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Commercial real estate leases and sales brisk

August is usually the slowest month of the year for commercial real estate transactions in California and around the country. This August has been different, however. So far, the summer as a whole has been very busy for commercial real estate and has enjoyed more brisk sales than those of previous years.

Transwestern reports that companies have leased 2.4 million square feet of office space in the last 90 days in the Bay Area. During the first quarter, only 700,000 square feet of office space was leased by businesses. New York has enjoyed similar volume increases. In July, sales and leases were up by 2.2 percent over June and by 10 percent over July 2016.

Lease dispute headed to arbitration after appeals court ruling

The 2nd District Court of Appeal in California has given a tenant a chance to arbitrate a dispute with a landlord in Los Angeles. This ruling reversed the decision of a lower court that had deemed the arbitration clause to be expired after 30 days from the notice that the landlord sent the tenant to quit the property.

The current landlord, DC Universal LLC, had bought the property in 2003, and the appeals court decided that the company had assumed the terms of the existing lease with the tenant, Appellant Universal Bank. A dispute that emerged between the parties after the purchase had been resolved with a third lease addendum that allowed the lease to continue until 2010 plus another five years of occupancy.

Home sales fell in June

Californians who are involved in the real estate market might be interested in learning that the sale of existing homes fell by 1.8 percent nationwide in June. While fewer closings occurred, that does not mean that the demand for homes fell. Instead, experts say that the process slowed because of a tight supply of homes combined with a price growth that has made it more difficult for buyers to find homes to purchase that fit their budgets.

According to the National Association of Realtors, the adjusted annual rate of sales in June was 5.52 million as compared to 5.62 million in May. Despite this month-to-month decline, the June annual adjusted sales rate was still 0.7 percent higher than it was in June 2016.

Essential elements for securing a commercial real estate loan

Many investors have used real estate to build fortunes in California, but financing a real estate opportunity can be challenging. From a banker's perspective, the aspirations an investor might have for a property mean little compared to the financial nuts and bolts of building the deal.

When considering a loan for a property, a lender will begin by studying the applicant's credit score. Most people have some sort of blemish on their financial history, such as late payments or a charge off. Two or more late payments, especially on balances that were 90 days overdue, will likely prompt a lender to deny a loan.

Fulfillment centers are the evolving face of the retail sector

While the commercial property market in California and around the country has performed well overall in recent years, the retail sector continues to struggle to cope with the nation's evolving shopping habits. The popularity of online operations like Amazon has prompted several prominent brick-and-mortar retailers to file for bankruptcy over the last few years, and abandoned malls and deserted big-box stores are becoming familiar sights on the American landscape. However, the consumer shift toward online buying has created a new and thriving commercial property segment in certain strategically placed communities.

Consumers enjoy the convenience of buying online, but the competition for their business is fierce. Retailers like Amazon, Costco and Walmart understand that online shoppers expect fast delivery, and they are building vast warehouse and fulfillment operations to keep up with consumer demand. These distribution facilities are generally built in areas with low real estate costs and easy access to major markets, and they can revitalize local economies by increasing tax revenues and providing jobs.

What is a "drive-by" lawsuit?

More and more so-called “drive-by” lawsuits are being filed across the country against small businesses, citing a lack of compliance with the Americans with Disabilities Act. These lawsuits earned their name due to the plaintiffs’ practice of driving around town and taking a picture of an accessibility violation and then filing a complaint with the courts. The plaintiffs literally "drive by" and attempt to collect cash based on nothing more than a photograph.

Plaintiffs never have to visit your property

Maturing CRE loans blamed for soaring delinquency rate

California commercial real estate developers have likely heard about a looming tranche of commercial mortgage-backed securities that must be paid off or refinanced in 2017. About $2.4 billion of these loans became delinquent in June, and experts believe that this may have prompted the delinquency rate on secured commercial property loans to surge by 28 basis points to 5.75 percent. The increase marks the biggest increase in five years on a month-over-month basis. The delinquency rate stood at 4.6 percent at the end of June 2016.

The largest increase in delinquency rates was observed in multifamily residential projects according to a real estate consultancy and information firm, but the company says that this can be largely attributed to two major defaults in Virginia. Delinquency rates also increased among industrial buildings, offices and lodgings and accommodations. However, developers in the retail sector are finding things particularly difficult.

Millenials and baby boomers increasingly cohabitating

California residents who own residential property may be interested in accommodating a growing tenant market. An app launching in the fall of 2017 is planning on pairing up young people, like millennials and college students, with older homeowners. In addition to helping the owners find new tenants to fill their available rooms, the app is combating rising home prices that are excluding many younger individuals from ownership.

There are several other programs that provide similar functions across the U.S. Commercial properties like senior living facilities have also begun to cater to millennials who require temporary residences. Part of the impetus for such trends is the fact that the nation is facing an ongoing deficit of housing in the low- and mid-price ranges. Many developers are responding to higher construction costs by seeking opportunities to upgrade older properties and render them more attractive since luxury apartments aren't affordable for working-class citizens.

When to sell a home

According to a report from the National Association of Realtors, 71 percent of homeowners in California and the rest of the country believe that now is a good time to sell a home. This degree of confidence is higher than what was reported among homeowners in the last quarter and a year ago.

While there is a growing optimism among homeowners, fewer renters share their enthusiasm. Only 52 percent of renters believe that now is a good time to purchase a home. This is down from 56 percent in the last quarter and 62 percent one year ago.

Home buying demands a measured experience

California residents who want to become residential property owners need to approach real estate purchases with caution, as these transactions deserve careful consideration. For instance, buyers should think about whether they might resell their home in the future and remember that their needs may change as their family members age.

Other important factors to keep in mind include the idea that transactions aren't set in stone. Requesting that sellers include additional perks in their sales, like furnishings, might lead to a more satisfying outcome. It's also smart to make informed purchase decisions based on reliable data, such as advice from a realtor or an official appraisal. Valuations that are significantly lower than a home's purchase price might indicate that buyers overvalued the property in question, so it's also critical to work with an experienced realty professional.

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L. Scott Karlin

L. Scott Karlin

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David E. Karlin

David E. Karlin

David E. Karlin is a California attorney with a primary focus on business and real estate, including law and legal issues...

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Michael J. Karlin

Michael J. Karlin

Michael J. Karlin is a Southern California based attorney whose practice primarily focuses on Entertainment Law. Michael began...

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