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Los Angeles Real Estate Law Blog

Properties with commercial leases to remain in demand in 2019

The real estate industry remains strong in Los Angeles, leaving many Californian investors feeling excited about staying active -- or becoming active -- in this area. But what will 2019 look like for those interested in investing in buildings featuring commercial leases? Here's a glimpse at commercial real estate investing trends that experts believe will dominate in the new year.

First, experts expect investors to avoid the United States' primary metropolitan areas and instead invest in secondary markets. This is because today's secondary markets are experiencing exponential growth along with strong price increases. Still, if the nation's economy experiences a downturn in the coming months, investors might go back to primary markets -- especially those on the coasts -- since they offer more security due to being more liquid and bigger in size.

Data center, warehouse buildings with commercial leases in demand

Investors in Los Angeles may currently be wondering what their next moves should be in the property market. The market for buildings featuring commercial leases has been relatively robust overall, but what specific sectors would be wise to focus on as 2019 draws near? Here is a look at a couple of sectors that are showing great promise at the moment.

The first sector is the distribution center and warehouse sector. The demand for these types of assets by digital retailers has caused this sector to thrive in 2018. In fact, over 60 million square feet entered the market during quarter three -- a nearly 11 percent rise from last year. Vacancy rates during this quarter remained at nearly 5 percent -- a historical low -- and rents also increased almost 6 percent.

How to make value-added property a wise investment

If you are among those who hope to capitalize on the potentially lucrative venture of apartment investment, you have many choices to make. Each corner of Los Angeles has its unique opportunities, and depending on your goals, you could have risks to consider before taking the plunge.

You may not feel ready to invest in the many luxury apartments developers are building in the downtown area, so if your focus is on other areas, you may find the potential for success encouraging. This is particularly true for value-added apartments.

Tax reform benefits those with properties with commercial leases

With the real estate industry continuing to thrive in Los Angeles and other parts of California, some investors might be wondering what in particular is triggering the growth of the industry. Experts say that tax reform may be a major contributing factor to the increase in transactions involving properties featuring commercial leases. Here is a look at how specifically tax reform is affecting the commercial real estate industry.

The truth is, tax reform in 2018 is expected to continue to fuel overall economic growth throughout the United States, and because the commercial real estate industry is part of this, tax reform should definitely drive revenue growth for property owners in the coming months. This is especially the case since tax rates that are lower typically lead to higher returns. As an example, the new 20 percent deduction for today's pass-through entities is expected to make properties smarter investments for people who are seeking cash flow.

Properties with commercial leases experiencing success

New research shows that the nonresidential property industry is on an upswing across the United States. It is therefore keeping pace with the economy at large. In light of the growth taking place in the real estate sector, more investors in Los Angeles and other parts of California might want to seek out properties featuring commercial leases this fall.

According to a study, commercial real estate has seen a rise in sales volume as well as gross income. This is true for people who work in various capacities in the real estate industry, including property management, multifamily buildings, retail buildings and the brokerage area. Other areas of real estate were also reflected in the study, such as office space, industrial space, land development and sales.

More investors may turn to buildings featuring commercial leases

During the past few weeks, the stock market has gone on a wild ride. Naturally, investors in Los Angeles may be on edge as a result. In fact, the volatility of the stock market may spur more investors to devote more of their funds to directly owning real estate, including buildings featuring commercial leases.

When people decide to invest in the real estate market, they generally do not do this in a vacuum. In other words, they look at a wide range of other investing opportunities to take advantage of as well. These other opportunities may include, for example, bonds, stocks, private equity and even public real estate investment trusts. As a result, the behavior of the bond and stock market can significantly impact investors' decisions regarding their real estate investments.

How can you protect your interests as a landlord?

California landlords know there are many regulations they must follow in order to protect the rights, safety and interests of their tenants. Whether you are a commercial property owner or you own residential rental property, it is for your own benefit to know how to protect yourself from the fallout that comes with tenant injuries. This will limit your exposure to litigation and legal complications that can cost you time and money in the future. 

It may be beneficial for you to learn about what happens if a tenant suffers an injury on your property. It is often not clear who is to blame for an accident, but there are times during which the injured party could move forward with legal action against you. You need to know your duties to your tenants as well as how to fight back when faced with the threat of legal action. 

Purchasing properties with commercial leases offers benefits

Investors who are active in residential real estate in Los Angeles may want to dip their feet into the commercial property world. After all, purchasing properties offering commercial leases has some special perks. Here is a glimpse at why going commercial might be a smart idea.

Commercial real estate properties are equivalent to businesses that come with overhead costs. The right commercial property may be one used for a factory, a warehouse, a storage facility or a medical facility, for example. Commercial properties are categorized into classes, with Class A properties being easy to access, B properties requiring some minor upgrades and C requiring hefty capital investments. The benefit of these types of buildings is that they can have several units, which means multiple streams of income. Furthermore, commercial leases typically last longer than their residential counterparts do.

More buildings with commercial leases may be going vertical

The nonresidential property industry in Los Angeles and other parts of California continues to thrive, especially in the area of industrial buildings. The reason for this is that more companies need buildings that can be used for fulfillment and distribution activities related to electronic commerce. However, a new trend in the industry is that more buildings featuring commercial leases will end up being vertical rather than horizontal.

A warehouse project in the North Bay is specifically poised to cause more buildings to stand taller than ever before. Site work for this project started recently for more than a million square feet. Two cross-loading structures spanning 702,000 and 362,000 square feet are slated to be completed in late 2019 and will stand 40 feet tall.

Older spaces used for commercial leases may present challenges

Investors in Los Angeles and other parts of the United States might understandably be interested in purchasing older properties. The reason for this is that some tenants may view older properties featuring commercial leases as being more authentic and having more architectural character. The main obstacle that investors face with these types of properties, though, is that updating them from a technology standpoint can be difficult.

Retrofitting older properties to turn them into state-of-the-art office spaces is a popular move right now. However, not all properties can be made to feature some of the latest technologies. These technologies include, for example, those associated with monitoring parts of buildings that are not used very often, as well as facial recognition and phone security access technologies.

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