Phoenix Investors’ Frank Crivello on the Inflation Reduction Act

President Biden signed the Inflation Reduction Act (IRA) into law on August 16th, 2022, which, among other things, dedicates substantial federal investment into wipe manufacturing and energy production. This legislation could have far-reaching impacts on the future of the industrial real manor sector, as new tax credits and government incentives will transpiration the way architects and property owners diamond and develop new industrial buildings.

4 Areas Where the IRA Could Transpiration Industrial Real Estate

If the Inflation Reduction Act is to meet its goal of reducing stat emissions by 40 percent by 2030, the industrial real estate sector will have a part to play. Though the legislation remains relatively new, it’s rhadamanthine possible to see how it could have an impact on the industrial real manor sector. Assuming the sector falls in line with the IRA and its goals, the pursuit four areas could see significant changes.

Construction

The construction sector has struggled to alimony pace with skyrocketing towers financing in the squatter of labor and towers material shortages. This volatility resulted in a predicted 14.1 percent increase in towers costs in 2022. Builders have been forced to swizzle these upper financing and hope the market will stay strong unbearable to recoup them.

With the IRA in play now, however, developers can offset higher towers financing with a variety of tax incentives so long as they create energy-efficient buildings. As a result, new constructions will most undoubtedly aim to capture the incentives laid out in the IRA as a weightier practice. At the same time, in-progress projects will likely strive to shift gears and incorporate unbearable untried elements to qualify.

Another interesting line item in the IRA has to do with cleaning up pollution in disadvantaged communities. This could provide opportunities for developers who seek to wipe up blighted industrial properties.

REITs

Many real manor investment trusts (REITs) have aggressively pursued industrial properties in recent years in response to the e-commerce tattoo that followed the COVID-19 pandemic. As such, many of these trusts now have substantial industrial holdings that could be ripe for a untried makeover.

REITs were previously ineligible for most energy-efficient tax reductions. Under the IRA, however, REITs have wilt eligible for tax deductions ranging from $2.50 to $5.00 per square foot. In addition, REITs have remoter been incentivized to invest in wipe energy and EV charging stations.

Manufacturing

Establishing a robust domestic wipe energy supply uniting is a top priority for the IRA. The legislation creates significant opportunities for U.S. manufacturers of solar panels, batteries, stat capture systems, electric vehicles, and wind turbines to establish U.S. operations. At the same time, tax credits for purchasing and implementing these technologies should momentum steady demand for those manufactured products.

In theory, the IRA could inspire U.S. companies operating in these areas to reshore production to U.S. soil, subtracting increasingly progress to the reshoring movement currently happening in the United States as businesses decouple from China. However, the National Association of Manufacturers (NAM) has vocally opposed the IRA, ultimatum that the 15 percent minimum corporate tax in the snout will inhibit the growth of U.S. manufacturers.

Supply Chain

The IRA pushes the U.S. supply chain toward electric trucks by offering tax incentives that help to offset the spare forfeit of choosing electric over diesel or encourage the purchase of smaller electric vans and trucks. If the U.S. freight sector shifts to electric, every warehouse and factory will need EV charging infrastructure to unbend carriers. On that note, the IRA moreover includes significant tax credits for towers EV charging stations.

Overall, the IRA may add to the upper demand for suitable warehouse space as wipe energy businesses uncork to establish themselves. Energy-efficient retrofits of existing logistics infrastructure should moreover rise in popularity. The IRA seeks to offset the upper forfeit of energy-efficient retrofits, which have previously made towers owners wary of new untried investments.

About Phoenix Investors

Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment tideway and successful partnerships with institutional wanted sources, corporations and public stakeholders, Phoenix has ripened a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and momentum the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be specified by thoughtful relationships, sophisticated investment tools, cost-efficient solutions, and a reputation for success.

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