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Recent Blog Posts
Development and Annexation Agreements in Illinois
Real estate developers in Illinois need to be aware of the potential implications of entering into development and annexation agreements with local municipalities. These agreements can significantly impact the financial viability of a project, as well as the potential risks and rewards. Understanding these agreements' essential terms and conditions is critical for ensuring a successful project. Without a development or annexation agreement, a developer risks having their project halted or modified, leading to significant delays and increased costs. To navigate this process, contact an experienced lawyer for essential guidance.
What Is a Development Agreement?
A development agreement is a contract between a developer and a municipality that sets forth the terms and conditions under which the developer may proceed with their project. The agreement will specify the type of development that is allowed, the number of units that can be built, the density of the development, the height of the buildings, the setbacks from property lines, and other zoning regulations. The agreement will also identify any particular conditions that apply to the project, such as environmental restrictions.
Common Pitfalls That Can Affect Commercial Leases
Most businesses need space where they can operate, requiring them to lease property from a landlord. Commercial lease agreements can be complicated, and tenants will need to be aware of how the terms of a lease will affect their ability to conduct business, the expenses they will be required to pay, and other unexpected issues that may arise. By understanding some of the lease-related pitfalls that commercial tenants commonly encounter, a business owner can avoid these problems and ensure that they will be able to conduct business successfully.
Commercial Leasing Issues That May Affect Tenants
Business owners will need to fully understand the terms of a commercial lease. Some issues that should be addressed when negotiating a lease agreement include:
- Common area maintenance (CAM) - A lease may require tenants to contribute toward operating expenses or other costs related to common areas on a property. This may result in additional rent being charged on top of standard rent payments. Tenants should be aware of the types of CAM expenses they may be required to pay, including capital improvements or expenses related to other tenant suites that are not exclusively common areas. In some cases, a lease may place a cap on operating expenses, or it may limit the types of expenses a tenant will be required to pay.
What Forms of Due Diligence Need to Be Performed in the Purchase of Commercial Real Estate?
Investments in commercial real estate can be very lucrative but can also be very costly if mistakes are made. There are a variety of concerns that will need to be addressed when purchasing commercial property. This article is brief summary of some of the main due diligence items but is not exhaustive. If a buyer will be assuming ownership of property that tenants currently occupy, they will need to be prepared to assume existing leases and understand any other contracts that are in place that will survive the Closing such as service contracts, Declarations of Restrictions and Easements, and other agreements. To ensure that the Due Diligence Process is done correctly and critical items are not missed by the Purchaser, it is crucial to work with an attorney who can help perform due diligence or guide the client in what matters of due diligence are most important during the due diligence period under the subject Purchase Contract in a transaction.
Commercial Lease Modifications for Tenants Affected by COVID-19
Since the onset of the COVID-19 pandemic in 2020, businesses in Illinois and throughout the United States have encountered financial difficulties. As the country is beginning to return to normalcy, some businesses have been able to resume their regular activities and continue operating successfully. However, many businesses are still struggling as they determine how to respond to the loss of revenue that occurred due to the pandemic. These issues have affected many commercial leases, and both landlords and tenants may need to determine how to address situations where a business has been unable to pay rent on a short-term or long-term basis.
Negotiating Lease Modifications for Commercial Landlords and Tenants
As commercial tenants have encountered financial struggles, this has put many landlords in a difficult position. While some landlords many have pursued lease enforcement actions, others may have been hesitant to do so due to the difficulty of finding new tenants in the current marketplace. Rather than pursue evictions or take steps to terminate a lease, it may be beneficial for both parties to negotiate lease modifications that will allow a tenant to continue occupying a space as they attempt to address their ongoing financial issues.
How to Successfully Navigate Through the Zoning and Development Process For Existing or New Commercial Real Estate Development Projects
Real estate developers and investors will typically have multiple opportunities to pursue projects involving commercial real estate which may include retail, industrial, office and various mixed-use developments. A development project will typically involve the construction of on-site and off-site improvements, the construction of new buildings or structures, and a variety of other changes that will allow a property owner to generate revenue by leasing space to commercial tenants. However, when planning to purchase commercial property or begin a development project, owners and investors will need to understand how zoning laws will apply to them and their options for addressing any issues that may affect their ability to carry out their plans. Any mistakes with this process can be very costly and fatal to a project. The zoning and land use attorneys at Lindell & Tessitore P.C. have extensive experience in helping buyers and owners navigate through the zoning and development process, including, but not limited to, due diligence matters and in seeking to obtain all zoning and development entitlements needed for the zoning or development project.
Which Type of Commercial Lease Is Right For My Business?
Whether you are the owner of a commercial real estate property, or you are looking to rent a space for your business, reaching an agreement on a commercial lease is a crucial part of your operation. There are a variety of lease structures available depending on the property's use and the preferences of both the landlord and tenant. The complexities of these different kinds of commercial leases can be challenging to interpret, but an experienced real estate attorney can help you determine the best options and negotiate a lease that addresses your needs.
Types of Commercial Leases in Illinois
Commercial leases vary based on the rights, responsibilities, and obligations of both the landlord and the tenant. Some of the most common types of commercial leases include:
The Benefits of Force Majeure in a Construction Contract
A construction project often involves many moving pieces, including supplies, equipment, various contractors and their employees, negotiations with the city over zoning regulations, and more. Even under normal circumstances, it can be challenging to ensure that you are upholding all of the details of your construction contract, and it may be impossible during an unprecedented event like the COVID-19 pandemic. At a time like this, it is important to review your contracts to determine whether they include a force majeure clause that can provide relief.
How the COVID-19 Pandemic Affects Construction Projects
COVID-19 and its effects may make it difficult or impossible to fulfill your obligations as a construction contractor for several possible reasons, including:
How Can Zoning Affect an Illinois Renovation or Redevelopment?
In the business of commercial real estate, it can often be beneficial to purchase a property that has already been developed, rather than starting a new development project from scratch. Perhaps a developed property is located in the perfect place for your purposes, and you may even find that you can adapt existing structures to your needs. However, chances are that you will need to make some changes, either through a renovation or a complete redevelopment, and if so, you should be aware of zoning regulations that may impact your project.
Zoning Regulations in an Illinois Commercial Real Estate Renovation
You may find that you can adapt a new property to meet your needs by renovating structures that have already been built. A renovation may help you save time that you would need to spend on demolition, construction, and rezoning, but in most cases, you will still need to pay attention to zoning regulations in the local municipality that affect the development. For example, you may need to ensure that your renovation complies with local health, safety, and energy efficiency standards. You will also likely need to ensure that the property is authorized for use as the kind of business that will be operated there.
Due Diligence Facts Every CRE Investor Should Know
Due diligence is a critical step in the acquisition of a property, especially for those dealing in commercial real estate. Done effectively, the process can protect you from lengthy project delays, zoning issues, and other negative consequences. In contrast, failures in your due diligence process may lead to extreme financial loss and an overall poor return on investment. Learn how to avoid mistakes and oversights in your due diligence with these crucial facts.
You Need to Spend Time at the Property
Far too often, investors rely on the “experts” to handle the due diligence process. They hire an inspector but do not attend the inspection, contact someone to value the property but are not present during the valuation process, and rely on reports to tell them whether the building is up to code. Sadly, this is a massive mistake.
Spending time at your property not only allows you to learn about it, it ensures you fully understand any potential issues. Rather than simply reading a report, you can talk to the fire martial or inspector to get an in-depth understanding of the issues (and the potential cost to fix). Simply being in the space can help you determine whether your goals and intent for it are realistic. So, if there is even just one thing that you change about how you conduct your due diligence, let it be a massive increase in the amount of time you spend at your properties.
7 Steps to Help You Break Into the Commercial Real Estate Sector
Savvy investors know the best protection against extreme financial loss is a diverse investment portfolio. Yet, many overlook the commercial real estate (CRE) sector. Perhaps it is because they fear the large, upfront investment, big risk, and long-term return on their investment. More likely, however, an investor may hesitate or even avoid the CRE market because they do not fully understand the benefits or the necessary steps for breaking in to this type of market.
Why Commercial Real Estate?
The first issue to address is the “why” behind commercial real estate. Certainly, there are other types of investments with lower risks. Yet, it is the high risk and large investment amount that make CRE properties so appealing. They offer a steady and stable return. Real estate is also considered a tangible asset, which investors can use as collateral on other investments.
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