As we noted in our last post, the demand for multifamily residential housing is expected to continue through the next few years. However, open spaces in Los Angeles to construct such buildings is becoming increasingly difficult to come by.

According to a recent globest.com report, there are only a few open spaces left, so many new projects are conceived to fit specific guidelines that have been instrumental for growth in urban metro areas. For instance, in Charlotte, North Carolina; Houston, Texas; Denver, Colorado and San Jose, California, new multifamily projects have been built on or near areas that exhibit these characteristics.

This post will highlight them.

Proximity to attractions – New developments in each of the cities mentioned were built in close proximity to attractive retail and entertainment venues. These included new outdoor shopping centers (as opposed to malls), movie theaters and restaurants.

Easy access to major roadways – While the developments were not located on major thoroughfares, residents had easy access to freeways and expressways that would enable them to reach major employment centers in a reasonable amount of time.

Driving distance to universities – In the same vein, successful new developments have been built in areas that provide easy access to university learning centers. Indeed, this has not caused a spike in new university housing, but it reflects a response to meet the need of millenials who are working towards degrees while working full time.

As we have noted in a number of our posts, the keys to being successful in real estate are anticipating trends and meeting demand. A skilled real estate attorney can help investors develop projects that do just that.

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With the advancements in educational technology, it is common for colleges and universities to offer courses online rather than having students live on campus or commute to classes. Because of this, many institutions save money by minimizing their physical presence. This is the situation in which California’s Claremont School of Theology finds itself. However, the sale of institutional property is not always easy, and the school is currently embroiled in a real estate dispute with its affiliate, the Claremont Consortium.

The Consortium sold the property to the seminary in 1957, but the deed included a provision that gave the Consortium first options for repurchasing the land. If the seminary ever decided to sell the property, it would be sold back to the Consortium at fair market value or using a formula that calculated taxes and depreciation. However, when the Consortium made its offer of $12.7 million for land the seminary valued at over $25 million, the seminary objected.

According to the Consortium, its final offer of $14 million, which was also rejected by the seminary, was $10 million above the stipulation in the deed. While the seminary believes the deed’s provision for calculating the land value expired in 1987, the Consortium says it was renewed in 2001. Both sides claim they are acting in good faith, but negotiations broke down quickly. The seminary recently filed suit against the Consortium.

The solution to their real estate dispute seems to hinge on the validity of a single clause in the original deed. If a California court finds that the clause is still valid, the seminary may have no choice but to accept the offer from the Consortium. However, even if the dispute is resolved, it is possible that the relationship between the two institutions may be irreparably damaged.

Source: dailybulletin.com, “Seminary sues Claremont Colleges over disputed land deal“, Lisa Marquez, Sept. 18, 2016

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In our prior posts, we have noted how the near future is bright for construction of commercial projects in Southern California. Cheap money, job growth and population growth are all substantial drivers of this growth. But for investors and developers, the principal question is where to find appropriate deals.

Indeed, there are many venues to consider for different needs. However, there are two that are drawing careful consideration from developers and investors. This post will highlight two popular cities.

Long Beach – According to many real estate professionals, Long Beach is ripe with properties that are virtually bargains compared to other cities around the region. Additionally, it has many of the amenities that millenials and potential office tenants are looking for, including prime outdoor and indoor spaces, walkable amenities and proximity to the Pacific Ocean. With such favorable price points and new leadership committed to redevelopment, Long Beach is poised for a renaissance.

Burbank – Like Long Beach, Burbank is working diligently to court millenials, as city leaders believe that this age group is the driver of economic growth. Burbank is home to more than 1000 entertainment related companies, making it the area with the highest concentration of such companies in Los Angeles County. Burbank is also going to be home to the largest IKEA in the United States, and several other high profile companies are building offices in the area, including Tesla Motors.

The emerging opportunities call for the guidance of an experienced real estate attorney. If you have questions about how to protect your interests in the midst of a new development, we can help.

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Investing in real estate is reputable for being profitable. Investors have a vast range of options, and one of them is commercial real estate (CRE), which is gaining a lot of attention as time goes by. This is because it has a higher income yield and low maintenance costs. However, you should consider crucial aspects when investing in CRE, including the property type.

Here is what you should know about this factor.

Decide a property type

CRE includes offices, retail, industrial and multifamily units. With offices, you will rent office spaces to businesses like law and accounting firms. These are the typical corporate-style workspaces. Retail CRE is for retail purposes. Thus, your clients will be shopping centers, restaurants, coffee shops and healthcare facilities.

With industrial spaces, you will rent to companies with heavy processes, such as manufacturing, storage (warehouses), assembly and production. Lastly, multifamily CRE defines the larger residential complexes with many units. They are for residential purposes but generate high rental income, hence commercial properties.

You should know which property type to invest in to make your work more manageable. It can be challenging to look at all types, and the market can have hundreds of each. Thus, consider the pros and cons of each and choose a type you can manage.

Decide occupied or empty

When investing in CRE, you can purchase a building that’s already occupied or an empty one, in which you will market to find tenants. Further, you can buy land and build the property. It will be best to know which one you want from the beginning to make informed decisions.

The property type you invest in is crucial. You should obtain adequate information about the industry to make the right moves.

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Our last few posts have focused on the state of the market and the growing opportunities with regard to commercial real estate and office locations. However, it is important for real estate investors and financiers to recognize the trends that could shape real estate development in the near future.

Essentially, a recent globest.com article highlighted three related trends. We will describe what they are and how they may influence future projects.

Generation specific housing – It’s no secret that the number of people reaching age 65 are growing each month. With that, the number of senior housing and assisted living facilities has to grow as well. Because of this, securing financing for these projects has become a critical aspect of development.

Co-urbanism – Real estate development is changing with the changing population needs. This means that more multiuse projects that enable retail, office and living spaces to be in close proximity to each other have become important as working and shopping experiences continue to change.

Cyber risk – With more developments touting intelligent technological benefits, including smart grids and automated retail operations, it is essential that these buildings be protected from cyber attacks. Ransomware and other attacks geared towards seizing private information cannot be ignored, and developers must include plans for cyber risk management.

Indeed, the guidance and advice from experienced legal counsel can be very helpful as developers secure financing for future projects. But knowing how these three trends may shape future projects can give developers a better opportunity for success.

The preceding is not legal advice.

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Our last few posts have focused on the state of the market and the growing opportunities with regard to commercial real estate and office locations. However, it is important for real estate investors and financiers to recognize the trends that could shape real estate development in the near future.

Essentially, a recent globest.com article highlighted three related trends. We will describe what they are and how they may influence future projects.

Generation specific housing – It’s no secret that the number of people reaching age 65 are growing each month. With that, the number of senior housing and assisted living facilities has to grow as well. Because of this, securing financing for these projects has become a critical aspect of development.

Co-urbanism – Real estate development is changing with the changing population needs. This means that more multiuse projects that enable retail, office and living spaces to be in close proximity to each other have become important as working and shopping experiences continue to change.

Cyber risk – With more developments touting intelligent technological benefits, including smart grids and automated retail operations, it is essential that these buildings be protected from cyber attacks. Ransomware and other attacks geared towards seizing private information cannot be ignored, and developers must include plans for cyber risk management.

Indeed, the guidance and advice from experienced legal counsel can be very helpful as developers secure financing for future projects. But knowing how these three trends may shape future projects can give developers a better opportunity for success.

The preceding is not legal advice.

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As we have noted in a number of our posts, the commercial real estate market is poised to meet a number of expectations as mixed use properties become ever more popular and necessary. The latest example is Blossom Plaza.

Set in Chinatown in downtown Los Angeles, the $100 million project will have 237 apartment units (which include 53 low-income rental units) retail space as well as a three level parking garage. Additionally, the property will have direct access to a Metro station, which will be an added perk for residents.

Not only is Blossom Plaza the latest addition to downtown LA, it is the latest example of developers rushing “quickly” to acquire cheaper locations in order to develop properties at a reasonable expense. Indeed, land around the Staples Center and LA’s downtown core have become increasingly expensive, so developers had to get creative about locations that would be suitable in bringing a quality product to the public. After all, when a building is built at a lower price point because of lower real estate costs, there are a number of options available to the developer.

As a result of this project, and a similar venture entitled Jia Apartments in 2014, upward pressure is being placed on prices per square foot. Yes, it has not reached the magical $1000 per square foot threshold, but they are stark reminders that the growing economy will create additional opportunities.

If you have questions about commercial real estate financing, so that prime opportunities do not pass you by, an experienced attorney can advise you.

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Our last post voiced a word of caution with regard to commercial real estate. Essentially, with higher vacancy rates, prospective over-building and jitters in the commercial mortgage back securities market, signs pointing to a major downturn are visible in Southern California as well as other regions of the country.

Nevertheless, as one form of real estate seems vulnerable, another shows signs of phenomenal growth. The latest investments in Anaheim are among the largest in the United States. According to a GlobeSt.com report, nearly $6 billion in investments are taking shape around Disneyland and Angel Stadium of Anaheim.

Specifically, the addition of a Star Wars themed land at Disneyland was announced earlier this year. Also, four new luxury hotels and other lodging venues are under construction. This is in addition to the expansion of the Anaheim Convention Center. The new investments reflect the ongoing success of “destination investment” given that more people are willing to pay for quality entertainment experiences. This also compliments the ongoing need for space to host conventions.

Further, there are new homes, a shopping center, restaurants and office space being planned around the Platinum Triangle area around Angel Stadium. This area was once littered with warehouses and industrial venues. Now it is re-emerging as an ideal place to live, work and play. It is drawing comparisons to L.A. Live in downtown Los Angeles, and the East Village in downtown San Diego.

These types of multi-billion dollar investment plans require the guidance and expertise of experienced real estate attorneys. Contact a skilled lawyer who can help make ideas reality.

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The Clinton and Trump campaign camps didn’t really focus on the unemployment rate or the jobs report in their respective conventions, but the latest jobs report supports what analysts have been saying about the commercial real estate market for months.

The national economy added 225,000 new jobs in July, and the unemployment rate remained unchanged at 4.9 percent. Overall, analysts determined that 1.3 million jobs have been added since the beginning of 2016.

The professional and business sector added about 70,000 jobs. Additionally, the financial services sector added 18,000 jobs and hospitals added 17,000. The services industry also accounted for $19,000 jobs. Even the construction industry added jobs, which is not particularly common in summer months given how many projects are already underway.

The common denominator between these is that they all call for additional office space, which arguably accounts for the increase in commercial real estate projects across Southern California. We noted in our prior post the trends that could dictate the future of commercial real estate projects, and the increasing need for office space corresponds with these trends.

It remains to be seen whether the construction growth will continue in earnest. After all, the possibility of the Fed raising interest rates this fall is a viable possibility. In the meantime, investors and developers must make the best of existing opportunities, and an experienced real estate lawyer can help move potential to reality.

If you need assistance or have pressing finance questions, a real estate attorney can advise you.

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In a number of our posts, we have noted how the desire for commercial real estate may be slowing even though some of the prime indicators (e.g. vacancy rates, cost per square foot, overall economic growth) may suggest that there are still opportunities for investors to take advantage of. However, the key is to purchase a property or enter into a development agreement at the right time.

For many investors, the best time to do so is at the lowest point of a downturn, and according to a recent wallstreetdaily.com report, the time to invest in commercial real estate may be coming soon. The report suggests that the next economic downturn may seriously affect the commercial real estate market, especially considering how some retailers are struggling against their online counterparts.

Analysts worry about vacancy rates being higher than their pre-recession levels, but with so much more commercial space available compared to pre-recession rates, the elevated number of vacancies could be attributable to overbuilding. Also, the market for commercial mortgage backed securities (CMBS) is not behaving normally. The market has not bounced back since a correction in the early part of 2016 sent prices spiraling downward.

Further, with the FDIC, Federal Reserve and the Office of the Comptroller of the Currency expressing concerns over underwriting standards for commercial real estate loans, these factors all spell potential disaster for the market.

In times like this, it is important to review one’s legal options in the event the market sees a crash reminiscent of the 2008 housing crisis.

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