by Dan Rafter
Commercial real estate developers, investors and brokers are preparing for a new presidential administration. While no one knows yet what impact a Trump presidency will have on commercial real estate, one thing is certain: The commercial real estate attorneys who represent these pros will continue to be busy as investors and developers face the potential of new regulations, changes in long-standing laws and, perhaps, a renewed focus on manufacturing in the country.
Illinois Real Estate Journal recently spoke with Linda White, partner in the Chicago office of law firm Dentons, about what kind of problems real estate attorneys might be taking on for their clients in the coming years.
Illinois Real Estate Journal: What are some of the biggest concerns of commercial real estate developers, investors and brokers today?
Linda White: The biggest thing people are dealing with now is the change in the administration and the new political environment. What will happen with all the economic issues we are dealing with today? What kind of legal regulations, or lack thereof, are we going to have after the new administration takes over? There are so many things the new administration says it is going to change. That does bring some uncertainty with capital and liquidity requirements, the ability to access capital.
IREJ: Can you give an example of what sort of change we might see in commercial real estate with a new administration?
White: Look at environmental issues as just one example. The Trump administration might change the environmental rules. The environmental regulations might become less onerous. Will the cost of energy become less? What will that mean? What will it mean for the rise in green building techniques that we’ve seen over the years? Will people no longer care about green buildings because there aren’t as many benefits from building green?
IREJ: How might a Trump administration impact the different commercial real estate sectors?
White: Take something like the industrial market. Trump is saying that he is going to bring jobs and manufacturing back to this country. Does this mean that owners will be hiring developers to redo existing manufacturing facilities across the country? Or will they hire developers to build new ones? We might see more investment in industrial if the new administration actually can bring manufacturing back to the country. Then there is the new administration’s possible impact on commercial financing. Are people going to be able to refinance loans now that interest rates will be higher? Does a developer have the extra cash needed to make a deal? What will happen with foreign investment in this country? Trump might enact some changes that will impact the real property tax act. How will those changes impact how developers work?
IREJ: What if Hillary Clinton would have won? Would there have been as much uncertainty, do you think?
White: I don’t think there would have been as much. We had more knowns with Hillary Clinton. She wasn’t as much about throwing everything out and starting over again. With the results of the election, we are now in a time of uncertainty. All we can do is live in the world we have at the moment and do our business the best way we can. But we do have to be cognizant that things will be changing.
IREJ: How will you help your clients through these changing times?
White: I’ve always viewed my clients as part of a team, and I’ll continue to do that. I’ve been doing this for more than 40 years. They will always get my best business judgment no matter what is happening around them. I always advise my clients that they are wise to bring me in at the beginning of any project they are working on. It is so much easier that way to identify the issues and try to work around them instead of being presented with a fait accompli and have to fix it. I think my clients value that I am ready to work with them from the very beginning of a project. That approach will remain important.
IREJ: How do you prepare your clients for the possible issues or challenges they might face when taking on a new investment or project?
White: My clients don’t always want to hear about every pitfall that you can identify as being a potential challenge. But it is important to alert people to the fact that pitfalls can occur. You have to tell them, ‘Here are the issues that might arise. Perhaps if we did it this way, it would create fewer issues.’ Then you have to show your clients that if they can’t do it a certain way they will face some risks. If you have that dialogue upfront, the clients will be so much better positioned to complete the transaction.
IREJ: How do clients in this industry handle change?
White: A lot of my clients are very large. They have a group of people who are always looking ahead to how things might change. It is the smaller developer who needs more handholding and advice. All you can do in in the real estate industry is deal with what you have in front of you at any given day and time. You have to look forward to see what the possible pitfalls are if the law changes versus the law remaining the same. Then you have to work out possible solutions to whatever challenges you can predict might arise. You have to anticipate problems. You can’t just react to them.
IREJ: How important, then, are commercial real estate attorneys to their clients?
White: It is more than just legal advice. It’s about trying to figure out how a business transaction and the law can come together to make the best possible transaction. Getting sound legal advice right from the beginning is so helpful. After a while, we get to know our clients’ businesses well. We can act as a sounding board. Not everyone thinks of every possible outcome or challenge. That’s why it’s important for our clients to have legal expertise. For instance, I’ve represented Willis Tower since 1986 through different ownerships. I know what’s happened there in the past. I know what the current agreements are with the building’s tenants. You bring that sort of knowledge with you when representing your clients. When I am representing clients involved with Willis Tower, they benefit from that knowledge.
IREJ: The experience you’ve built up over the years is a strong benefit for your clients then.
White: They hire me for my experience. After you do this for a while, you end up with a lot of experience. You bring that with you when you work with clients.
IREJ: You’ve built a long and successful career in law. What is it about this field that you enjoy the most?
White: I enjoy the people. I enjoy taking on complex problems or working on transactions that require solutions. I enjoy taking a complicated transaction and coming out with a solution that works from both a business and legal perspective. If clients want to listen to your advice, that’s wonderful. If they don’t want your advice, it becomes more difficult. That is not the kind of client I enjoy working with. I’m not going to tell a business person how to structure a transaction. But I enjoy being part of the team. I don’t like being presented with a term sheet and being asked to simply document it. I don’t want to just be the scribe where I don’t have any input. That is not the type of client that I am attracted to or who values my experience. But working on a team to solve problems and create solutions? That is what drives me.