Real estate acquisitions and dispositions has changed dramatically over the past several years, posing new challenges. We hear from Michaela Grambling, who reveals what could be done to increase commercial growth in real estate and reasons to why deals often fall through.
With Texas being the top state in the US for contributions to state gross domestic product and jobs created/supported by commercial real estate development, how do you recommend the legal sector should change in order to support this growth?
I graduated from law school in May 2008, and began my career just as the financial crisis hit our country and affected many clients. As the country progressed into the recession, I noticed that the need for legal services remained strong, but many companies struggled to pay their legal bills. Legal professionals need to be able to adapt and put themselves in the best position to survive the cyclical nature of the real estate business. This means being open to alternative billing models such as fixed, flat, capped or blended fees for services, in order to ease potential cash constrains that you’re your client may be temporarily experiencing. This not only helps your clients find a payment structure that works for them, but also ensures that you are able to collect on your billable time.
Moreover, what do you think could be done to increase commercial real estate growth within your state?
I think a good start is encouraging investment in sectors that have the most potential to drive innovation, such as the technology and health care sectors. These sectors not only create more jobs within their fields, but also drive job growth in industries that play support roles. This includes jobs in legal, construction, retail, and related fields. As demand for space increases, rents go up, and this tends to draw new investment and competition into the market.
When undergoing due diligence reviews, what are important things for you to ‘check off’ for your clients?
When representing a purchaser, it is not only important for contractual documents to specify what documents are needed during due diligence, but it’s also important that they contain a reasonable, yet firm, deadline for the receipt of those documents. These are commonly the preliminary documents I ask to check off, reserving the right to seek additional information:
What are common reasons to why real estate deals fall through? What could be done to prevent this?
Financing obviously plays a major role in determining whether a real estate transaction is going to close. The best way to deal with this issue to try to make sure your client secures proof of funds and earnest money as early as possible. I also see deals die due to a lack of firm deadlines for due diligence and a failure to communicate between the parties. I have found success in outlining a standard schedule for communication from the outset of a transaction. This usually means weekly conference calls in which all interested parties must participate.
What is a characteristic you think lawyers in property and real estate should maintain?
I am a third-generation attorney. This advice is among the first that I was ever given by my father, who is also a real estate attorney, upon graduation from law school. A good lawyer will always follow the rule of the “3 As”: Affability, Availability and Ability. Affability: it’s important to be likeable. If a client doesn’t like you as a person, he or she isn’t going to come back to you. It’s important to get to know your clients on a personal level and be able to have a regular conversation that doesn’t involve business. Availability: One of the biggest client complaints involves the unavailability of some lawyers. If you don’t return phone calls or emails promptly and aren’t available for meetings with little notice, a client isn’t going to want to use you again. Ability: It goes without saying that a good real estate lawyer must have the ability to get a transaction done with a minimal amount of hiccups. Often, this means taking time to draft and review documents slowly. Tying this back into the evolving billing model that is emerging in the legal sector, this may mean sacrificing a bit on the traditional billable hour model in order to make sure the client is happy with the cost of your services, as well as the quality.
HCG Asset & Property Management offers comprehensive property management services for a wide variety of commercial property types. Our specialties include Office, Retail, Medical Office/Healthcare Facilities, Industrial, and Multi-Family Properties.