2015 Is The Year For Commercial Leasing, Apparently

Retail Space AvailableAt least, it has been for me so far. I have been doing a lot of tenant representation so far this year … reviewing and negotiating commercial leases. For some reason my transactional work (loan closings, purchase/sale closings, etc.) has been lagging since the end of 2014, and I’m not sure whether it’s a trend for real estate in general or is specific to my clients and my practice. In any event, the commercial leasing work has helped take up the slack and I enjoy the work and the clients for whom I do it. Generally, it’s fast-paced work … once an LOI has been agreed to both parties want the lease negotiated and executed as soon as possible: the tenant, because they want to get in, get their tenant improvements installed and get revenue flowing in as quickly as possible, and the landlord, because they want the rent to start flowing in as quickly as possible. That sometimes puts stress on the attorney(s) involved because we’re called upon to do our our work in short order, often with the client or their broker in our ear continually asking (or repeatedly emailing) “have you gotten to that lease, yet?” That, in turn, requires an experienced practitioner who is skilled at focusing on the most important issues to his client and is discerning enough not to waste time haggling over terms that aren’t material or that, even if they are material, are very, very unlikely to be changed by the landlord even if objected to. I am glad to have several tenant clients with whom I’ve worked long enough, and for whom I have negotiated enough leases, that I know what is important to them. It is one of the (few, perhaps?) pleasures of this demanding profession to have long-standing clients who trust you and are appreciative of your work and with whom you are knowledgeable enough to know what is important to them and what is a waste of their time and money.  If you need an attorney like that, I know where you can find one!  BH

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Expect Nothing Appreciate Everything

“I’m waiting for …” What? Why? Don’t wait! Do something!

I saw the post below online this morning and it reminded me of one of those “lessons learned.” As a young associate I once started a response to a senior attorney (who wanted an update on the status of an important matter) with “I’m waiting for ….” That’s far as I got! “Why? Why are you waiting? Pick up the phone and call him. Get it done. GO.”

Whoa. My first reaction was “What a jerk!” And, frankly, he was. THEN, however, I realized the reason I was waiting was because I was intimidated at the prospect of calling the attorney on the other side. I was stalling because of my own insecurity. And there was no reason for it! He’d made his point.

Lesson learned: Whenever you find yourself starting a sentence with “I’m waiting for …,” take a second and think about whether you should be waiting for anything at all or whether, instead, you should take control and make something happen! More often than not that is the better choice!

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Good News Keeps Coming …

good-newsWow. I think the (seemingly mythical) “turnaround” in the commercial real estate market is actually going to stick this time! After many years of up and down and sideways market conditions, GOOD news about the Orlando/Orange County/Central Florida commercial real estate market is being consistently observed and reported. For example, see this article entitled “9 things that may surprise you about Orange County real estate” by Anjali Fluker, writer for the Orlando Business Journal. Local market indicators are the best they’ve been in at least 5 years, new construction and new commercial activity is booming throughout the area (have you seen the construction (and traffic) on International Drive lately? It’s insane!) and deals are being made! Here in Winter Park things are very active along the 17-92/Lee Road/Denning Drive corridors, which I think is fantastic. I WILL be checking out the new Trader Joe’s on 17-92 as soon as it opens! On a larger scale, my clients who attended the recent ReCon/ICSC convention in Las Vegas came back with pleasantly optimistic reports. Sure, everyone in real estate has been burned enough the past several years that they remain at least slightly wary, but that’s good business judgment in all market conditions and is also healthy for the industry. Nobody I know wants another real estate “bubble” to blow up in our faces. But, despite all the false starts and cautionary tales of the past few years, we finally seem to be in the midst of a consistent, upwardly trending, pattern of recovery. Thankfully, it feels good to read the commercial real estate news again, in the OBJ Commercial Real Estate News and other publications.

Too Busy To Blog! But that’s no excuse …

writing-life-300x200Sorry for my absence, lately! I understand now what marketing professionals mean when they tell me that the key to a successful blog is consistency, as in consistently providing new, meaningful content on a regular basis. Trust me, it’s a really hard thing to do, especially if you demand to personally write all of your own material, as I do. If I don’t write it myself I just don’t “feel” it, it’s not “me”, and that’s not the type of blog I want mine to be.

Unfortunately, the result is that I sometimes fall into the predictable pattern of many bloggers, which goes like this: (1) I find myself not as busy as I’d like to be or I’m busy with pretty mundane or unprofitable work; (2) I write articles to fill in any time gaps I may have, hoping to build business and find meaningful, profitable work; (3) I get busier with good work and feel (almost always wrongly) that I don’t have time for anything else; (4) I neglect to write articles because I’m so busy; (5) Suddenly, I finish a project or wrap up a big closing and realize I’m once again not as busy as I’d like to be; and (6) It occurs to me that I haven’t written an article in a long time and I think “Hey, I really need to write an article.” But it is SO hard to get those wheels turning again once they’ve stopped.

Successful blogging is very much like exercise. To get the greatest benefit one must exercise consistently and regularly because once you slow down or stop, it is 10 times harder to get going again. Same with the blog. Once I’ve slowed down or stopped, getting started again is akin to starting all over again with the proverbial “blank sheet of paper” that just stares back at you while all the great ideas for articles you used to have seem to have just evaporated.

Well, I’m back now and away we go. I’ll try to do better. The good news is that as I write this I am actually pretty busy. The commercial real estate market is clearly heating up, if not to the “hot as the sun” levels of the bubble years 5 or 6 years ago, at least to a nice, steady simmer, and maybe even a gentle boil. New buildings and shopping centers are going up all around the Central Florida area, and I have been working on quite a few commercial leases, purchase and sale transactions, and loan closings, but of course could always do more! Just down the street (17-92 in Winter Park) the new Trader Joe’s is going up fast, as is the new ABC Fine Wine & Spirits across from Winter Park Village, and it looks fantastic. Other parts of the Metro-Orlando area appear to be just as busy. Clients of mine who are commercial tenants report that they are having a more difficult time finding available space and shopping center owners are actively shopping for new centers. All of this bodes well for Central Florida’s economy and I’m glad to see things picking up.

Remember, if you are involved in commercial real estate, buying, selling, leasing or financing, get an experienced commercial real estate attorney (I hope it’s me!) involved early in the transaction. If you’re leasing, have your lease reviewed before you sign it. If you’re buying, have your contract reviewed before you sign it. Hopefully, we’ll all be busy with meaningful, profitable work for a long time to come AND I’ll do a better job of adding new, interesting content to the blog at the same time. And exercising. Mustn’t forget to exercise.

Thanks for reading!

BH

Considering a sublease? LOOK BOTH WAYS!

Look_Both_Ways_asphalt

I recently assisted a client that is a commercial tenant with extra square footage by reviewing a proposed sublease of the extra space to a prospective subtenant. It was a good opportunity to once again think about the best way to structure such an arrangement and the risks involved, particularly for the tenant (my client) that will now be “sandwiched” between their landlord under their own master lease and their subtenant under their new sublease. Most importantly, it reminded me that in these situations the tenant must LOOK BOTH WAYS before stepping out into “Sublease Street” because now they are taking on risk in both directions, “left” as tenant under the master lease and “right” as sub-landlord under the new sublease.

In these situations, it is very important to review both the master lease, to ensure that subletting is permitted and, if permitted, under what circumstances and conditions, and the sublease, to ensure that the sublease meets all the conditions of the master lease and that it is an acceptable and enforceable lease in it’s own right as between the tenant and subtenant. Balancing the requirements of all the parties (landlord, tenant and subtenant) is complicated business!

look_both_waysI’ve seen subleases done two ways: One, as a stand-alone lease between tenant and subtenant that does not incorporate the master lease, or two, as a lease between tenant and subtenant that incorporates the master lease and thereby requires the subtenant to abide by all of the terms and conditions of the master lease. The proper structure in a commercial situation is usually method two, incorporating the master lease, because usually in a commercial situation the master lease imposes the obligation to do so, along with other conditions such as obtaining landlord’s prior consent. “Looking both ways” by reading both leases and making sure they are compatible (and, especially, that neither the sublease nor any of its terms results in a default by the tenant under the master lease) is the only way to know the proper way to move forward.

Because several parties with opposing needs are involved, subleasing can be tricky business, so looking both ways is critical for the tenant in the middle of the arrangement. Hire a highly qualified commercial real estate attorney (hey, maybe that’s me!) to draft or, at minimum, review the proposed documents and helping you LOOK BOTH WAYS.

As always, thanks for reading! BH

How Do You Define Confidence? Here’s One Way …

ConfidenceSaw this on the internet the other day and it rang true to me. For me, one way of defining confidence as an attorney is being able to respond to a client’s question by admitting, without any shame, “I don’t know … ” but being able to ‘confidently’ add “however, I can get that answer for you.” I recall an instance when, as a young associate at a large firm, I whined to my supervising partner, “You never explain anything to me. I feel like I’m always trying to figure everything out.” He looked at me, perplexed and a little annoyed, and said, “We’re ALL just trying to figure everything out.”

Lesson learned. NOBODY has all the answers.

When hiring an attorney don’t be dissuaded by one who says “I don’t know.” Instead, if he or she has the other characteristics you’re looking for … solid reputation, significant experience, strong work ethic, a personality you’re comfortable with … be encouraged by their willingness to be open and honest and rely on their determination to doggedly pursue the answer. Remember, the “law”, like the “internet”, is a massive thing. Nobody knows it all. BH

Two Words On “Attitude” …

Captain Jack Sparrow, channeling Charles R. Swindoll …

Captain Jack Sparrow - AttitudeThe longer I live, the more I realize the impact of attitude on life. Attitude, to me, is more important than facts. It is more important than the past, than education, than money, than circumstances, than failure, than successes, than what other people think or say or do. It is more important than appearance, giftedness or skill. It will make or break a company … a church … a home. The remarkable thing is we have a choice everyday regarding the attitude we will embrace for that day. We cannot change our past … we cannot change the fact that people will act in a certain way. We cannot change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude. I am convinced that life is 10% what happens to me and 90% of how I react to it. And so it is with you … we are in charge of our Attitudes.  Charles R. Swindoll

SHOW ME … I mean … WIRE ME THE MONEY!!

showmethemoney-Jerry-Maguire-1I exchanged emails today with another real estate attorney and was amused when I saw this statement as part of her email signature in bold, red letters:

DO NOT DELAY YOUR CLOSING: Due to recent changes in the real estate industry, we can only accept wire transfers. Cashier’s checks do not immediately clear and are not “COLLECTED” funds and will no longer be accepted at closing. Our wiring instructions will be provided.

It’s a bit “in your face” but I understand it. During the real estate “bubble” of a few years ago claims against title insurance underwriters for fraudulent cashier’s checks and other fraudulent activities increased dramatically. That trend continues and, with new technologies, the risk of fraud has become even greater. For example, one M.O. that has been employed, now that checks can be deposited simply by sending a photo of the check to your bank, has been for a person receiving a check at closing to take the check from the closing, deposit it by phone, return and claim that they would actually prefer a wire instead of the check. When the closing agent takes the (now already deposited) check back and then sends the recipient a wire instead, he or she will then have paid twice! The potential scenarios can seem crazy, I know, but with the recent tightening of attorney trust accounting rules and the severe penalties for any discrepancies or errors, we (attorneys) simply can’t take any chances.

ASIDE: Coincidentally, as I was typing this I received an emailed “Fraud Alert” (common these days) from a title underwriter describing a new scheme that has been detected. In this one, the fraudster hacks into a realtor’s or other service provider’s email and directs the closing agent to wire money to the fraudster’s account instead of the person’s whose email they’ve hacked into. Another technique made possible by modern technology! In the alert they recommend that we actually call the recipient to confirm that the email containing their wire instructions was authentic – good grief, one more administrative hassle to deal with at closing!

With regard to cashier’s checks, specifically, many people don’t realize that even cashier’s checks may take a few days to “clear” our trust account and some even get offended if we don’t accept theirs or state that it might cause a delay. However, under no circumstances are we allowed to disburse funds that are not confirmed as being “collected,” that is, confirmed by our bank as being in our account. If you don’t want to risk delaying the closing until we confirm that the funds you are providing are actually “collected,” be prepared to wire the funds. If you absolutely must provide a cashier’s check, be prepared to provide it far enough in advance of closing (i.e. several days) so that the check will clear in time for closing. Personal check? Ummm, not happening.

Thanks for reading! Drop me a note and let me know what you think!

BH

It’s the end of “the closing” as we know it, but it feels fine.

Does it seem as if your life revolves around emails, texts, computers, tablets, the internet, the “cloud” and other electronic forms of communication? Well, the practice of real estate law really isn’t any different and it has changed the way real estate closings are typically conducted. In my commercial real estate practice, it is actually more unusual to have a traditional “sit down” closing, with all parties physically present at the same time, than for the closing to be handled electronically or by “mail away.” While residential closings are still often conducted in the traditional manner, although they are changing also, in my commercial practice it is more often the case that communications between myself and opposing counsel are by phone, email and overnight courier such as Fed Ex or UPS.

Typically, documents are drafted by the closing attorney, transmitted by email for review by the various parties and comments are received back via email or phone. The documents are then finalized and sent out for execution by email or overnight courier, executed and returned by overnight courier. Funds are wired in and wired out. In many cases I never meet opposing counsel or their client face to face and, in fact, I would say that has become the norm in more sophisticated transactions.

Personal checks? Unless you feel like waiting a couple of days until that check clears my trust account, forget it. Attorney trust accounting rules are so strict now that delivery of funds by check, even by certified check, just slows down the process. With my license to practice law riding on it, I’m not disbursing a dime until all funds are confirmed by my bank as being in my trust account and available for disbursement, so don’t try to talk me into cutting any corners!

That being said, I kind of like this new style of closing because, if done right, I think it makes the whole process less stressful for the parties involved. True, it can be impersonal, but it is more systematic, there’s more certainty and there is less opportunity for a last-minute dispute to arise at the closing table. However, it takes a lot of planning, attention to detail and good execution to make this all go smoothly.

To make sure your closing go smoothly, engage an attorney who is willing to put in the work early on to make the day of closing a “non-event.” Documents and closing statements should be prepared and provided for review in advance of the closing date. Comments should be provided and changes to the documents should be made quickly. Money should be wired into the closing attorney’s trust account in advance, perhaps a day or two before the closing date, if possible. If the closing attorney has all the executed documents in-hand and all the funds in his or her trust account no later than the morning of closing, the so-called “closing” becomes as simple as issuing notice to all parties that “we’re closed.” In other words, closing becomes a simple, stress-free non-event. That, in my book, is a successful closing.

An experienced commercial real estate attorney will work with you and guide you through the process in order to make your closing as uneventful as possible!

As always, thanks for reading.

BH