For those interested in selling business properties in Los Angeles, issues can easily crop up that are beyond the seller’s control. However, in some cases, some of the issues that arise can be blamed on the seller’s mistakes. Here are a couple of mistakes that sellers of properties featuring commercial leases may make in California.

One common mistake that sellers make involves not approaching month-to-month leases properly. If a buyer is using a lender, the lender will want to see that the seller has a contractual flow of income that is greater than the mortgage payment. For sellers who may have some month-to-month tenants paying rent amounts that are below market, the sellers would be wise to lock these tenants into longer-term leases. If the property buyers will likely maintain these tenants, then the sellers may wish to get the tenants signed to one-year leases at the very least.

Another common mistake involves overpricing properties. All properties are unique, so establishing the perfect prices for properties can be complicated. The goal is to price a property in an aggressive manner without necessarily turning off interested buyers. If the prices of properties are too high, buyers may be reluctant to inquire about them, thus leading to lost sales opportunities for the sellers of these properties.

Selling properties featuring commercial leases can be rewarding if the sellers can market these properties effectively. However, in addition to dealing with the sales aspect of a deal, sellers must be prepared to deal with its legal aspects as well. An attorney can provide sellers with the guidance they need to navigate even the most legally complex deals with confidence in Los Angeles.

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When it comes to insurance needs and risk management for development projects, you want to make sure that you have all of your bases covered. Dangers and hazards are everywhere at construction sites, and it’s nearly impossible to ensure everyone’s safety 100 percent of the time.

Not only could the contractors and subcontractors working at the site suffer injuries, but someone not involved may also end up injured depending on the circumstances. In addition, the potential for inadvertent damage to your property or a neighboring property also exists. How are you going to cover everyone?

Enter the OCIP

Perhaps your development needs an OCIP, which stands for owner controlled insurance program. This general liability insurance exists to cover everyone involved in the project from you, as the property owner, down to the subcontractors. Even if someone else on the project causes damage or suffers an injury, it will eventually lead to you, so making sure that there is enough insurance to go around may prove useful.

Seasoned developers may be wondering why something that used to exist only for projects worth at least $50 million ends up on smaller projects. These days, it saves everyone time and money since only one policy exists instead of several — one policy for one project. The intent of an OCIP is to simplify the process.

Negotiating and paying for the OCIP

You and the general contractor work out the details of the policy, which the general contractor then purchases. The general contractor hires subcontractors at lower rates since they won’t need to carry their own liability insurance for the project.

The project manager is the point of contact for claims and is responsible for the payment of deductibles. Whether the subcontractor that caused the damaged in the claim pays any of the deductible is a point of negotiation when the subcontractor is hired and should be outlined in the resulting contract.

Coverage and the OCIP

At the very least, the OCIP contains workers’ compensation insurance and commercial general liability insurance, but it may also contain one or more of the following depending on the needs of the parties involved and the project itself:

• Builders risk insurance
• Umbrella insurance
• Professional liability insurance
• Pollution liability insurance

An OCIP may not contain the following types of insurance:

• Commercial property insurance
• Commercial vehicle liability insurance
• Inland marine insurance

To learn more about the advantages and disadvantages of an OCIP, along with whether it makes the most sense for your project, you may want to sit down with an attorney with experience in risk management and insurance. It would also be beneficial to have an advocate on your side when it comes time to negotiate the terms of your project’s insurance policy or policies to make sure you receive the best possible terms.

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The real estate world continues to evolve, so much so that it can be difficult to keep up. Of course, failure to keep up may mean many lost investing opportunities. Here is a look at a particular real estate myth that some investors in Los Angeles believe — a myth that impacts those interested in investing in properties featuring commercial leases.

E-commerce has most definitely changed how consumers shop. However, this does not mean that physical retailers will be extinct in the near future. After all, retail sales in stores made up more than 90 percent of the $5 million-plus generated in the United States retail market in 2017. In addition, retail sales are slated to climb more than 4 percent this year.

The retail world is here to stay. It is simply taking on a new look. Landlords today are turning to pop-up tenants, entertainment and food-and-beverage businesses to give today’s consumers the type of diversity they are demanding. Convenience and discount merchandisers are especially popping up in droves due to high demand. The trick in 2018’s retail market is determining what customers are looking for and cannot easily get online.

With retail still alive and going strong in Los Angeles, now might be the perfect time to invest in properties featuring commercial leases. Once these types of properties are purchased, investors can simply focus on drawing the right tenants to their spaces with the hopes of meeting local shoppers’ needs and ultimately seeing their profits soar. An attorney can provide an investor with the guidance he or she needs to complete a commercial real estate property purchase, ensuring that his or her best interests are protected each step of the way.

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The real estate market in Los Angeles and elsewhere continues to change thanks to the advancements being made in technology. A particular change that appears to becoming to real estate is the increasing use of cryptocurrency. This form of currency may come in handy not only for residential real estate but also for purchasing properties featuring commercial leases.

Real estate appears to be the ideal sector for embracing blockchain-driven innovation. In the past, completing real estate transactions via digital channels was never the norm. After all, these types of transactions have traditionally be conducted face-to-face with a wide range of entities.

However, blockchain is opening up a number of ways in which to change this. For instance, the smart contracts available in today’s blockchain platforms currently allow for the tokenization and trading of real estate using Bitcoin and other cryptocurrencies. With blockchain technology, those completing real estate transactions essentially no longer need an expensive broker to facilitate their transactions. Instead, they can use the blockchain — a peer-to-peer, distributed network — instead. A major benefit of this is that the blockchain may make property data much more accessible and centralized.

Whether properties featuring commercial leases are purchased with cryptocurrency or with traditional cash, the process itself can seem daunting. This is particularly true for those in Los Angeles who have little experience with the dynamic and competitive commercial real estate market. Fortunately, an attorney can provide the guidance needed to navigate these types of transactions correctly and confident in the Golden State.

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A large office campus that eBay occupies in San Jose, California, was recently purchased. The sale price for the building featuring commercial leases was over $130 million. Investors with ties to another country completed the major purchase, the likes of which are continuing to draw attention throughout the Golden State, including in Los Angeles.

The office campus that was recently bought spans 250,000 square feet and features four buildings. The investors, who paid a total of $132.5 million for the campus and also secured an $88 million loan from a bank, have completed other notable real estate deals recently as well. For instance, in July 2017, they bought an office complex containing the National Aeronautics Space Agency’s headquarters. The investors also purchased the DreamWorks Animation’s headquarters in Oct.  2017.

Several other companies have all purchased big properties in the northern part of San Jose as well. These high-profile businesses include Samsung, Microsoft, Google and Apple, for example. Demand is expected to continue to drive development activity and investment in northern San Jose.

Purchasing properties featuring commercial leases in California can be both exhilarating and intimidating, as one wrong decision can end up costing a buyer more than expected or may derail a potentially favorable deal altogether. This is true whether it is a buyer’s first time or fifth time completing this type of real estate transaction. Fortunately, a real estate attorney in Los Angeles can walk a buyer through the transaction to ensure that his or her best interests are protected during all stages of the process.

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When entering into a lease agreement for your commercial space, you will probably spend a significant amount of time negotiating what would make up your rental payment, how to split the responsibilities for common areas and the particulars regarding the space itself.

Once you resolve those issues, you may want to turn your attention to issues of liability. This will help dictate what types of insurance your rental agreement may require you to maintain during the term of the lease. Of course, you want to make sure you have ample coverage for anything that could go wrong, but more than likely, you don’t want to spend more than necessary on premiums.

Insuring against damage to property

It may seem obvious that you would need a policy to protect you against damage to the property. The question is what type of policy your landlord may require. A “named peril” policy only covers specific issues such as fire or hail damage. An “all risk” policy covers you no matter what happens.

Insuring against lost income

If something happens and the building becomes uninhabitable, it will obviously affect your ability to operate and, hence, to pay rent. You may consider purchasing a policy that covers the loss of rent, along with a business interruption policy. These policies may help keep you afloat while you are unable to do business because you are unable to occupy the rental space.

Insuring against third-party claims

Liability insurance is crucial, especially when dealing with the public. Your lease may specify a certain amount of general liability insurance, but that may not cover everything you need it to cover. You may want to obtain coverage for employment practices and products liability as well. Essentially, your liability insurance should cover any liability that may arise due to your business and its operations.

Paying for the insurance you need

When it comes to paying for the insurance, you may be able to negotiate those costs based on the type of lease you enter into with the landlord. In most cases, the insurance policies must cover both the tenant and the property owner, which is why you may be able to negotiate payment of the premiums.

Knowing whether you have the right insurance coverage — and enough of it — may not be as simple as it sounds. The goal is to protect yourself as much as possible. Sifting through all of the options available to you may seem like a daunting task, but you don’t have to do it alone. Relying on the legal resources available to you here in Los Angeles could make your experience less stressful and more satisfying.

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In Los Angeles and elsewhere, non-residential real estate remains in high demand. A number of factors have been contributing to the growing demand for real estate featuring commercial leases. Here is a glimpse at some of these factors.

First, experts say that, during the next few years, technological advancement will continue to drive real estate growth across the country. Another possible contributing factor to real estate growth in the near future is the recent rewriting of the nation’s tax code that Congress passed. After all, this is the most extensive update of the code in three decades.

Solid job growth is also signaling opportunities in the real estate sector. In a survey, 66 percent of executives said that job creation this year would be significantly or marginally higher than last year. Nonetheless, nearly half of survey respondents asserted that they were concerned about the impacts of rising interest rates on the U.S. economy, which might temper the current momentum of the market. When it comes to financing, though, many investors are turning to banks and private equity funds to fund their real estate transactions.

The real estate market in Los Angeles and other parts of California is a complex beast. Thus, naturally, purchasing properties featuring commercial leases can be complicated and overwhelming. Fortunately, buyers do not have to go about their real estate transactions alone. An attorney can provide them with the direction they need to complete their deals in the most personally favorable manner possible in the Golden State.

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In an ideal world, disputes about agreements would never crop up. However, the world is not perfect, so real estate dispute situations are sometimes unavoidable. A common dispute in the real estate world in Los Angeles and elsewhere has to do with breach of contract.

A breach of contract happens when two parties enter into an agreement but one party fails to fulfill its contractual obligations. A breach can happen when a party does not perform on time, for example. It may also occur if a party fails to perform in line with the agreement’s terms, or perhaps the party fails to perform altogether. For instance, maybe a home seller fails to fulfill his vow to offer clear title to his property, or maybe a seller ends up taking lighting fixtures that he had agreed to leave behind.

Once a real estate contract is breached, the two parties might try to enforce the terms of the contract and resolve the matter on their own. If their informal attempts at resolving the dispute fail, they may try alternative dispute resolution options, such as mediation or arbitration. However, the most frequently pursued step is a legal suit.

The party who has been negatively impacted by a reported breach of contract may decide to file a lawsuit against the allegedly breaching party, seeking damages. An attorney in Los Angeles can provide the guidance needed to pursue the most personally favorable outcome considering the circumstances surrounding the real estate dispute. The attorney’s ultimate goal is to make sure that the plaintiff’s rights are protected during each stage of the civil court proceedings.

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As Americans in Southern California keep aging, the current senior care center inventory will not be enough to support the increasing number of elderly individuals. This is particularly true for centers that deal with memory care — for example, those that accommodate patients with Alzheimer’s disease and dementia. At the same time, the shrinking availability of land and commercial leases in dense parts of Southern California, such as Los Angeles, has pushed memory care-related development into the region’s secondary markets.

Secondary markets for memory care development include the likes of San Diego County, the San Fernando Valley and Riverside County. Those wishing to develop land for memory care facilities face stiff competition from single-family and multifamily developers. After all, the latter have a far better land stake since they can cover the cost of land with their handy compressed cap rates.

In addition to looking at secondary markets, developers of memory care facilities have become more creative when it comes to building and financing their spaces. For instance, long-term leases for land have become more commonplace across Southern California for all classes of assets. These types of leases were once unpopular for developers and banks to use for underwriting purposes.

Los Angeles remains an in-demand area for those looking for commercial leases or property to develop for their businesses. However, this also means that competition there is tough. Fortunately, an attorney can offer the legal guidance that aspiring business tenants, property investors or property developers need to achieve their unique goals in the booming Southern California real estate market.

Source: bisnow.com, “High Land Prices An Obstacle For SoCal Memory Care Developers“, Parker Brown, May 29, 2018

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A real estate firm recently purchased a condominium interest in California. Swift Real Estate acquired an interest in an office asset spanning more than 219,000 square feet in San Francisco. These properties featuring commercial leases remain in demand in other parts of the state as well, including in Los Angeles.

The real estate firm paid more than $109 million for the condo interest, which Broadreach Capital owned after purchasing it for more than $42 million back in 2007. The property, which was renovated at that time, features retail space on the ground level and houses noteworthy tenants, including the City of San Francisco and Twitter. San Francisco in 2017 renewed a lease for more than 69,000 square feet, which it is using for its city attorney’s office.

The real estate investment firm has acquired several properties over the past 12 months in key real estate markets along the West Coast. For instance, it recently added an office property in Silicon Valley as well as an office tower in San Diego. However, the company has also sold multiple properties and generated profits during the past 12 months in such areas as Irvine, California, and Portland, Oregon.

Purchasing and selling properties featuring commercial leases can be both an exciting and a daunting undertaking. This is especially the case for those who have never gone through the process before. However, a real estate attorney in Los Angeles can provide the necessary guidance to cross every “t” and dot every “i” during even the most complicated commercial real estate transactions in the Golden State.

Source: cpexecutive.com, “Swift Real Estate Grabs $110M SF Office Tower“, Barbra Murray, May 23, 2018

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