U.S. Bank National Association
There’s a lot of stress out there,” is how Sachin Jay Darji describes the real estate market right now. “Real estate is a huge market, it dwarfs everything else in dollar value,” said Darji, associate general counsel and vice president at U.S. Bank National Association.
There’s something of a reckoning going on with markets. “There are a lot of projects that were invested in prior to 2020 but don’t make any sense. The typical real estate loan after five years is in refinancing.” The banking system is really healthy, Darji said, despite the run at Silicon Valley Bank, but he wonders what kind of flexibility banks now are able to offer lenders.
But, the rate of commercial foreclosure volume is down, Darji said. With government support, there has been an appetite for buyers to go forward. “The cliff comes when borrowers have to refinance, when they see their return isn’t happening, but loans are still performing so banks haven’t had to do anything,” he said.
“I always joke that every project works at the right price. Find the right price, find the right user. There are still buyers out there. It’s a positive development.”
Darji is concerned that law firms have not supported real estate lawyers and developed the practice. There are multiple causes for concern, he said. In the 1990s and 2000s, law firms weren’t changing people. “There was less handing off of responsibility for clients to newer lawyers. Retirements resulted in the obliteration of expertise,” he said.
“It matters that people have seasoning. Are there going to be enough people in five or six years? Are we doing enough to train real property lawyers? We deal with archaic laws and practices and people who understand how real property works are dwindling. How do we meet the needs of the clients, how to we provide expertise?” he asked.