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Commercial Landlords: Tips for Strategically Planning for the Future

Commercial

Erreka Campbell

February 25, 2018

Commercial Landlords: Tips for Strategically Planning for the Future

Whether they own an office building, a shopping center or an industrial park, every commercial landlord should create (or re-evaluate) the overall operating or strategic plan for their property. Not only is today’s environment competitive for attracting high-quality tenants, but tenants’ needs and wants are changing as quickly as new technologies pop-up and intentionally (or inadvertently) change the leasing business model. Let’s take WeWork as an example. WeWork offers shared workspaces for small to large business nationwide through short-term “memberships” instead of leases with amenities like high-speed internet, fresh fruit and professional and social events. Most traditional landlords neither offer nor encourage short-term or temporary leasing arrangements.

Are you missing out on business opportunities due to old ways of doing business? Outside of a lease, do you have a written operating or strategic plan for your property? If so, how often do you update the plan? If the answer to the last question is never or longer than every three (3) years, then the plan is antiquated. Maybe you don’t have an operating or strategic plan but instead, rely on your standard lease form as an operational guideline. When is the last time the form was reviewed and/or updated? How does the form measure up to how business is done today? Even if you have no desire to alter the way you do business, changes in the market or law could render your current form outdated.

Sending your lease form to an attorney for periodic legal updates addresses a major area of concern. However, to maximize the benefit of engaging legal counsel, you should provide your attorney with an updated operating or strategic plan for your property. While each plan should be developed in accordance with each landlord’s property type and market, and in accordance with contractual restrictions (e.g., if there is a mortgage on the property, you will undoubtedly need lender’s approval prior to making operating changes), we suggest you develop your plan by first evaluating the following areas: permitted and prohibited uses, parking and liability.

Permitted and Prohibited Uses

The permitted uses at a property grant insight into how the property operates. All landlords should evaluate business trends to determine if there are any new business opportunities they would like to explore or explicitly prohibit. Some landlords grant their tenants the right to use their premises for “any legal purpose,” but such a broad grant limits the landlord’s ability to prevent a tenant from engaging in an undesired business, especially if the business was not contemplated at the time the parties entered into the lease. Each landlord should customize each tenant’s permitted use in accordance with the tenant’s proposed business and should explicitly state prohibited uses at the property. Traditional prohibited uses for a retail property include carwashes, pawn shops, and even health clubs and gyms. However, modern-day prohibitions might include hookah and vaping lounges or cannabis dispensaries, even if the state law does not yet permit such a business. Office and industrial landlords’ sensitive to spikes in the consumption and costs of electricity should consider prohibiting data mining (i.e., for cryptocurrency) at their property.

Parking

Traditionally, parking is a highly negotiated point between landlords and tenants. Tenants desire exclusive parking rights, and landlords have been willing to grant such rights because local municipalities set minimum parking requirements for the property. However, due to the increased use of ride-sharing services like Uber and Lyft, some cities are steadily decreasing local requirements for parking. As a result, future thinking landlords are partnering with ridesharing companies and valet on-demand services like DropCar to offer tenants’ alternatives to on-site parking. Landlords should work toward eliminating parking exclusives and evaluate potential development or income generating uses for their current parking sites.

Liability

Whether you develop a new plan or update an existing one, evaluating the landlord’s exposure to liability is a critical component. An attorney can advise as to changes in the law. However, in addition to an attorney, each landlord should engage its risk management team and/or insurer to confirm landlord’s insurance policies and the policies required to be maintained by each tenant are sufficient for the property’s strategic and operating plan.

Every landlord should be strategic in evaluating the current and future uses of its property to not only assess new business opportunities but to also protect against undesired uses, risks, and liabilities generated due to changes in the market, law, and technology.

Trends Changing the Real Estate Landscape

Commercial

Events Editor

December 25, 2017

Trends Changing the Real Estate Landscape

We’ve witnessed significant improvement in technology the past few years, especially in areas like big data and artificial intelligence. These technological developments have been adapted in industries like real estate.

In fact, it’s likely you’ve heard of terms like smart homes. These innovations are changing the real estate industry, benefiting not just buyers but also sellers.

Technology is fueling most of the trends expected to affect the real estate industry in the not-so-distant future. The following are four trends that will change the landscape of the real estate sector in the coming years:

Virtual tours for prospective customers.

Thanks to technology, realtors can reach out to potential buyers wherever they maybe. Virtual tours can allow them to show every corner of a house or property for sale if it is physically impossible to tour clients. With virtual tours, a Chinese businessman looking for houses in Canada doesn’t have to take a plane to see the properties up for sale. All he needs is to go to a website of the realtor and he can get a virtual tour of the house that’s being sold.

The rise of smart homes.

Smart homes are houses that incorporate hi-tech automation systems that provide advanced monitoring and control over the functions of a building. For example, a smart home owner can control lighting, security, temperature and door and window operations.

These hi-tech homes are becoming the toast of the real estate industry, and for good reason. One survey conducted by Coldwell Banker Real Estate that nearly 5 out of 10 American homeowners have plans buying, or are presently living in smart homes. Moreover, 7 out of 10 people who own smart homes say they would want to buy more smart home products.

Robots taking over the real estate profession.

Robots and computers will soon take over the jobs in the real estate industry. A survey conducted by Pew Research Center showed that majority of the respondents believe that real estate professionals would lose their jobs to robots in 50 years. Robots can perform tasks of humans not only more efficiently but also more safely. Experts also foresee a future where real estate professionals will have to create their own jobs, requiring entrepreneurial skills and aptitude.

Office spaces will become cheaper.

Freelancing will continue to become widely accepted in many companies. A recent study by Upwork showed that 35 percent of Americans are doing freelance work. Companies, too, are becoming more tolerant with work-from-home arrangements.

These developments are expected to affect the demand for office spaces. In turn, it is possible that office space rent will become cheaper in the future.

This is a trend that we’re starting to see now. In India, office space leasing dropped by 2 percent in the first half of 2017 with experts attributing it to layoffs by tech firms which are agreeing to work-from-home arrangements.

It’s even possible that office spare rental prices in mature real estate markets like New York and London would drop if and when technology continues to develop.

Purchasing a Drone? Here Are Seven Things You Should Know Before Your First Flight

Events Editor

December 20, 2017

If you’ve recently purchased a drone, you’re probably pining to get out there and start flying, exploring, taking pictures, and recording eye-popping videos. However, it’s in your best interests to take heed of some general tips and tricks before you take off, especially if you’ve invested a few hundred dollars into a high-end drone and wish to avoid the most common mistakes and mishaps.

Shown below are the seven most important considerations before your first flight.

Learn About the Legalities, Regulations, and Rules

Although the stipulations will vary slightly from region to region, it’s in your best interests to take note of some of the widespread laws associated with contemporary drones:

Pilots must pass a written test and be at least 16 years of age
You must register your drone into the FAA national database
The aircraft must be flown below 400 feet
You are not permitted to fly at night
Your flight path must be at least five miles away from any airports

Read the Entire Manual

Almost one million drones have been sold in the US during the past year alone and each one comes with its own distinctive set of features, which is why it’s so important to learn as much as possible about your unique aircraft before taking to the skies. You’ll be able to learn about its functionality, safety provisions, engine capabilities, and other integral aspects.

Inspect Your Drone

Before you can start zipping around and snapping pictures, you have to carefully examine your drone and pay attention to the following aspects:

Any signs of damage or physical issues (usually due to careless shipping)
Check the propellers, ensure a steadfast connection
Assess the camera for any imperfections
Look for loose screws and attachments

If you are able to ascertain any flaws, be sure to contact the supplier as soon as possible.

Acquire a Secondary Battery Pack

When it comes to flying a drone for the first time, there are few things more heartbreaking than having to deal with a faulty or defective battery, so be sure to order a tertiary power supply before you head out for your first flight. You’ll be able to fly for longer periods of time and rest easy knowing that you always have a spare at your disposal.

Start Out Small

Although it might be tempting to take your drone to an ambitious, magnificent location, you should avoid this idea at all costs, particularly during the early stages of the learning process.

Instead, you should start small by visiting a simple, open field away from any trees, power lines, and other potentially dangerous obstacles. Focus on learning the controls and getting a feel for the device at low altitudes–the fun stuff will come later.

Don’t Test the Collision Avoidance System Early On

In addition to avoiding tight, obstructive spaces, you’ll also want to train your muscle memory and reaction speeds with regard to the controls, especially when considering the nuanced, somewhat complicated skills required to fly drones. Thus, you should exercise extreme caution and avoid relying on the built-in avoidance features–practice makes perfect.

Respect Mother Nature

Because drones tend to struggle significantly with rainy settings and high winds, it’s important to pay attention to the local forecast and avoid flying in troublesome conditions. Even if your drone features waterproof capabilities, you’ll want to familiarize yourself with the aircraft before truly testing Mother Nature.

If you take all of these bits of advice into account before your first flight, you’ll be able to confidently soar and explore with nary a concern, because after all, proper preparation prevents poor performance!

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