Our government is talking about major tax reform. That will make you really nervous if you were in the commercial real estate business in the 1980’s. You will remember how a Republican president signed into law a tax law which killed our industry for 10 years.

Sure, much of the changes in that law were necessary and appropriate. But they changed the rules retroactively and that’s not fair. That meant that anyone who invested expecting a certain tax treatment got something totally different. When new laws are enacted, they should be for the future and not undermine and unravel everything that came before it.

The industry was building far too much in the way of supply given the demand back then. We haven’t seen supply and demand out of whack to that extent since. But talk of tax reform justifiably makes commercial builders and investors jittery so they are keeping a close eye on what’s going on in Washington.

Steve Brown of the Dallas Morning News quoted Ross Perot Jr. in an article recently (full article) saying, “all of us need to watch this tax code for unintended consequences.” We can’t trust the government to truly understand the consequences of the laws and codes they enact. So it’s the unintended consequences that make us most nervous.

With the president being a commercial real estate guy, hopefully he’ll have some clue as to the unintended consequences and won’t sign anything that will put us in recession like in 1986.

Stay tuned though.

Bob Gibbons is a Real Estate Advisor & Tenant Advocate with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas and the surrounding areas and specializes in companies which lease or buy office and warehouse properties.