Planning decisions throughout the commercial real estate industry are currently being influenced by uncertainty. For those seeking policy solutions, legislative action at the federal level is a less likely route than in the past. A 2024 analysis by Reuters found a 40-year downward trend in the number of bills, proposed measures, debates, and speeches. A range of factors, including well-publicized issues and increasingly divergent political viewpoints, has influenced this trend.

Market forces are also accelerating change. Private firms face dynamic challenges as the Fourth Industrial Revolution continues to gain speed. Technological innovation, changes in manufacturing, labor and population shifts, and other macro trends are creating new pressures. Yet while headlines focus on federal action, policymaking at the state and local levels could offer meaningful benefits to investors and businesses.

In such a dynamic environment, this is a pivotal moment for U.S. states and local communities to drive policy change. How are states positioned for success? A few factors offer clear advantages:

Nimble legislative process: States review more bills, and in a faster timeframe, than the U.S. Congress—including through “fast track” procedures and shorter legislative sessions. When market forces demand a government response, states are well-equipped to act in a timely fashion.

Bipartisan incentives: Structural processes and requirements unique to the state and local levels—especially around balanced budgets—encourage a higher degree of bipartisan compromise than at the federal level. Additionally, the National Conference of State Legislatures has found that the more local an issue is, the greater the odds for bipartisan agreement.

Tailored context: Finding a one-size-fits-all solution is no small feat for the federal government. State and local governments, on the other hand, have a narrower remit, reducing the scale of their focus and allowing them to better target legislation for specific purposes—or even specific sites.

For private firms, states may offer much-needed policy clarity and growth opportunities with real impact. The evidence is there, even on complex issues like power and housing shortages. South Carolina’s legislature recently approved a bill to expand power capacity, for example, and California’s State Assembly advanced a bill out of committee to expedite new housing development. Both efforts have been bipartisan and address local constraints and opportunities. As new challenges emerge that warrant public support, state and local governments are responding with tailored policies—often in relatively short order.

There is a path forward to finding and creating opportunities at the state and local levels. Private firms and investors should keep in mind the productive features inherent in these jurisdictions as a counterbalance to federal challenges. Getting expert support to understand policy developments can reveal opportunities, even amid other market constraints. For states and communities, developing a holistic awareness of peer positions, policies under development, and comparative advantages or disadvantages is key to building and executing the right strategy. Federal action should still be monitored—but not relied upon—for new funding.

The state and local levels may provide more structure amid uncertainty in the national landscape. Both the policies themselves and the legislative capacity they project offer a chance to mitigate challenges and unlock new opportunities. As laboratories of democracy, these layers of government have long experimented with policy to maximize local impact—a quality that is especially influential in the current environment.