Commercial Real Estate
Commercial real estate is a broad term describing property that is being used to generate a profit. It can take many forms such as commercial malls, hotels, industrial property, office buildings, apartment buildings, hospitals, warehouses and the list goes on and on. Individuals or business entities generally acquire a specific commercial property because of its location. Unlike stocks or bonds where many people can buy the same thing, real estate is scarce. The location of the commercial property will generally drive its best use but each specific location also has its own unique challenges.
Imagine a typical industrial section of a city or along a highway. High smokestacks, smells and truck traffic are not uncommon. With this location it is probably not best to develop a multi-tenant apartment complex. This is better suited for a manufacturing company or a warehouse. However, in these locations, environmental concerns must play a bigger role in the process due to potential liability and clean up costs imposed by the federal, state and local environmental laws.
Contrast this with farmland being converted into a small office complex along I95. While environmental concerns should never be ignored, in this instance however, the surrounding challenges may be developmental in nature. For example, land use and rezoning may play a larger role in the process.
Wherever your property is located and whatever the potential issues may be, Danziger Shapiro & Leavitt, PC has the ability to represent you no matter what role you may play in the process - buyer, seller, investor or bank. Below we have set forth a very brief overview of common issues that need to be considered when buying or selling commercial real estate.The Commercial Real Estate Process
Step 1. Development of the Deal and Due Diligence
The first step with any commercial real estate deal is to develop your plan. What are you trying to accomplish and how are you going to get there? Development of your deal requires due diligence. The amount of due diligence required varies for every deal. However there certainly are basic questions common to all real estate deals.
- Is the location appropriately zoned for what you want to use the property for?
- Are there environmental issues? If so, is a stage 1 or stage 2 investigation required?
- Is the property properly zoned? Will a zoning variance be required?
- Is it necessary to appear before neighborhood associations and other interested parties to gain acceptance of your project?
- Outstanding taxes and other liens against the property?
- Are engineering studies required?
- Is financing secured (early seed money and/or bank financing)?
- Retain the correct professionals (lawyers, engineers, accountants etc...)
Step 2. Transfer of the Commercial Property
The second step in the transaction is the transfer of the commercial property to a new owner. As with the first step, there are several steps that are common to all transactions whether you are the buyer, seller, investor or contractor as you move forward from development towards actual operations.
- Is the property "turn-key"?
- Is construction required?
- Is construction financing required with arranged "draws"?
- Is a project manager required?
- Marketing of Project (informal and formal)?
Step 3. Operation of the Commercial Property
By the time you reach step three you should have already developed a plan regarding how the commercial real estate is actually going to be managed so that you make money on your investment.
- Do you need tenants? If so, a plan should have been put into place in Step 2 above.
- Commercial Leases. Do you have leases in place with your tenants if you are using the building yourself? In appropriate circumstances, sometimes a business will want to have ownership of its business in a separate entity from its business for liability and related reasons.
- Financing. Is a short term loan required to insure the long terms success of your business (known as a bridge loan)?
Simply put, we don't over lawyer the deal and get in the way. At Danziger Shapiro & Leavitt we operate our law firm as a small business and as such are acutely aware of the pressures you face. We work with you side by side to get you from point A to point B in the quickest and most cost effective way possible taking into account when it is necessary to bear down on a particular issue.
Recent transactions include:
Represented controlling party in sale of 8.5M hotel in suburban PA
Represented physician in acquisition of multi-tenant free standing professional office building for $1M.
Represented investor in connection with construction financing project. After review of transaction advised client not to invest saving client several hundred thousand dollars. Click here for client review.
Representing property owner in self development of a block long mixed use property.