A Double-Edged Sword For CRE: The Beauty And The Beast Of Trump’s One Big Beautiful Bill Act

In July 2025, Trump signed the One Big Beautiful Bill Act (OBBA). For commercial real estate (CRE), it is both a glass slipper and a poisoned apple – promising tax relief while stripping away green incentives. In this blog, we will dive into the effects of the OBBA on the CRE market now that the dust has settled.

The Beauty: The OBBA cements certain Trump-era tax provisions, most notably the reinstatement of bonus depreciation. It permanently reinstates 100% bonus depreciation – which was introduced by President Trump under the Tax Cuts and Jobs Act (TCJA) in his first term, but had been decreasing since 2022 – for most qualified property acquired after January 19, 2025. The permanent bonus depreciation means that capital investments, such as machinery, equipment or facility upgrades, can be deducted in full in the year they are placed in service. This can reduce taxable income and improve after-tax cash flow for building owners and asset managers, freeing up more capital for additional investments. The permanent reinstatement of bonus depreciation should incentivize large retrofit projects and the modernization of aging building stock. The OBBA also introduced a new, temporary full expensing provision for qualified production property, extending this benefit to manufacturing.

The Beast: As with much of the policy stemming from the Trump administration, there is also another side to the coin. Under the OBBA, Section 179D energy efficient commercial buildings tax deductions, which offer up to approximately $5.81 in savings per square foot for energy-efficient improvements, will only be available through June 30, 2026. The bill also sunsets Section 179D’s residential counterpart, Section 45L, impacting developers in multifamily and mixed-use spaces. This means that any energy-efficiency-related projects undertaken after the June 2026 deadline will lose a key financial lever. The OBBA also rescinds unobligated funding (funding not yet spent or awarded) for numerous federal sustainability programmes, such as the Department of Energy’s Energy Infrastructure Reinvestment Financing and the EPA’s Greenhouse Gas Reduction Fund. With the loss of these incentives, building owners and asset managers may delay or downsize decarbonization projects. Firms relying too heavily on OBBA’s financial perks while ignoring tenant demands for sustainable buildings risk losing tenants and access to capital.

The OBBA is a double-edged sword: it brings tax certainty and financial relief for CRE via bonus depreciation – but at the cost of the green incentives that many firms were counting on. In the short-term, building owners and asset managers should strike fast on 179D-eligible projects before the June 2026 deadline. In the long term, organizations will need to balance the OBBA’s tax windfalls with growing regulatory and investor pressure to hit sustainability goals without federal support. Those who seize the OBBA's financial benefits while finding creative ways to fund sustainable transformation will stand out in the decades ahead.