Commercial real estate investments in Republican-led states have outperformed those in Democratic-led states for several years, according to a new study. But Democratic victories in Tuesday’s midterm elections, including in traditionally conservative areas, have raised questions about whether those states will keep their economic edge as political priorities change.
Mitch Flax, founder and chief investment officer of Net Equity Capital, said he began examining the issue after noticing that some investors based in blue states were hesitant to put money into their own markets. One family office executive, he recalled, told him they avoided investing in real estate in blue states.
Flax’s research reviewed nearly 24,000 commercial property transactions, using an estimate of investment returns and classifying states according to how they voted in the 2024 presidential election. He said differences in state business policies were a major factor behind the gap in performance.
The findings come amid a broader shift of businesses and wealthy residents toward states with lower taxes. Texas, in particular, has drawn companies from more expensive coastal regions. Flax believes the state could become a major tax haven for businesses, comparing its potential to Singapore’s. He joked that a wave of wealthy Texans could be on the way.
Recent election results may complicate that forecast. Texas elected Democrat James Talarico to the U.S. Senate, defeating Ken Paxton, who had President Donald Trump’s backing. Democrat Gina Hinojosa also won the governor’s race against Republican Greg Abbott.
A CBRE analysis found that 725 companies moved their headquarters between 2018 and 2025. The Dallas-Fort Worth area attracted 111 of them, while Austin drew 88 and Houston 31. By comparison, the San Francisco Bay Area lost a net 163 headquarters. Companies leaving the region have cited taxes, labor rules and high living costs.
Flax argued that population growth and corporate moves are signs of a deeper divide, rather than the underlying cause. In his view, state business policies shape where companies invest, and those decisions can set off a chain reaction in local real estate markets.
As businesses move, workers may follow. That can increase demand for housing and retail space, while new jobs bring demand for offices and logistics facilities, he said.
