What the Midterm Elections Mean for Commercial Real Estate
October 6, 2026
What happens to commercial real estate if control in Washington remains as is or changes?
With the 2026 midterm elections approaching, there will be plenty of attention on which party controls Congress. For commercial real estate investors, lenders and owners, however, the more important question is what the election could actually change.
Some of the federal tax provisions most important to CRE are now embedded in current law. Other issues, including housing policy, federal spending and state and local regulation, remain very much in play.
Here is what I am watching.
The numbers are close
Republicans currently control both chambers of Congress. The Senate has 53 Republicans, 45 Democrats and two Independents who caucus with Democrats. The House majority is considerably narrower.
That leaves several possible governing configurations after November, including continued Republican control, divided government, or Democratic control of Congress.
The congressional map itself has also changed in several states during the 2026 election cycle, adding another variable to a closely divided House.
For CRE, however, the composition of Congress matters less as an abstract political question than for what it means for taxes, housing, spending and regulation.
What's already in the tax code
One reason this election may have less immediate impact on CRE tax policy than investors might expect is that several important provisions were addressed in the 2025 tax law.
- The law made 100% bonus depreciation permanent for qualifying property acquired after January 19, 2025, eliminating the previously scheduled phase-down.
- The legislation also established a longer-term framework for Opportunity Zones, including enhanced incentives for qualifying rural investment. For example, the substantial improvement threshold for property in qualifying rural Opportunity Zones was reduced from 100% to 50%.
- Section 1031 like-kind exchanges for qualifying real property also remain part of the tax code.
That does not make any of these provisions untouchable. A future Congress can change tax law. But there is an important distinction between a provision scheduled to expire and one that remains in place unless Congress affirmatively changes it.
For underwriting purposes, today’s tax framework remains the starting point.
The real issue: housing policy
Housing may be where the next Congress matters most for real estate.
The 21st Century ROAD to Housing Act became law in July with broad bipartisan support. The legislation focuses on increasing housing supply and reducing regulatory barriers, but it also established restrictions affecting large institutional investors in single-family housing.
That combination is worth paying attention to.
Washington is looking for ways to increase housing supply while also examining who owns portions of that supply and what role institutional capital should play in the housing market.
Future congressional debates could put different emphasis on supply incentives, permitting reform, affordability requirements, institutional ownership and tenant protections.
For multifamily, single-family rental and build-to-rent investors, the direction of those policies could increasingly become part of underwriting.
The bigger lever may be the deficit
The Federal Reserve operates independently from Congress, so the midterm election does not directly determine interest rates.
Fiscal policy, however, can still influence the rate environment.
Federal spending, tax policy and deficits affect Treasury issuance and can contribute to movements in longer-term Treasury yields. Those yields, in turn, are important reference points for CRE borrowing costs, investor return requirements and asset pricing.
That transmission mechanism matters.
For commercial real estate, a sustained change in long-term rates can flow through to:
- Debt costs
- Refinancing proceeds
- Debt-service coverage
- Required equity returns
- Cap rates
- Property values
- Transaction activity
That means one of the most consequential questions following the election may not be which party controls Congress, but what the resulting fiscal policy means for the long-term cost of capital.
The impact may show up first in the states
While Washington gets most of the attention, many of the policies that affect an individual property’s economics are determined much closer to the asset.
- Thirty-six states and three territories are electing governors this cycle. State legislatures, governors, municipalities and voters will continue making decisions involving zoning, permitting, rent regulation, property taxes, transfer taxes and housing development.
- Massachusetts, for example, has a proposed statewide rent-control initiative that would limit annual rent increases if it ultimately qualifies for and is approved by voters.
- Property tax measures are on the ballot in several other states this fall. Other states are considering property-tax, housing and development measures with direct implications for real estate owners and investors.
For CRE professionals, that creates an important distinction.
Federal elections can change the broad economic and tax environment. State and local decisions can change the economics of an individual property.
Takeaway: Why It Matters
The 2026 midterms matter to commercial real estate, but probably not for the reasons that will dominate election-night coverage.
The federal tax framework that investors have been underwriting since 2025 is more durable than it was before the new tax law. The more immediate variables are likely to be fiscal policy, the direction of housing regulation and the growing number of state and local decisions affecting individual markets.
For owners, lenders and investors, the practical question is not simply whether Republicans or Democrats control Congress.
It is how changes in policy ultimately flow through to interest rates, borrowing costs, taxes, rents, expenses, development feasibility and property values.
Those are the variables that belong in the underwriting.
How Summer Street Advisors Can Assist
Political and economic changes matter to CRE only when they change the economics of an investment.
Summer Street Advisors helps lenders, investors and owners translate changing market conditions into property-level and portfolio-level decisions.
That can include evaluating how changes in interest rates affect refinancing and valuation, stress-testing cash flows and exit assumptions, reviewing appraisals and underwriting, assessing portfolio exposure across markets, and evaluating hold, sell, refinance or recapitalization alternatives.
The objective is not to predict Washington.
It is to understand what changing policy and capital-market conditions mean for the asset, the loan and the investment decision.
About Jack Mullen of Summer Street Advisors:
As Founder & Managing Director of Summer Street Advisors, Jack Mullen leverages decades of experience in valuation, underwriting, and risk management to lead multi-million and multi-billion dollar CRE transactions.
Previously with GE Capital and large institutional banks, he has shaped investment strategies for some of the industry’s largest deals. A recognized leader, his insights are featured in GlobeSt.com and CREFC Finance World, and he is a sought-after speaker at industry conferences and top universities.
For strategic advice on your portfolio or transaction, contact:
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