Real estate investors often buy commercial properties with the intention of updating, modifying, or improving the property. If you are buying commercial real estate, it is crucial that you understand the zoning and land use laws that will affect you. Strategic commercial development avoids zoning violations that will cause legal and financial headaches. If you are building on commercial property, work with a real estate lawyer who can help you complete your development project efficiently and legally.

Zoning Laws and Land Use Rules

Like most things in commercial real estate, modifying or building on a commercial property comes with a considerable amount of red tape. Anyone beginning a development project will want to understand how land use and zoning laws apply to the project.

Make sure you understand your obligations regarding:

Business owners have countless issues to consider when starting or expanding a business. One major concern for many business owners and entrepreneurs is securing a place in which to operate the business. If you are a business owner looking for commercial real estate, it is important to take your time and fully evaluate your options.

Before you sign a commercial real estate lease, it is essential that you have the lease reviewed by a skilled real estate attorney. Your attorney may be able to help you negotiate more favorable terms, and ultimately save you and your business money. Furthermore, your attorney can help you spot red flags that may be signs a commercial lease agreement is not in your best interests.

The Landlord Suggests a Verbal Agreement Will Suffice

As a business owner, you probably already know the importance of getting any business relationship in writing. Unfortunately, even the savviest business owners have been ticked by smooth-talking landlords who assure them they have nothing to worry about. Make sure you get the lease in writing and have your attorney review the lease before signing.

A commercial real estate development project will often represent a lucrative business opportunity for all parties involved. However, significant construction may be needed before a developer can realize the full potential of a property. Whether a new building will need to be built, an existing building will need to be refurbished, or other types of construction will be needed to ensure that a property will be able to serve its purpose, these construction projects can represent a major investment of time and money. To ensure that work will be completed properly, a construction contract will be needed, and the right type of contract should be selected based on the work being done.

Four Types of Construction Contracts

When parties sign a contract, they are making a legal agreement, and they will both be required to meet their contractual obligations. A contract should fully outline the scope of the work being performed and the responsibilities of each party. It should state the price of the project and how this amount may change if unforeseen circumstances occur, and it should detail a payment schedule and the penalties for late payments. Any relevant documents, such as blueprints and specifications, should be included in a contract.

The decision to buy or sell a commercial property is likely one of the most consequential financial decisions you will ever make. In order to get the best deal possible, proper valuation of the property is essential. An accurate appraisal of a property’s value is also used by lenders when determining how much debt the lender is willing to provide. There are several different approaches used to value commercial real estate properties.

Valuation Methods for Commercial Real Estate

Many people assume that the term “value” is synonymous with “price” or “cost.” Price and cost will certainly influence a property’s value, but they are not interchangeable terms. The value of a commercial property is typically determined by an appraiser. The three main methods for valuing a commercial property include the income approach, replacement cost approach, and market value approach. The valuation approach an appraiser will use depends on several factors including the type of property and how the property will be utilized.

With more investors breaking into the commercial real estate sector, demand for reliable and comprehensive information on the selling and leasing of property increases. Granted, the information that one finds on the internet must be carefully vetted, and investors are highly encouraged to run all decisions and potential changes by their attorney, as this can help avoid the risk of lawsuits and financial loss. However, with a better understanding of the potential pitfalls, landlords can be better prepared, which can allow them to better plan for their future. 

Being Prepared for the Challenges in Commercial Leasing 

The stakes and risk of financial loss are far greater for the commercial landlord and tenant. There are also some nuanced issues in the CRE market that can significantly alter the needs and concerns of an investor. For example, there are different asset classes in the CRE market, and the challenges tend to vary for each one. In other words, the owner of a low-income apartment will have different needs than a hotel or casino owner.