Combatting the “Expectations Gap” in Commercial Real Estate

Naperville CRE attorneyMost everyone knows what it feels like to plan something and set expectations on the outcome, only to encounter an obstacle along the way. Almost immediately, the bottleneck increases stress levels – because, as everyone knows, complications lead to delays and less than optimal results.

In the commercial real estate (CRE) industry, the space in which these losses occur in are known as “expectations gaps.” For the commercial investor and their team, the consequences of a gap can be dire, resulting in lengthy delays and lost income. Learn more about what causes these gaps, and how your firm can overcome them, in the following sections.

CRE Lawyers and CRE Investors – Results vs Expectations 

Real estate attorneys are often seen as the “bad guy” in a real estate deal – the reason that bottlenecks occur. This is not the case, however.

Lawyers scour through lease agreements, often thick packets filled with dozens (perhaps even hundreds) of pages. They look over every line, every minute detail for any discrepancies or potential issues that might negatively impact their client. In short, they are not the cause of the expectations gap; they are just perceived as it because their part in the process requires a great deal of time and effort. Thankfully, there are ways to overcome the lags in deal closures. These same strategies can also help real estate investors overcome the expectations gap.

Addressing the Real Cause of Expectation Gaps

When investors walk into a contract, knowing that it will take time to adequately ensure their protection in a real estate transaction, their expectants become more realistic. Investors can further aid their lawyers (thereby further minimizing the expectations gap) by ensuring that they provide all details and information, upfront.

Investors who work closely with an attorney – not just during deals, but also in between them – can also see an improvement in the time it takes to close a deal. It during these in-between phases when problematic issues in former leases can be addressed, negotiations can be improved, and due diligence can be adequately conducted.

Contact Our Seasoned Naperville Commercial Real Estate Attorneys Today

Another way that real estate investors can address the expectations gap is to find a skilled and knowledgeable attorney in the real estate industry. Lindell & Tessitore, P.C. is one of the most trusted firms in the state. Schedule a personalized consultation with our seasoned Oak Brook real estate attorneys to see how we can assist with your investment portfolio. Call 630-228-2555.

Source:

https://www.propmodo.com/how-the-commercial-real-estate-industry-can-combat-the-expectations-gap/

 

CBD Industry Offers New and Exciting Opportunities for Mall Owners

Oak Brook commercial real estate attorneysWith widespread mall closures for retailers like Nordstrom, JC Penny, and Macy’s, commercial real estate owners are scrambling to fill space. Two major mall franchises have announced plans to add CBD shops to their list of retailers. Learn more about this interesting development in the commercial real estate (CRE) industry, and how it could impact your bottom line.

Mall Franchises Partner with Major CBD Retailer

Two mall franchises, Simon Property Group and Brookfield Properties, recently announced their plans to partner with the major CBD retailer, Green Growth Brands. More than 200 CBD shops will be opened in malls across the country over the next year. With a strong growth history and high-quality products, the CBD company is expected to flourish inside of malls.

Specifically, Green Growth Brands will be featuring its health and beauty stores inside of malls. They own two specific (but different) brands – one focused on soaps and shampoos, the other on the empowerment and wellness of women. The opening of CBD flower shops is also expected in some locations.

Why CBD Shops? 

Non-THC products have long been legal in the United States. However, Americans have only recently shown wide-spread interest in CBD-containing products. Purported to have numerous health benefits, CBD products are considered an alternative to pharmaceutical medications and synthetically produced products. In terms of beauty, CBD products are supposed to be healthier for the body and they are said to promote youthfulness and health.

The growing acceptance of alternative medicine, and CBD products specifically, have led many CRE developers to open up shops. It is a viable alternative to empty space, and given the popularity of these companies, it may be a smart solution.

Of course, CBD shops may not be appropriate for every situation. While CBD products do not contain THC, not all mall owners are willing to deal with the stigma surrounding cannabis-containing products. Others become concerned that the CBD wave is nothing more than a temporary trend. Either way, it is important to ensure you have all the information before moving forward with a CBD shop in your vacant space.

Contact Our Naperville Commercial Real Estate Lawyers Today

Whether you are a current mall owner or planning to purchase one, it is important to understand the challenges and possibilities you may face along the way. Lindell & Tessitore, P.C. can help with all of your commercial real estate needs. Call 630-778-3818 and schedule a personalized consultation with our Naperville commercial real estate attorneys today.

Sources:

https://www.cnbc.com/2019/06/10/green-growth-brands-to-open-over-70-cbd-shops-in-malls-with-brookfield.html

https://moneywise.com/a/retailers-closing-stores-in-2019

https://www.cnbc.com/2019/02/11/simon-the-biggest-mall-owner-in-the-us-plans-to-open-108-cbd-shops.html

Commercial Real Estate Valuation – What Investors Need to Know

Oak Brook commercial real estate lawyersAlthough there are many aspects that go into determining a commercial real estate investor’s overall return on investment (ROI), the valuation of each property is one of the cornerstones. What do you need to know about property valuation to improve your overall ROI in commercial real estate (CRE), and how can a seasoned real estate lawyer help? The following explains.

There is More Than One Way to Valuate a Property 

Property valuations are not as cut and dry as some might like you to believe. Instead, there are multiple approaches that one can use to determine what their final ROI on a property might be.

The first is the cost approach, which examines the amount of money that it might take to procure a property and, if necessary, rebuild it. This is typically used for unique properties, as well as those that need or have undergone extensive repairs or upgrades.

The second valuation method is the income capitalization approach. Based on the amount of money that an investor is likely to derive from a specific property, this valuation method takes a wide range of issues into account – everything from the possible cost of utilities and maintenance to the sale cost of the building or property in question.

Another commonly used valuation method is the sales comparison approach (also known as the market approach). In this method, you rely heavily on the recent sales of other, like properties. Though generally one of the least reliable approaches, it can be rather effective when in the midst of a slow market or economic downturn.

Investors who plan to hold onto their properties as rentals often use a valuation method known as the gross rent multiplier. It essentially tells you when the property will have “paid for itself,” and when you can expect to start seeing returns.

The value per door process may be one of the least used valuation methods, but it can be highly effective for those who plan to purchase a multi-tenant property. It breaks down the total worth of the building and then determining how much an investor should expect to see, per door (or per tenant). This approach can help the investor determine if the rental prices needed for a positive ROI are on par with similar, nearby properties.

Our Naperville Commercial Real Estate Lawyers Can Help

Property valuation is an inherently complex process, and a mistake can cost your company dearly. Avoid such issues by employing the aid of a seasoned Naperville commercial real estate attorney. Call 630-778-3818 and schedule a personalized, no-obligation consultation with Lindell & Tessitore, P.C. today.

Source:

https://azbigmedia.com/a-guide-to-commercial-property-valuation/

 

5 Responsibilities of a Commercial Real Estate Landlord

Naperville commercial real estate lawyerWhile it is true that you can boost your income and perhaps even build a nest egg with commercial real estate (CRE) investing, those who are not equipped to handle the process risk significant financial loss. First, there is the risk of a failed return on investment – an issue that can often be mitigated using seasoned legal assistance during each step of the transaction process. Then there is the chance that you may be sued if you fail to meet your legal obligations as a landlord. What are these obligations, and how can an attorney help you meet them? Continue reading to learn more.

1. CRE Landlords Are Required to Adhere to All Local and Federal Laws

All landlords are required to follow certain local and federal laws. Commercial landlords are no exception. You cannot discriminate based upon certain criteria (race, religion, etc.). Furthermore, you must adhere to all building codes and zoning laws. Failure to meet any one of these obligations can result in serious consequences, including (but not limited to) legal recourse.

2. CRE Landlords Are Encouraged to Use Clear and Concise Contracts 

Ambiguity in a CRE contract can result in a whole host of issues, including tenant default and suit. Avoid such issues by ensuring that every aspect of your landlord-tenant contract is clear and concise. In particular, consider:

  • Who will be responsible for cleaning out the leased space before the contract commences, and when it ends;
  • Who will be responsible for what repairs, and to what end;
  • What alterations the tenant can make (and which ones might be considered a breach of contract); and
  • What is considered a timely response or request time for minor repairs.

3. Adhering to the Contract and Know Your Repair Responsibilities 

When you enter a legal contract, you are bound by it. As such, it is critical that CRE landlords only implement terms that they can meet. Moreover, ensure that your property is well-maintained, both on your end and your tenant’s, as failure to do so can cause a loss in value for your property. Also, be certain that you know and understand which types of repairs typically fall under the landlord’s jurisdiction (i.e. HVAC repairs, electrical repairs, etc.).

4. Minimize Your Risks and Liabilities 

Part of protecting your property is ensuring that its risk for loss is carefully mitigated. Much of this is done through the maintenance of the property, but there are other aspects that you may want to consider as well. For example, you may want to ensure that your property has a security system in place, and that all doors and windows have working locks, which can protect both you and your tenant from vandalism and theft.

5. Maintain Diverse, Comprehensive Insurance Coverage 

Even when you take all reasonable precautions to protect your property, loss can occur. Acts of God, such as fire or flood may occur. Equipment can also be both an asset and a liability for a CRE property owner. Protect your assets by ensuring you have diverse and comprehensive insurance coverage for every aspect of your CRE rental property.

Contact Our Oak Brook Commercial Real Estate Lawyers

At Lindell & Tessitore, P.C., we work hard to increase your investment company’s bottom line. Able to help you through every step of the real estate transaction process, and capable of helping you manage tenancy issues, our Naperville commercial real estate lawyers are the ones to call. Schedule a personalized consultation by dialing 630-778-3818 today.

Source:

https://www.law.cornell.edu/wex/landlord-tenant_law

 

Three Things to Know Before Entering the “Green” Commercial Real Estate Market

Oak Brook commercial real estate lawyersAlthough the big debate over global warming has made headlines in recent years, the scientific consensus is overwhelming: the planet is getting warmer, and it is happening at an alarming rate. This information, paired with the growth of the “green movement,” has increased the demand for eco-friendly applications in almost every industry. Commercial real estate (CRE) is no exception.

What does it mean to “go green” in the CRE industry, and how can you ensure that you get ahead of this trend? More importantly, how can you increase the chances that your green efforts will be profitable for your real estate company? Learn more in the following sections, including how the assistance of a seasoned CRE attorney can boost your profitability in the green CRE sector.

1. The “Green” Trend is Here to Stay

Despite all of the controversy over global warming, “green” trends are here to stay. Moreover, eco-friendly features are gaining traction within the commercial real estate industry. Part of this could be attributed to demand, but with landlords also seeing benefits from “going green,” its place in the CRE market is being further solidified.

2. Eco-Friendly Features Are Becoming More Affordable for Investors

As the “green movement” gains more traction in the CRE industry (as well as in the United States, as a whole), it becomes a more affordable investment for property managers. In fact, costs for “green features” have plummeted so much that, in some cases, it may be less expensive to implement an eco-friendly feature over an outdated, fossil-fueled one.

3. “Going Green” Can Boost Your Investment Company’s Bottom Line

With the cost of green features going down and the imminent savings that investors see after implementing such features, it is no mystery on how “going green” boosts your bottom line; lower costs and long-term savings are the cornerstone for increasing a return on investment (ROI). However, the benefit to your bottom line can also be traced back to a greater demand – and not just among tenants who pride themselves on being eco-friendly. Those who are interested in saving on their utilities, both immediately and in the far distant future, also tend to see the clear benefit in renting a space with “green” features.

Contact Our Naperville Commercial Real Estate Lawyers 

At Lindell & Tessitore, P.C., the goal is not to just help you close a deal. Our seasoned Naperville commercial real estate attorneys want your investment to be a profitable one for years to come. See how we can help improve your bottom line using tailored, competitive legal services in your next commercial real estate transaction. Call 630-778-3818 and schedule a personalized consultation with our offices today.

Sources:

https://www.clevelandjewishnews.com/features/special_sections/real_estate/commercial-real-estate-goes-green/article_c6897296-822f-11e9-adf4-8f85e46e11a2.html

https://www.nationalgeographic.com/environment/global-warming/global-warming-real/