Market Intelligence
Monitor legislative and regulatory changes affecting CRE and NNN valuations
Proposed limits on 1031 exchanges are still being debated in Congress, including bills that would cap how much gain can be deferred in a year. The current rule allows unlimited tax-deferred exchanges, which is a real incentive for net-lease buyers. A restriction would shrink the buyer pool and could pressure values as investors looked for other structures. Passage is uncertain over the next year and a half, and it is worth watching.
12 states have enacted zoning reforms to increase mixed-use development and reduce single-use zoning restrictions. This creates opportunities for NNN investors in evolving urban centers with higher density prescriptions. States including Minnesota, Oregon, and Massachusetts now permit fourplexes in single-family zones, driving increased commercial ground-floor development. NNN properties in reformed jurisdictions benefit from improved neighboring land values and development optionality.
SEC climate disclosure rules finalized for 2025 require institutional investors to track property-level emissions. That raises the value of knowing how efficient a building is, and it is an incentive to retrofit. Properties with modern HVAC, LED lighting, and building controls can price tighter. Older buildings may face pressure, which is an opening for a buyer willing to upgrade.
Rising labor costs, inflation that was still elevated in the July 2026 CPI, and state minimum-wage increases continue to pressure retail tenant margins, especially in quick service, convenience, and specialty retail. The 2026 bankruptcy wave, including Saks, Eddie Bauer, Claire's, and Francesca's, is partly that cost pressure showing up in filings. Net-lease investors are protected when the lease passes expenses through, and they should still watch occupancy cost where labor is a large share of the tenant's revenue.
The regulatory environment for commercial real estate has grown more complicated. The 2017 Tax Cuts and Jobs Act cut the corporate tax rate, which supported landlord profitability. The pandemic brought eviction moratoriums and property-tax deferrals. In 2023 and 2024 the focus moved to climate disclosure and resilience. Zoning reform accelerated after 2021, and many states loosened single-family rules. 1031 exchanges have been in nearly every tax-reform proposal since 2017. The 2025-2026 inflation resurgence, still visible in the July 2026 CPI, shifted attention back to monetary policy, including FOMC dissents in favor of hikes. Tax bills and the rate path both belong on the watch list.
Data and analysis on this page are for informational purposes only and do not constitute investment, financial, or tax advice. Figures may be estimated from publicly available sources and should be verified with primary data providers (CoStar, MSCI RCA, CBRE, FRED) before use in investment decisions. Past performance does not guarantee future results.