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January 26, 2017

Almost a week ago, Donald Trump became the first President to take office without having held a prior official public or military position. As he enters his first 100 days in office, the impact of his perceived pro-growth policies is already being felt in several areas across the U.S. economy. Despite initial market jitters over the election results, major stock market indexes have soared to all-time highs. Companies across most industry sectors are eagerly anticipating pro-business reforms, including a reduction of the corporate tax rate, deregulation and a repeal of sequestration.

Throughout the campaign season, President Trump outlined strong policy positions on several key issues, including immigration reform, rebuilding the military, repealing and replacing Obamacare and reinvesting in the nation’s infrastructure. The groundwork for much of the administration’s plans are summarized within President Trump’s “Contract with the American Voter,” which broadly seeks to reduce the size of government and improve federal agencies’ operational efficiency. While the plan outlines a hiring freeze for federal employees, the expanded mandate for groups such as Customs and Border Protection and the Department of Defense should create a dynamic of winners and losers, in which favored agencies grow headcount and real estate demand, while others enter a period of contraction.

While the Reduce the Footprint policy is likely to remain in effect throughout the federal government, changing power dynamics in Washington will likely create new opportunities within the real estate market.

Regardless of the new administration’s ability to enact change, a degree of uncertainty is likely to persist over the federal office market, as policies to remain in place to reduce the size of the government’s footprint and the trim the federal workforce.

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