Preparing for the Building Boom
The OBBBA has undeniably set the stage for a building boom in commercial real estate, but reaping its benefits requires foresight and preparation. The bill serves as a catalyst, but its execution will depend on thorough preparation. While navigating this exciting period, don’t lose sight of the fundamentals.
Yes, there will be a lot of new demand, but prudent asset management and tenant relations remain paramount. Industrial tenants will need help navigating rapid occupancy of new spaces, healthcare tenants will need flexibility as they grow or adapt, and lenders will expect professionalism and transparency from those managing the properties they’ve backed.
Is your portfolio ready for a wave of tenant demands and retrofit opportunities? The CRE leaders who prepare now will own the next cycle.
