Democrats will take control of both chambers of Congress in January after an election night that went worse for Republicans than almost anyone in either party predicted. As of Wednesday morning they had secured at least 228 House seats and 54 Senate seats, with dozens of House races still being counted and network projections running considerably higher. The Senate map was the biggest surprise, with Democrats flipping seats in Kansas, Iowa, Texas, Ohio, Maine, North Carolina and South Carolina, several of which were not considered competitive a year ago. About two-thirds of voters told an election-day survey that tariffs had hurt the economy, and gas prices tied to the war with Iran weighed on Republican candidates almost everywhere.

Markets mostly shrugged. Stock futures dipped overnight before recovering, the 10-year Treasury yield fell a few basis points to between 4.90% and 4.94%, and oil and the dollar both slipped modestly, according to Cushman & Wakefield. Investors seem to understand that winning Congress and governing from it are very different things while Donald Trump still holds the veto.

Trump made that point himself on election night, posting an image of a red cap with “VETO” stitched across the front. On Wednesday he told reporters that Democrats would “send over things that are insane and I’ll veto them,” though he also said he expected to work with the new majority on some issues. Overriding a veto requires two-thirds of both chambers, which means 290 votes in the House and 67 in the Senate, and Democrats are nowhere near either number. Most legislation also has to clear a Senate filibuster that requires 60 votes. Budget reconciliation gets around the filibuster with a simple majority, but a reconciliation bill still ends up on the president’s desk.

Hakeem Jeffries, who is expected to become Speaker, has promised to restore Medicaid funding and Affordable Care Act subsidies, roll back tariffs and end the war with Iran. Each of those goals depends on Trump signing something he opposes or on enough Republicans breaking with him to override his veto. Some defections are plausible, since Trump is in his final two years and Republicans who just watched colleagues lose in Kansas and Texas have reason to keep some distance from the White House, particularly on tariffs. Getting to two-thirds is another matter, and party discipline usually erodes one narrow vote at a time.

For commercial real estate, the federal policies with the most direct effect on buildings are already written into law. The One Big Beautiful Bill Act, signed in July 2025, cut short much of the Inflation Reduction Act’s clean energy package. Owners felt it most through Section 179D, the energy-efficient commercial buildings deduction, which does not apply to projects that began construction after June 30, 2026. The 45L credit for efficient new homes and the 30C credit for EV charging equipment ran into similar deadlines. Bringing any of them back would take a new tax bill with Trump’s signature on it, which is unlikely before he leaves office. The same law made 100% bonus depreciation permanent, a provision the industry lobbied hard for, and Democrats can’t repeal it over his objection any more than they can restore 179D. Owners can reasonably assume the tax code they are working with today is the one they will have in 2028.

Tariffs rest on executive power rather than legislation. After the Supreme Court struck down the emergency tariffs in February, the administration reissued them under other trade authorities that Congress had delegated years ago. A Democratic Congress can hold hearings and apply pressure, but it cannot change that policy on its own, so the cost of steel, aluminum and other building materials will keep following decisions made at the White House.

Where Democrats do gain real power is in their ability to slow things down. Control of both chambers gives them appropriations, committee chairmanships and subpoena authority, and Cushman & Wakefield expects divided government to raise the odds of a debt-limit fight, government shutdowns and more unilateral trade action from the executive branch. The White House has reportedly spent months preparing to advance its agenda without going through Congress at all. Policy made by executive order can change quickly and be reversed just as quickly, and that kind of uncertainty is harder for lenders and investors to price than a statute that will sit on the books for years.

The larger variable for property values is the war. Vice President JD Vance blamed Tuesday’s losses on the Iran conflict, and Trump pointed to gas prices. Cushman & Wakefield considers the war the primary swing factor for inflation and interest rates, and in a market priced off the 10-year Treasury, that matters more than which party runs the House.

Past midterms offer little reason to expect a shift in property markets. Since 1978, private real estate returns in the year following a midterm have looked about the same as returns in any other year, according to Cushman & Wakefield, and REITs, which reprice faster, show the same pattern. The firm did not change its economic outlook after Tuesday, because a divided Congress was already part of its baseline. It expects growth slightly above 2%, inflation that stays elevated before gradually easing, and a 10-year yield between 4.5% and 5.0% through 2027.

That outlook is reasonably good for occupiers. Continued growth should support demand for space across most property types, and with little new construction in the pipeline, rents should rise, especially in the highest-quality buildings. For investors, Cushman & Wakefield expects returns to come from rising income rather than falling cap rates, so interest rates, economic growth and the performance of individual properties will matter far more over the next two years than anything that happens on Capitol Hill.

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