To that end, Saft is launching two new practice specialties: a fully integrated Strategic Utilization of Real Estate (SURE) group advising corporate and non-profit clients on their real estate holdings, and a group known as the Disaster Assistance and Recovery Team, or DART. Dewy & LeBoeuf says it's the first time a major law firm is including these types of specific practice as part of its services.
Saft tells GlobeSt.com that the firm has extensive experience in both areas, "and what I've done is come out with specialties that play to our strengths. One is disaster assistance and recovery, which comes out of our experience representing the Lower Manhattan Development Corp. at Ground Zero, as well as shopping center and office clients who have had roofs collapse and fires."
The idea behind the DART group, Saft says, is that "when disaster strikes real estate, whether it's a terror attack or an ice storm or mold, it's like the old Ghostbusters movie: who do you call? We're putting together a specialized team that is real estate focused, but can call on the firm's experts in other areas, whether tax planning or environmental or litigation, to provide owners with one number to call to deal with all of the issues that arise."
The SURE practice grows out of Saft's experience last winter of representing General Motors, "analyzing 80 million square feet of real estate and making recommendations on what they should do with it. The realization that came out of this is that during an economic upheaval that will probably continue for the next three to five years, businesses want to focus on their core business, whether it's selling cars or flying planes or providing credit. They don't want to think about their real estate. But at the same time, they have huge inventories that they might not necessarily need, but they really can't sell in this soft market without writing off a substantial part of their investment."
Saft says the SURE team will analyze companies' core businesses "and what they need to operate from a real estate point of view, and make recommendations on the best utilization of their real estate, including: reducing the cost of operating it, subleasing it or finding ways of consolidating groups. In this environment, we think that could be very helpful for businesses."
With more than three decades' real estate law practice, Saft comes into his new position amid what he sees as potentially more fallout for the industry in the next few years. Although there's more optimism about the economy now than there in 2009, "we're going to see serious problems evolving in the commercial real estate sector and perhaps in the residential sector," he says. He cites real unemployment at 18%, depressed commercial rents, difficulty of obtaining credit and "a tremendous amount of debt coming due." In the residential sector, it's the 'Catch 22' of a growing population with growing housing and lack of access to credit.
"We're trying to be as creative as possible in helping our clients through this, creativity to a large extent means sitting down lenders and working through business plans that make sense to them," Saft says. "It makes sense, both in terms of our investor clients working with their lenders to come up with creative solutions to the lenders' problems and in terms of our working with lenders, trying to protect their loans, coming up with short-term solutions to get through the next year or two and longer-term solutions dealing with how the lenders can have an exit strategy."
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
