📢Good morning — today’s Signals are brought to you by CRE360 Signal™.
Today’s Signals highlight a split inside the U.S. infrastructure economy that every developer, lender, and operator should understand clearly.
Legacy energy assets are slowing under regulatory drag, while digital infrastructure is accelerating under renewed legal clarity.
These forces are not competing — they simply operate at two different speeds inside the CRE universe.
📌 Three Mile Island: A Case Study in Legacy-Energy Drag
The sale of the decommissioned Three Mile Island nuclear site — once an 800-MW anchor of the Mid-Atlantic grid — reveals how heavy legacy-energy redevelopment has become.
Nuclear capacity nationwide is down ~5% since 2015.
Every attempt to repurpose sites like TMI encounters the same friction:
NRC oversight
Environmental remediation uncertainty
Decades-old liability structures
Zoning restrictions
Multi-year entitlement processes
Local tax revenues remain depressed, and the buyer has not disclosed redevelopment plans — a signal that risk assessment is still underway.
Why It Matters
Legacy-energy CRE no longer trades on demand; it trades on regulatory velocity — and regulatory velocity is slow.
These assets carry long lead times, long liability tails, and slow return cycles.
📌 Meta’s Antitrust Win: The Acceleration of Digital Infrastructure
Meta’s legal victory — blocking the FTC from unwinding its past acquisitions — did more than preserve corporate structure.
It restored legal stability to the digital ecosystem after years of uncertainty.
For CRE, the implications are immediate:
Stronger demand for hyperscale data centers
Accelerated development of compute corridors
Tighter cap rates in top markets
Rising absorption across Northern Virginia, Phoenix, Dallas, and Columbus
Digital-infrastructure tenants commit long-term capital only when the legal environment is predictable.
This ruling gave them the green light.
Why It Matters
Digital infrastructure doesn’t expand because cycles are good — it expands because compute demand is non-negotiable and legal clarity eliminates expansion risk.
CRE tied to AI, cloud, and fiber will continue to scale despite rate pressure.
Legacy energy reminds us that some parts of CRE move at the speed of government.
Digital infrastructure reminds us that others move at the speed of demand.
These aren’t opposing trends — they’re parallel realities.
And the operator who understands which systems run slow and which systems run fast will price risk correctly when everyone else is mixing categories.
📢What Policy and Regulatory Shifts Are Reshaping CRE Right Now?
The most consequential changes hitting commercial real estate today are coming from federal tax law, updated lending and valuation standards, and a wave of state-level reforms. These shifts are not cosmetic— they’re directly altering capital flows, underwriting assumptions, and the economics of development across every asset class.
1. Major Federal Policy: The OBBBA Reset
The One Big Beautiful Bill Act (2025) is now the dominant federal driver of CRE strategy. Its impact is uneven:
Permanent TCJA expansions: Higher Section 179 expensing thresholds, renewed 100% bonus depreciation for manufacturing and production-adjacent assets, and immediate expensing for qualifying facilities.
Good for: industrial, logistics, cold storage, manufacturing.Boosted LIHTC incentives:
– Higher 9% LIHTC ceiling
– Reduced thresholds for 4% LIHTC
This materially expands the underwriting viability of affordable and mixed-income development.Long-term tax credit certainty:
Affordable Housing (LIHTC) and New Markets Tax Credits both received permanent extensions, creating a more predictable capital environment.A major negative:
Section 179D repeal after June 30, 2026 removes the deduction for energy-efficient commercial improvements.
This will push owners to rethink energy-retrofit economics and reduce the incentive for green upgrades.
2. Lending, Valuation & Agency Standards
Agency lenders (Fannie/Freddie) have tightened both appraisal and property risk standards, particularly on multifamily.
This means:
More documentation
More conservative risk scoring
Slower approvals and higher fall-through rates
Higher bar for renovated, value-add, and transitional assets
The net effect: agency debt is no longer the easy button.
3. Climate-Driven Underwriting & Insurance Pressure
Climate compliance is no longer theoretical.
Lenders and insurers now penalize:
coastal and flood-risk assets
wildfire-exposed regions
aging buildings with poor climate-risk metrics
This is raising premiums, reducing LTVs, and in some markets, eliminating coverage altogether. The capital stack is reacting accordingly.
4. State & Local Law Shifts
This is where CRE is changing the fastest.
Adaptive Reuse & Zoning Flexibility
States facing housing shortages (CA, TX, FL, parts of the Northeast) are easing conversion pathways:
faster approvals
reduced parking requirements
looser zoning restrictions
lower impact fees in targeted districts
This is breathing life into obsolete retail and office — but only for well-capitalized sponsors who can clear construction and code constraints.
Other notable state actions
Texas: Non-homestead CRE appraisal caps
Tennessee: Accelerated removal process for unlawful occupants
Both shift operating assumptions and risk exposure for owners.
5. The Federal Budget Cycle
The government’s short-term funding patches have reopened debate on:
housing incentives
permitting reform
additional tax credit expansion
environmental compliance timelines
This creates a moving regulatory target heading into FY2026.
Bottom Line
These policy changes are not moving in one direction. They’re creating a barbell market:
Tailwinds: industrial, manufacturing-linked assets, affordable housing, adaptive reuse
Headwinds: traditional office, regulated multifamily, climate-risk assets, energy-retrofit plays (post-179D repeal)
Financing standards are tightening. Incentives are pulling developers toward specific asset classes. And compliance risk is starting to price into valuations in a way the industry hasn’t seen in over a decade.
This is the new regulatory terrain CRE operators must underwrite against.
