Local Executive Talks State Of DC Title Insurance Market
Acquiring title insurance remains a key part of CRE deals in 2017. Gary Cortellessa, Stewart Title senior vice president and senior underwriting counsel, sat down with Bisnow to discuss title insurance.
Bisnow: What is the most frequently misunderstood aspect of applying for title insurance?
Cortellessa: At Stewart Title’s Washington DC Commercial Services office, we provide one-stop shopping for title insurance locally, nationally and internationally. Real estate customs, practices and laws are different in each state and even in different parts of the same state. When transactions involve properties outside of the local area, we counsel customers on these differences. Another common misunderstanding is the amount of insurance needed for full coverage on a real estate investment. For example, if a developer has a policy on vacant land and then obtains a construction loan to build a building, the owner’s policy coverage should include the cost of the improvement.
Bisnow: Title insurance is a key component of many real estate transactions. How do you help first-time applicants understand the process of acquiring it?
Cortellessa: We are very proactive in dealing with new and repeat customers. Communication is key, and we make sure we understand the requirements of each transaction by discussing with customers their needs, timing issues and expectations. For new CRE purchasers, we explain all the steps to closing and all the details within the title insurance policy coverage. If the search and examination of the title uncovers any issues, we raise them early with the parties involved and proactively suggest ways to resolve them. We also explain which endorsements can remedy any perceived title issues, along with other commercial endorsements to enhance basic policy coverage. Together, we build trust and long-term relationships, and we work with all the relevant parties to resolve and facilitate issues and coordinate transactions through closing.
Bisnow: Which industries are driving commercial development in DC?
Cortellessa: In the DC metro market, industries and trends driving commercial development are the federal government, professional service firms such as law firms and lobbyists and foreign investors looking for stability. It is also affected by the influx of young Millennials attracted to the excitement of working in DC. Office, multifamily and mixed-use development are the top commercial segments. The DC metro area is fortunate to have a highly educated, professional and well-paid workforce that drives consumer spending. Overbuilding in DC is mitigated by the restriction that buildings cannot be higher than the Washington Monument — approximately 12 stories. The DC government is committed to upgrading and increasing affordable housing through private-public partnerships.
Bisnow: Where do you see the health of the DC real estate market in five years?
Cortellessa: DC is often described as recession-proof because of the federal government’s large influence. Government spending contributes approximately one-third of the gross domestic product in the DC metro area. While there are some ups and downs in the market, the changes are not as severe in the DC metro area — it is a fairly stable market. Over the next five years, we expect the East End and Washington waterfront along the Anacostia River to see continued development; Northern Virginia, especially Tysons Corner, will complete a phase of its 20-year redevelopment plans; Metro’s Silver line finished out to Dulles Airport; ongoing redevelopment in Rockville Pike and Bethesda, Md.; and continued building around new metro stops. While there might be some short-term pullbacks during periods of uncertainty with the new administration and rising interest rates, the future looks bright for the Shining City on the Hill.
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