Editor’s note: The next challenges after Covid

We’ve almost got Covid tamped down. 

Now come inflation, supply chain disruptions and an emerging global energy shortage, all of which could disrupt real estate. Some are calling it a return to the 1970s.

Sure, it’s not anything like a pandemic (and hopefully we are past the last big surge now), but it does present a new set of challenges for the industry to navigate. 

Stuart Elliott

Of course, the financial pressures of the pandemic have hit landlords and developers, many of whom have been unable to pay their lenders. 

Grappling with a broad moratorium on foreclosures and trying to avoid bad optics, the lenders have had to get creative to maintain leverage with troubled borrowers, as Joe Lovinger writes in this month’s cover story.

“At the moment, banks are using a very light hand with respect to their troubled borrowers, because it’s more of a perception issue,” Garry Graber, a commercial litigator at Hodgson Russ, tells TRD. “They don’t want to create the perception that they’re kicking somebody who’s down and out through no fault of their own.”

That may change as Covid recedes and lenders get more aggressive.

Ambiguity also extends to the details of President Biden’s economic agenda, with real estate investors and their financial advisers attempting to predict the future.

Tax reform is the biggest issue that accounting firms are dealing with these days. But as Keith Larsen and Rich Bockmann write, formulating a tax strategy for real estate clients as “the winds out of Washington seem to shift multiple times a day is like trying to play a game in which the referee keeps changing the rules.”

Despite the uncertainty (and let’s face it, things look a lot better than they did a year ago), there are still plenty of opportunities from coast to coast. 

In New York City’s commercial brokerage world, there is a new crop of rising stars. A string of departures by high-profile dealmakers has ushered in a new generation of leaders looking to capitalize on the market at the city’s top brokerages.

In South Florida, Lidia Dinkova and Katherine Kallergis bring you a profile of the billionaire Dubai developer who has unexpectedly emerged as the stalking-horse bidder on a property that local developers have shied away from: Champlain Towers in Surfside, where nearly 100 people died this summer when a condo building collapsed. 

Developer Hussain Sajwani has made a career of bucking conventional wisdom. Choosing Surfside as his first U.S. project seems to fit that pattern.

In Los Angeles, a massive development that would remake Hollywood has created divisions — and the lines extend to the earth below the project. Millennium Partners’ four-tower Hollywood Center has triggered an intense debate over its location along a possibly active earthquake fault line. See the story by Trevor Bach.  

In the Bay Area, things aren’t always about tech. The life science sector in the region (the second-biggest in the country after Boston) has hit a fever pitch with prices up and vacancies down. And Chicago’s luxury market is in fine form, even if, from a New Yorker’s perspective, prices are pretty modest (the top listing in Chicago is asking a mere $30 million).

Finally, readers from all corners of the country should join The Real Deal in Miami for our first big event in nearly two years. Our South Florida Real Estate Showcase and Forum will bring to the stage some of the biggest local and national developers amid a backdrop of sun, sand and dealmaking. Click here for more information.

Enjoy the issue.