Manatt Real Estate Co-Chair Featured in Western Real Estate Business

Legal Roundtable Q&A
– Western Real Estate Business

Manatt's Tom Muller, co-chair of the firm's Real Estate & Land Use Practice, spoke to Western Real Estate Business for a special Q&A article that focused on Muller's insights and deep legal understanding of the commercial real estate industry.

When asked how the field has changed over the past two years, Muller said, "The first thing I would say is that our field has changed rather slowly during the past two years' emergence from the recession. The recession of the early 1990s and the dot-com recession of 2000 saw much faster recoveries. This one has been steady but not very steep. In general though, deal flow has picked up, particularly in 2012, and workout work has fallen off to a trickle."

Muller also commented on the most pressing issues he thinks are affecting the current commercial real estate market.

He said, "The most pressing issues in the current commercial real estate market are not legal at all. The issue is that the real estate market comprises a range of product types and qualities. The lingering effects of the recession mean that easily valued products like apartments are overvalued because of the huge amount of money chasing few deals. In the meantime, harder-to-value product like office and retail is still not seeing normal deal flow, except among the higher quality properties. At the low end of the quality scale, it's very hard to do a deal. The main "legal" issue that is materially affecting the market right now is the fiscal cliff coming this January when the Bush tax cuts expire and various federal budget controls kick in.  This is creating a lot of uncertainty, which tends to make investors wait and see what's going to happen. On the other hand, I have several deals hell-bent on closing this year because of concern that capital gains tax rates will never again be as low as they are now."

The article also addressed current issues, advice Muller would offer someone entering the field, and what he thinks the next year will bring to the industry.



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