When I think about where the real estate legal market is headed, I conjure up the lyrics from The Who’s song, "Won't Get Fooled Again." Yes, indeed, the Presidential election has taught us that anything is possible and that perhaps, a new revolution may be on the way. Or, could it be “meet the new boss, same as the old boss.”
Certain commercial real estate is back for now. Developers are developing again and buyers and sellers are doing deals. Even lenders (at least some) have stepped back into the real estate game. With a real estate developer occupying the White House, there may be a regulatory reversal in the offing. Just as we had become accustomed to the regulatory challenges of real estate development, we may see a rollback in the extent of environmental regulation originally designed to control development. Couple this reversal with potential favorable tax changes and the loosening of lending restrictions, and one could easily envision another real estate boom.
Lawyers, as they always are, will be at the forefront of these changes. What is should mean is a much more user-friendly government, together with a more common sense approach to regulation. While it is certainly a laudable goal to protect wetlands that really have a connection to navigable waterways, there never was sufficient justification for protecting isolated wetlands. While real estate lenders had to be reined in due to the questionable practices of some in the 2006 to 2009 era, the enactment of significant regulatory restraints on lending has created a complex process that keeps many credit-worthy potential homeowners out of the marketplace.
Social media will continue to play a major role in our society generally and in our legal community as well. As the real estate industry continues to rely upon social media for a great many of its marketing and other needs, legal issues will continue to arise. What can and cannot be said through social media; what constitutes fraud or discrimination; and how can the public have confidence that confidential information is not being hacked.
Even the lending industry is affected as the race for private equity dollars moves away from the traditional offering memorandum and into the realm of crowdfunding. While crowdfunding is a relatively new means of raising capital for real estate projects, the platform is continuing to grow at an exponential rate domestically and overseas. While certain modest fixes have already been made to crowdfunding legislation, expect more changes to evolve that will expand the marketplace. Again, the possibility of fraud will be a concern for the public and a hot topic for lawyers.
Like most of you, I too have heard what seems to be bi-partisan support for a significant infrastructure spending program. The need to modernize and expand our roads, bridges, airports, and other infrastructure will no doubt require government to acquire property amicably or take it through condemnation. Certainly, lawyers practicing in the eminent domain arena will be kept busy as a result.
Finally, I can never skip the opportunity to mention the commercial real estate impacts which will come from the legalization of marijuana. Property must be acquired for production, storage and dispensing. These properties will undoubtedly need some level of entitlements, perhaps with the added challenge of local government or neighborhood opposition. These issues will make their way first through the local government process and then the appellate court process. The results should be very interesting.
All-in-all, the next few years should be a very exciting time for commercial real estate lawyers. New development introduces a whole new level of complexity and issues to the real estate attorney. In order the appropriately handle a transaction and draft proper documents, the real estate must continue to stay informed as to both current and pending changes in the law. I’m looking forward to what the future holds for the real estate industry.
Neil A. Stein is a co-founder and principal of Kaplin Stewart and a member of the Land Use, Zoning & Development group.