The real estate sector supports a historically cyclical industry, but high interest rates have caused a cascading series of events that have negatively impacted the sector that was compounded by the impact of the pandemic and facing looming debt maturities.
Higher interest rates have reduced valuations, which in turn has led to higher carrying costs, lower valuations and lenders leaving the sector. Nevertheless, there have been some bright spots such as industrial, retail and build-to-suit residential. “Surprisingly, retail has shown strength as owners have re-oriented and re-developed their centers to, for instance, add housing. All of this has led to entitlement and development activity to address the demand by builders for more land that is entitled for residential uses,” said Mathew Wyman, partner and chairperson for Cox, Castle & Nicholson.
Cox, Castle & Nicholson has offices in Los Angeles, Orange County and San Francisco. It employs 140 transactional and litigation attorneys across the state and specializes in all aspects of commercial real estate. That includes transactions, entitlement, development, property leasing, and environmental compliance. Environmental issues have gained in demand with the growth of new technology in the alternative energy sector.
“We see this sector as only continuing to grow as new technology both enables and encourages its development,” said Wyman.
More changes are coming for the real estate industry. For example, the state recently passed AB 98, which will change how large warehouses are developed and operated. Industrial real estate operators will likely face increased costs because of the infrastructure and equipment requirements, including the need for detailed truck routing plans and separate truck entrances. The first set of standards will go into effect on Jan. 1, 2025, and the remaining standards a year later.
Overall, the 25 largest real estate practice groups in Los Angeles County reported 490 attorneys for the specialty in local offices, which included 287 partners.
