It’s not hyperbole to compare the recent commercial real estate market to a roller coaster, with its ups, downs and crazy curves. This uncertainty means it’s more important than ever to seek legal counsel from professionals who have their fingers on the pulse of the industry. That’s why clients rely on attorneys at Greenberg Traurig LLP, an international law firm with a laser focus on real estate.
Michael Baum, co-chair of Greenberg Traurig’s global Real Estate Practice, touts the firm’s focus on teamwork, collaboration, innovation and commitment to excellence in client service as key to its continued growth and success. “Our culture, attitude, versatility, and adaptability are what set us apart. We are able to draw on our significant experience and bench strength to look around the corner and know where our clients need to be in today’s rapidly changing economy.”
While some commercial real estate sectors have seen a slowdown, Baum anticipates continued strong demand for well-positioned, quality industrial, hospitality and multifamily assets.
And those are just a few of the many areas where the firm is uniquely equipped to help clients make the right moves, says Robert Ivanhoe, vice chair of Greenberg Traurig, senior chair of the global real estate practice and co-chair of the REIT practice. “Our footprint gives us a much broader reach and far more resources than most other firms. In addition, our focus on real estate means we can get very granular into subspecialties of broader practice areas.”
In previous issues, The Real Deal sat down with leaders from Greenberg Traurig to discuss how it has transformed the South Florida skyline and what the New York City practice is seeing in the country’s financial epicenter and beyond. Today, we hear from some of their practice leaders about evolving trends and opportunities in various real estate asset classes across the U.S. and globally.
Finding hospitable niches in hospitality
While the pandemic ushered in a tumultuous time throughout the commercial real estate industry, the hospitality sector faced some steep challenges and now is experiencing welcome surges. Although many initially had predicted a lag that would extend until 2024 or 2025, a healthy rebound has beat those lackluster anticipated recovery trends, says Samantha Ahuja, co-chair of Greenberg Traurig’s Global Hospitality Practice.
Yet despite renewed interest from travelers, other economic factors are complicating the sector’s recovery. “Hotels have been impacted by the current tight lending environment, especially since regional banks, which are a primary funder for hotels, have been less open to lending,” Ahuja says. With higher interest rates and the looming possibility of a recession, hotels aren’t actively trading; however, since hotels aren’t beholden to long-term leases like many commercial buildings, they are relatively well-positioned for any rebound, she notes.
Another development that the firm’s hospitality team is watching is the growth of artificial intelligence (AI), given the key role data plays in hotels’ operations, from loyalty programs to the various ways people book travel. “AI can analyze customer data from these programs to help hotels better understand their guests and provide more personalized experiences, such as pre-stocking their rooms with their favorite snacks or recommending local activities based on past visits. Of course, AI also presents legal questions about data privacy. While hotels have always grappled with the issue of who owns data, it will become even more prominent as AI matures and assumes an increasing share of everyday functions,” she says.
Indeed, the legal needs of hoteliers and investors typically extend beyond the acquisition and disposition of properties, Ahuja says. “They also may need help with franchising, licensing and branding, hotel, retail and restaurant management agreements, and even casino agreements,” she says. “Our multiple offices and deep bench mean we can advise clients in both general hospitality matters and those specific to real estate.”
Clients depend on Greenberg Traurig exactly for this breadth of experience, Ahuja says. “We can maximize our various layers of expertise because we’re not just dealing with foreclosures and bankruptcy loan workouts. We also have multiple clients who are upgrading assets, which is a common trend during this portion of the cycle. We’re able to work with clients throughout the entire life cycle of a deal.”
Multiplying profit potential in multifamily housing
Michael Davis, co-chair of the firm’s Los Angeles real estate practice, points to multifamily as an asset that largely remained in demand during the pandemic. He expects multifamily leasing activity to remain strong as higher interest rates generally make buying a home more expensive, further driving up demand among millennial renters.
Within the broader multifamily sector, senior housing and student living are poised to benefit from strong occupier demand and solid investor interest, Davis says. While the senior housing sector faced some challenges during the pandemic, investor activity has started to recover and is expected to increase, fueled by population growth among older Americans. “Many of the investors we’re working with on the senior side are very bullish, because they see an absorption of the demand,” he says, adding that those currently in the market are committed to the asset class and have the necessary expertise to execute.
At the other end of the spectrum, student housing also faced disruptions during the pandemic, amid a pullback in international enrollees and fewer students living near campus as classes went online. That’s now in the rearview mirror, and Davis sees demand rising as supply tightens, the result of existing assets being absorbed as students return to the traditional college experience.
For those considering investing in the category, he mentions a unique challenge—the inflexibility of the construction timeline, given how tightly intertwined student housing and leasing are with the academic calendar. “If you fall behind on your opening schedule and miss the leasing window, you’ve effectively lost an entire year, while a normal apartment complex would just bump their timing back a month or two,” Davis explains.
Getting the office sector back to work
Davis reports seeing investor caution in the office sector. As work patterns shift, the concept of big urban offices as perennially safe investments has been turned on its head. With loans now coming due, it is no longer the time to wait and see how the return to work will eventually shake out.
“Some owners are exiting the sector, while others are exploring workouts, which is an area where we’re heavily involved right now,” Davis says. He sees opportunity in top-tier office properties that offer appealing outdoor amenities, open spaces for collaboration and a strategic mix of tenants that complement each other.
“Companies will pay higher rents for those environments, with the expectation they will entice their employees to return to in-person collaboration,” he says. “I believe we’re at the forefront of the next generation of American offices.”
Surprising factors revamping retail real estate
There is a wave of disruption underway in the retail sector—and it’s not necessarily because of economic factors, says Michelle Gambino, co-chair of the firm’s real estate litigation practice. The proliferation of e-commerce has led to big changes in retail configurations and has driven up demand for regional and last-mile distribution facilities. “To accommodate a surge in omnichannel shopping, big box retailers must focus their efforts on creating additional conveniently located distribution centers,” Gambino notes.
This increased demand is being accommodated by a complementary trend as many retailers downsize their physical footprint, allowing big box brands to repurpose these large parcels for distribution services, provided the zoning is amenable. In those cases, Gambino helps companies negotiate Reciprocal Easement Agreements (REAs), which are covenants that govern truck traffic and other related issues. “Typically these REAs were created decades ago before distribution centers existed, so we often help mediate disagreements over how big box retailers can use the land for these large centers,” she says.
The ability to address these evolving issues is where Greenberg Traurig sets itself apart, Gambino says, as the firm can provide advice across the full spectrum of issues retailers are facing. For example, she mentions the firm’s fully developed retail group that specializes in distribution centers, as well as its entertainment group, which represents influencers and works with the brands hiring them. “While that wouldn’t be considered real estate per se, retailers have many overlapping constituencies, and we are prepared to help them all.”
These days her group is regularly engaged by retailers aiming to determine their duty of care in ensuring the safety of the public and employees in the wake of mass shootings. Among the new considerations facing retailers are whether they should update their store layouts, add more emergency exits or upgrade design materials to better withstand a tragic event, Gambino says. Fortunately, the team is equipped to help, with OSHA experts who have extensive knowledge of best practices in this area.
Opportunities beyond borders
A self-described long-time student of real estate and economics, Ivanhoe has overseen many real estate cycles. Today, he believes that the performance and trends in the U.S. real estate market are largely driven by global capital flows. “Real estate initially evolved from a localized business to a national one, and then over the past two decades we have seen increased investment flowing in from Asia, Canada, Europe and the Middle East, to name a few international hotspots,” he says.
Greenberg Traurig’s significant global presence makes the firm ideally suited to serve international clients’ needs. “When companies decide to become involved with overseas opportunities, there are undoubtedly nuances that they aren’t well-versed in. Our footprint gives us a broad reach and extensive resources that allow us to come in and help pave the way on their road to success,” Ivanhoe says.
Drawing on its comprehensive experience helping clients sustain and grow their businesses during the ups and downs of economic cycles, Greenberg Traurig is well-positioned to help apply that expertise in overseas markets. The firm has more than 2,650 attorneys in 45 offices worldwide, including a growing presence in Asia and the Middle East, where it is affiliated with the Khalid Al-Thebity Law Firm in Riyadh. Greenberg Traurig recently launched a new Singapore office, the firm’s fourth in the Asia-Pacific region, and currently is seeking approvals to open offices in Riyadh and Dubai. “International clients rely on advisors to help them through these cycles and need to have confidence that we withstood similar scenarios in the past,” Ivanhoe says. “That’s where Greenberg Traurig offers an advantage, as we can identify common denominators and offer tools and resources that will help them survive and thrive, even in uncertain market conditions.”
This commitment to anticipating client needs is a key part of integrating new associates into the firm, he says. “We ensure they know how we service clients and share responsibilities by deploying a team approach—it’s an ‘our’ client perspective, rather than ‘my’ client.” That, he says, allows Greenberg Traurig to provide the best resources to its clients, both domestically and abroad.
Why Greenberg Traurig Should Be Your “Go To”
Valuable insight like that shared above abounds at Greenberg Traurig, which offers unrivaled diversity and bench strength on its team. “I think the secret to our success is that we’re not industry- or client-agnostic. If it touches real estate, we do it—whether it’s fund formation, financings, sales and dispositions, leasing or M&A, to name a few specialties,” Baum says.
Davis explains that the firm’s varied client list makes its advice even more valuable. “Here in Los Angeles, for example, we represent developers, capital partners and more…the whole gamut,” Davis says. “That allows us to help our clients consider opportunities from a variety of perspectives, and we are seen as counselors who provide advice relevant to their goals. They consider us partners who drive real business impacts, rather than just someone who will draw up documents.”
Finally, Baum cites a camaraderie and culture that are outside the norm. “Because we trust and empower our colleagues and collaborate as a team, I believe that our work product is better and our clients are confident that we have the depth and breadth of coverage to tackle virtually anything. They see we’re invested in ensuring that the resources they need are available, with the entire firm working for them and with them.”
Are you ready to harness the power of Greenberg Traurig as your “go to?” Contact GT Law today.