Legal Advice Blog: Legal Advice, Case Insights, & Local Law Information

Across the country, retail locations of various types of stores are closing at a rapid pace. With more and more shopping opportunities available online, more consumers are choosing to spend their money from the comfort of their own homes. However, these trends are not necessarily true for Los Angeles. For some time now, Los Angeles has remained one of the most expensive and highly sought real estate areas in the country. Currently, the popularity and growth of retail locations in this part of California is one of the reasons for the area’s booming real estate market. At this time, vacancies for retail locations are low, which means they are in high demand by various types of businesses. Retail in Los Angeles The percentage of retail vacancies in the Los Angeles area remains at about 4 percent, which is slightly higher than in 2017, but this is still good news for commercial property owners and tenants. If you are a property owner or a business owner, it may prove helpful to understand more about the current state of the commercial real estate market and what it may mean for you. Consider the following: Prices for retail locations in L.A. range significantly, depending on location. Prices per square foot range from $6 to $90. Los Angeles’ retail trends are the opposite of other parts of the country, where there are more vacancies due to closures. Los Angeles is still very popular for established brands to operate stores, as well as new and emerging brands to get their start. Retail locations, in particularly popular and busy areas of the city, are more costly and in high demand because of exposure and traffic. Despite the good news for retail business and commercial property owners in the area, there are still closures and vacancies. It is beneficial for businesses to carefully consider location and work to reduce their risks when choosing to open a physical location in Los Angeles. Protecting the rights of commercial tenants If you are a commercial tenant, it is particularly important for you to understand how to protect your interests in the process of choosing a location and negotiating a lease. Before you sign a contract that could impact your retail business, you would be wise to seek an evaluation of your case. An experienced real estate attorney may prove to be a useful and beneficial ally as you make these important decisions for the future of your company.

The market for nonresidential properties appears to be relatively robust in Southern California. This is evidenced by the fact that the renters of large office spaces in Orange County and Los Angeles are jumping on their lease renewals early. Research shows that office tenants that are occupying at least 75,000 square feet of properties featuring commercial leases are renewing their leases 22 months ahead of time on average. This trend has been going on since 2012. By renewing their leases 22 months early, tenants can make the most expedient economic decisions for themselves and weigh increasing rents. They usually need a lot of lead time for finding new locations if their current spaces’ physical attributes or economics no longer work for them. In addition, if tenants need large blocks, this can be hard to find or take landlords a while to assemble. However, smaller tenants — those occupying under 75,000 square feet — are not renewing their leases as quickly. Still, the cost of renewing a lease is typically a lot lower than relocating to a new space, which is why lease renewals are so popular among tenants. Recent research showed that all in all, commercial renters are leasing about 135,000 square feet on average and that their lease terms are 101 months on average. An increasing number of these spaces are being used as co-working spaces, with Los Angeles being the nation’s second-biggest co-working market. Leasing commercial spaces can be both exhilarating and intimidating for business owners in Los Angeles due to the stiff competition that exists in this area of California. However, an attorney can provide aspiring tenants with the guidance they need to secure the best commercial leases for their needs. This includes reviewing a lease agreement and negotiating it before a business owner signs on the dotted line.

The market for nonresidential properties appears to be relatively robust in Southern California. This is evidenced by the fact that the renters of large office spaces in Orange County and Los Angeles are jumping on their lease renewals early. Research shows that office tenants that are occupying at least 75,000 square feet of properties featuring commercial leases are renewing their leases 22 months ahead of time on average. This trend has been going on since 2012. By renewing their leases 22 months early, tenants can make the most expedient economic decisions for themselves and weigh increasing rents. They usually need a lot of lead time for finding new locations if their current spaces’ physical attributes or economics no longer work for them. In addition, if tenants need large blocks, this can be hard to find or take landlords a while to assemble. However, smaller tenants — those occupying under 75,000 square feet — are not renewing their leases as quickly. Still, the cost of renewing a lease is typically a lot lower than relocating to a new space, which is why lease renewals are so popular among tenants. Recent research showed that all in all, commercial renters are leasing about 135,000 square feet on average and that their lease terms are 101 months on average. An increasing number of these spaces are being used as co-working spaces, with Los Angeles being the nation’s second-biggest co-working market. Leasing commercial spaces can be both exhilarating and intimidating for business owners in Los Angeles due to the stiff competition that exists in this area of California. However, an attorney can provide aspiring tenants with the guidance they need to secure the best commercial leases for their needs. This includes reviewing a lease agreement and negotiating it before a business owner signs on the dotted line.

When it comes to selling properties in Los Angeles, sellers are legally obligated to disclose possible problems to prospective buyers that may impact the properties’ value. Also, it is not legal to purposely hide major property defects. If a seller fails to share with potential buyers any major problems that his or her property has, this is grounds for real estate litigation. As a general rule of thumb, property owners must make disclosures only for those problems of which they are aware. This means that they generally do not need to have professionals inspect their properties before they sell them. However, hiring a professional can be helpful in that the seller may learn about a problem and then quickly fix it before putting his or her property on the market. This will help him or her to avoid potentially losing a good buyer to a problem that the buyer may discover when he or she hires his or her own inspector to examine the property for issues. Of course, if sellers do end up discovering problems with their properties, they do not necessarily have to repair them. They only have to disclose the issues. Still, these unresolved issues could very well impact the valuations that appraisers or buyers place on their properties. The state of California has very detailed requirements for disclosing real estate issues, with real estate litigation being a viable option for buyers if these issues are not disclosed properly. For this reason, an applied understanding of the state’s laws in this area is critical for those wishing to sell property here. An attorney in Los Angeles can walk buyers and sellers through these requirements so that his or her best interests are protected during a real estate transaction in the Golden State.

When it comes to selling properties in Los Angeles, sellers are legally obligated to disclose possible problems to prospective buyers that may impact the properties’ value. Also, it is not legal to purposely hide major property defects. If a seller fails to share with potential buyers any major problems that his or her property has, this is grounds for real estate litigation. As a general rule of thumb, property owners must make disclosures only for those problems of which they are aware. This means that they generally do not need to have professionals inspect their properties before they sell them. However, hiring a professional can be helpful in that the seller may learn about a problem and then quickly fix it before putting his or her property on the market. This will help him or her to avoid potentially losing a good buyer to a problem that the buyer may discover when he or she hires his or her own inspector to examine the property for issues. Of course, if sellers do end up discovering problems with their properties, they do not necessarily have to repair them. They only have to disclose the issues. Still, these unresolved issues could very well impact the valuations that appraisers or buyers place on their properties. The state of California has very detailed requirements for disclosing real estate issues, with real estate litigation being a viable option for buyers if these issues are not disclosed properly. For this reason, an applied understanding of the state’s laws in this area is critical for those wishing to sell property here. An attorney in Los Angeles can walk buyers and sellers through these requirements so that his or her best interests are protected during a real estate transaction in the Golden State.

The California e-commerce industry has apparently been on an upswing in the Los Angeles area. However, it is clear from the area’s retail vacancies that brick-and-mortar shops are still strong contenders. This is great news for those interested in purchasing buildings featuring commercial leases for retail business owners. The figure for Los Angeles County retail vacancies during 2018’s second quarter is 4 percent. This is a slight jump from last year, when the figure for vacancies rested at 3.9 percent. On top of this, the current year’s figure is far smaller than the vacancy rate of 5.9 percent seen back in 2009. Prices for retail properties in the Los Angeles area are between $6 and $10 per square foot in a popular location. However, they can easily jump to $90 for a single square foot in areas such as Beverly Hills’ Rodeo Drive. The trend taking place in Los Angeles stands in contrast to what is taking place on the East Coast — specifically, in New York City. The Big Apple has witnessed an alarming jump in retail vacancies over the past two years. In light of the above findings, Southern California appears to be a promising location for investing in retail properties. However, the process of purchasing a building featuring commercial leases can understandably be complicated, especially for anyone who has not navigated this process before. Fortunately, an attorney in Los Angeles can provide commercial real estate investors with the direction they need to successfully execute their deals time and time again in the Golden State.

The California e-commerce industry has apparently been on an upswing in the Los Angeles area. However, it is clear from the area’s retail vacancies that brick-and-mortar shops are still strong contenders. This is great news for those interested in purchasing buildings featuring commercial leases for retail business owners. The figure for Los Angeles County retail vacancies during 2018’s second quarter is 4 percent. This is a slight jump from last year, when the figure for vacancies rested at 3.9 percent. On top of this, the current year’s figure is far smaller than the vacancy rate of 5.9 percent seen back in 2009. Prices for retail properties in the Los Angeles area are between $6 and $10 per square foot in a popular location. However, they can easily jump to $90 for a single square foot in areas such as Beverly Hills’ Rodeo Drive. The trend taking place in Los Angeles stands in contrast to what is taking place on the East Coast — specifically, in New York City. The Big Apple has witnessed an alarming jump in retail vacancies over the past two years. In light of the above findings, Southern California appears to be a promising location for investing in retail properties. However, the process of purchasing a building featuring commercial leases can understandably be complicated, especially for anyone who has not navigated this process before. Fortunately, an attorney in Los Angeles can provide commercial real estate investors with the direction they need to successfully execute their deals time and time again in the Golden State.

When people in Los Angeles think about real estate investing, they often lump residential property investing with investing in non-residential properties. However, the two are quite different. Here is a look at the difference between investing in a single-family residence, or SFR, and a property featuring commercial leases. Unlike investing in SFRs, investing in commercial properties focuses on acquiring, developing, leasing and operating a variety of types of property. These property types include apartments as well as retail, office, hospitality and industrial properties. Still other commercial property types include senior living, self-storage and student housing. On the flip side, investing in an SFR usually consists of purchasing, leasing and operating a single-unit dwelling. An SFR’s value drivers include the value of the land, the structure’s value and the supply/demand premium, which is a reflection of submarket dynamics. Commercial real estate has these same value drivers, although it also has an additional one: net operating income, also known as NOI. NOI refers to revenue obtained from a property minus one’s operating expenses. This particular value driver is exceptionally large and thus can have a major impact on the value of an asset — especially in real estate markets featuring high rents. Getting into real estate investing can certainly be exciting due to the great income potential that exists in the current market. However, investing in properties featuring commercial leases can especially be tricky. Fortunately, an attorney can provide aspiring investors with the guidance they need to successfully navigate the legal side of any real estate transaction in Los Angeles.

When people in Los Angeles think about real estate investing, they often lump residential property investing with investing in non-residential properties. However, the two are quite different. Here is a look at the difference between investing in a single-family residence, or SFR, and a property featuring commercial leases. Unlike investing in SFRs, investing in commercial properties focuses on acquiring, developing, leasing and operating a variety of types of property. These property types include apartments as well as retail, office, hospitality and industrial properties. Still other commercial property types include senior living, self-storage and student housing. On the flip side, investing in an SFR usually consists of purchasing, leasing and operating a single-unit dwelling. An SFR’s value drivers include the value of the land, the structure’s value and the supply/demand premium, which is a reflection of submarket dynamics. Commercial real estate has these same value drivers, although it also has an additional one: net operating income, also known as NOI. NOI refers to revenue obtained from a property minus one’s operating expenses. This particular value driver is exceptionally large and thus can have a major impact on the value of an asset — especially in real estate markets featuring high rents. Getting into real estate investing can certainly be exciting due to the great income potential that exists in the current market. However, investing in properties featuring commercial leases can especially be tricky. Fortunately, an attorney can provide aspiring investors with the guidance they need to successfully navigate the legal side of any real estate transaction in Los Angeles.

The growth of the prices of nonresidential properties in the United States, including Los Angeles and other parts of California, appears to have cooled off during the summer. However, some sectors of the commercial real estate market continue to experience quick sales price gains in spite of already being at record price levels. This may be welcome news for those interested in selling properties featuring commercial leases. Of all of the types of commercial assets, apartments experienced the largest monthly gains of a little more than 1 percent in July. In addition, they experienced the greatest year-over-year increases of 12 percent. Retail additionally saw a price increase of nearly 2 percent. The sales prices of office properties also increased more than 7 percent. Office properties in suburban areas were especially in demand. Meanwhile, the prices of industrial assets decreased during the month, dropping 0.3 percent, although these assets were the only ones that experienced a decline. With properties featuring commercial leases remaining hot, now might be a smart time to sell these properties for a profit. At the same time, investors may be interested in purchasing these highly valued properties with the goal of generating consistent income from them and eventually selling them for a profit. The challenge for many individuals, though, is figuring out how to navigate a commercial real estate deal — particularly when they have never been through the process. Fortunately, an attorney in Los Angeles can help both buyers and sellers to successfully complete their real estate transactions while ensuring that their best interests are protected each step of the way.

The growth of the prices of nonresidential properties in the United States, including Los Angeles and other parts of California, appears to have cooled off during the summer. However, some sectors of the commercial real estate market continue to experience quick sales price gains in spite of already being at record price levels. This may be welcome news for those interested in selling properties featuring commercial leases. Of all of the types of commercial assets, apartments experienced the largest monthly gains of a little more than 1 percent in July. In addition, they experienced the greatest year-over-year increases of 12 percent. Retail additionally saw a price increase of nearly 2 percent. The sales prices of office properties also increased more than 7 percent. Office properties in suburban areas were especially in demand. Meanwhile, the prices of industrial assets decreased during the month, dropping 0.3 percent, although these assets were the only ones that experienced a decline. With properties featuring commercial leases remaining hot, now might be a smart time to sell these properties for a profit. At the same time, investors may be interested in purchasing these highly valued properties with the goal of generating consistent income from them and eventually selling them for a profit. The challenge for many individuals, though, is figuring out how to navigate a commercial real estate deal — particularly when they have never been through the process. Fortunately, an attorney in Los Angeles can help both buyers and sellers to successfully complete their real estate transactions while ensuring that their best interests are protected each step of the way.

California business owners understand that unexpected complications can lead to both legal issues and financial losses. In some cases, the impact can be significant, and business owners see the importance of effective risk management and reducing the chance of problems. One practical way to avoid certain types of problems is to strategically negotiate the terms of any commercial lease. Contract negotiation is a crucial aspect of protecting the best interests of your company, and you can do this with the terms of a lease as well. While landlords are not always willing to negotiate the terms of a lease contract, businesses find it prudent to ensure they take effective measures in order to ensure they do not face unnecessary exposure to various risks. The terms of your commercial lease could impact your company for years to come. Reducing the chance of complications or financial harm Commercial leases are different from residential leases in various ways. For example, the terms of most residential leases are generally not negotiable. Issues to consider include the following: Commercial leases can cover an extensive amount of time, sometimes up to years at a time. There are fewer legal protections available through a commercial lease, which means it is critical to negotiate fair and reasonable terms. Each commercial tenant is different, and varied terms are common – it could be important to secure terms that are beneficial for your specific needs Examples of terms you may be able to negotiate before signing a commercial lease include future rent increases, financial responsibilities of each party and penalties for early termination of the lease. Fair commercial leases are important for all types of business, including those seeking industrial space, offices, retail storefronts and mixed-use buildings. The financial future of your business The decisions you make today will have a future impact on the health and success of your company. A bad lease could derail your business and keep you from your long-term goals. Risk management involves many things, but it can be as simple as ensuring you are agreeing to terms that are fair, practical and sustainable for the next few years of your company’s life. Due to the significant financial risk involved with signing a commercial lease, it may be beneficial to have experienced guidance as you take this step. Before signing a contract, it can be helpful to have it carefully reviewed and evaluated by a knowledgeable legal professional.