Category : Commercial Real Estate

Commercial Real Estate

Settling Agent Disputes In Commercial Real Estate Deals

Picture of a man on the phone trying to settle a commercial real estate disagreement or dispute

Almost every profession in this country is closely regulated by different associations and official bodies. In the world of Orange County real estate in general, that professional body is the California Association of Realtors (CAR). The CAR is dedicated to advancing the profession of realtors and ensure that certain standards are put in place. The CAR can help settle and mediate commercial real estate disputes.

The purpose of the CALIFORNIA ASSOCIATION OF REALTORS is to serve its membership in developing and promoting programs and services that will enhance the members’ freedom and ability to conduct their individual businesses successfully with integrity and competency, and through collective action, to promote real property ownership and the preservation of real property rights.

When realtors are affiliated with the CAR, they are also mandated by arbitration and mediation standards. Hence, if there is ever a dispute, the CAR has procedures in place to help in resolving such. However, a commercial real estate agent is not a realtor. As a result, while some still choose to join the CAR because of their overall professional standards within the world of real property, they are also not bound by those arbitration and mediation requirements.

Some people believe that it is this particular lack of overseeing body that makes commercial realtors akin to cowboys. They believe that the term is suitable for them because it describes the fact that they work hard, are true entrepreneurs, and take whatever they can. This is particularly true for those commercial real estate professionals that operate on a commissioned-sales payment arrangement, which most of them do.

The amount a commercial real estate agent receives on a commission is calculated as a percentage of the total commercial property sale price or lease value. While it’s illegal due to anti-trust laws to set a market- or industry-wide standard for commission percentages, most agents earn anywhere from 4% to 8%.

However, regardless of how professional the commercial real estate agents are – or aren’t – there are bound to be disagreements. Usually, those are related to the manner in which they get paid. And this is where they truly set themselves apart from cowboys, because while their disputes may not be arbitrated by the CAR, they also don’t meet at high noon at the OK Coral.

How Commercial Real Estate Agents Resolve Complaints

The vast majority of disputes between commercial real estate agents is a fee disagreement. Most professional commercial real estate agents try to prevent this from happening by starting any negotiation with a clear understanding of who will be paid what even before the deal is negotiated. They have faith in the fact that their coworkers are as honorable as they are, in other words, understanding that working in an ethical manner ensures that there will be no misunderstandings, that deals will go by smoothly, and that everybody will get paid with the right amount. Mainly, however, they ensure that they have a written agreement in place for everything, including escrow, leases, responses, offers, listings, and more.

In a few situations, a contract must also be in writing to be valid. State laws often require written contracts for real estate transactions or agreements that will last more than one year. You’ll need to check your state’s laws to determine exactly which contracts must be in writing.

Additionally, while it is certainly true that commercial real estate agents don’t join the CAR, because they don’t have to, that doesn’t mean that they are not represented by any professional body. They are often members of the Association of Industrial Commercial Real Estate (AIR CRE).

AIR CRE is an innovative, member-owned platform that provides commercial real estate professionals in Southern California with the critical tools they need to be successful. We have curated the best resources that the industry has to offer, and packaged them together as a single integrated network. Our Members have unparalleled access to a system of market research, listings services, contracts and legal resources, networking, and education.

AIR CRE has also created a platform for agents who are involved in a dispute and require arbitration. This has become even more important since there have been significant changes in the market for commercial real estate professionals in Southern California.

Then, there is the fact that the majority of commercial real estate agents work from an office, rather than completely independently. While it is true that the agents are often not classed as ’employees’ of these offices, they can access their policies and procedures and use them for their own issues. These include dispute resolution strategies and mediation options.

How a Resolution Is Obtained in Disputes Between Agents

If a dispute does occur, most commercial real estate agents will be able to go through five different steps, escalating to the next one whenever a particular step did not bring a successful solution. These steps are:

Step 1 – Work with the other agent to try and come to an amicable solution for the problem.

Step 2 – If no resolution can be agreed upon by the two parties, managers will be brought in. These can be intra-office or interoffice.

Step 3 – If managerial involvement still does not lead to an agreeable solution, an arbitrator will be brought in for mediation. This arbitrator should be independent and skilled in bringing negotiations back on track.

Step 4 – Should mediation fail, then a new form of arbitration will commence, known as binding arbitration.

In binding arbitration, disputing parties waive their right to a trial and agree that they will be bound by the arbitrator’s final decision. Binding arbitration is suitable for business disputes in which two parties need to resolve internal conflicts in order to expedite an outcome.

Step 5 – If the binding arbitration fails to resolve the situation, then both parties will seek legal advice in an attempt to litigate towards a resolution. This is rare, because the point of a binding arbitration is to avoid going to court. However, this can be circumvented by suggesting that the new dispute is based on the binding decision of the arbitrator.

That being said, most commercial real estate professionals will say that it is very rare that things ever get past the second step, and even rarer for them to get past the third step.

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Commercial Real Estate

Newport Beach Welcomes New Chipotle Headquarters

Chipotle is a popular Mexican grill restaurant that was originally opened in 1993 in Colorado by Steve Ells. Since then, it has remained headquartered in the Rockies. However, in a surprise move, it seems that the company is now moving its headquarters to Newport Beach, something that has sent shock waves throughout the fast food industry. It seems that the company, which started as a humble eatery near the University of Denver and grew to a global chain of some 2,300 restaurants, is ready for something new.

When Chipotle opened its first restaurant in 1993, the idea was simple: show that food served fast didn’t have to be a “fast-food” experience.

The E. coli Outbreak at Chipotle

Recently, Chipotle seemed to be a restaurant that went from strength to strength. In fact, in July 2015, the company’s stock price reached almost $750, a new record. However, towards the end of that year, there was an outbreak of E. coli contamination, which caused tremendous damage to the value of the company.

When Chipotle announced the closure of 43 restaurants in Oregon and Washington state on Nov. 3 because of the outbreak, sales dropped nationally by 20 percent over the next few days. Sales were down 16 percent for the entire month of November.

Decline in Sales at Chipotle

Naturally, the company wanted to show that it was sincere in expressing apology to its customers. In spite of that and despite the containment of the outbreak, earnings declined. Various tactics were tried, including the addition of new menu items, but it was to no avail. Shareholders, including activist Bill Ackman, publicly criticized the company, which eventually resulted in Steve Ells stepping down as CEO and taking on the position of executive chairman instead.

The expanded board was supported by activist investor Bill Ackman, whose Pershing Square Capital hedge fund took a nearly 10 percent stake in September 2016.

Chipotle seems to be recovering since Ells stepped down, resulting in the company being able to move away from Denver and to Newport Beach. This came after a new CEO was appointed, who hails from Southern California. Interestingly, competition is fierce here with In-N-Out Burger, Del Taco, and Taco Bell all operating in the area as well.

Direction of the Company with Brian Niccol as CEO

Brian Niccol, the new CEO since February 2018, explained that the move will not come without some cutbacks, but that it is believed to be an opportunity for sustainable growth.

We have a tremendous opportunity at Chipotle to shape the future of our organization and drive growth through our new strategy. In order to align the structure around our strategic priorities, we are transforming our culture and building world-class teams to revitalize the brand and enable our long-term success.

Field operations workers and restaurant employees will maintain their position. However, some cuts will be made among corporate employees. So far, various corporate functions, including human resources and finance, have started to make the transfer, as the company has identified the commercial real estate property for their operations. Interestingly, Brian Niccol was the CEO as Taco Bell prior to his new appointment, which is based in Irvine.

To date, Chipotle has offices in Denver and New York, and those will be consolidated into offices in Newport Beach and Columbus, OH. This came as a significant surprise for both Denver and for Newport Beach. Indeed, no notices were given about the imminent move, which is rare considering the scale of operations of moving a huge company. In fact, even Tara Finnigan, deputy city manager for Newport Beach, was not aware of the move.

Unidentified Location of New Offices in Newport Beach

It is also not clear, what the location of the new offices will be, other than that they will be in Newport Beach. This could mean, therefore, that Chipotle is still looking for office space and this is welcome news. According to JLL, a real estate firm, there has been an increase in availability in office spaces due to more efficient use of space and new construction in the area. Hence, now could be a very good time to invest in this type of real estate.

Nationwide, vacancy rates for office spaces stand at 12.6% while Newport Beach’s vacancy rate is 10.7%. In Fashion Island, it is as low as 6%, in fact. The result is that rents are far more expensive as well, around 11% higher than the rest of the county, or 46% on Fashion Island. Again, if there is currently an opportunity to invest in office spaces, it is important to strike while the iron is hot.

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Commercial Real Estate

Big Sale In Orange County Commercial Real Estate

The world of commercial real estate in Orange County is always exciting. Because it is such a hot market in which virtually every business would like to have a presence, and because there is almost no land available anymore, and properties that do come up are snapped up very quickly. Just recently, four multifamily properties were sold across Orange County and San Diego County by Marcus Millichap.

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Commercial Real Estate

Residents Of Cypress Vote To Redevelop 150-Acre Los Alamitos Race Course For Mixed Use

California Chrome will soon have to change home because the Cypress Los Alamitos Race Course will soon be redeveloped. This was agreed upon at the most recent Primary Election.

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Commercial Real Estate

Orange And Los Angeles County Commercial Real Estate Market Remains Bullish

In line with the new tax reform by President Donald Trump, continued job growth, and a good GDP (gross domestic product), it seems that the commercial real estate (CRE) market in both Orange and Los Angeles County will continue to be bullish. This is also according to the latest biannual Forecast Commercial Real Estate Survey by Allen Matkins/UCLA Anderson.

The tax bill is expected to increase the rate of return on commercial real estate and makes investment more attractive. Survey participants predict it will cause moderate though uneven growth.

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Commercial Real Estate

Shopping By 2030 – A Futuristic View Of Retail Properties

Shopping, especially clothes shopping, is something that has been done in the same way for a very long time. You pick something from the rails, try it on in the changing rooms, find it is too small, have to get dressed again, hunt for a larger size, try it on again, and so on. The lights in the changing rooms are unflattering and make everything look terrible, and most of us leave feeling horrible and without that must have item we came for. But this could soon all change. Retail industry predictions say that there could be exciting changes to retail properties.

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Commercial Real Estate

Two Orange County Real Estate Managers Placed On Watch In Line With Pacing

A new preliminary plan for real estate investment has been set by the Orange County Employees Retirement System (OCERS), based in Santa Ana. Essentially, they intend to make three commitments ranging from $125 million to $175 million, which will be to their core real estate portfolio. In addition, they intend to make a four more commitments ranging from $75 million to $125 million for their non-core investments. This will be for the 2019 fiscal year. OCERS is a $15.7 billion pension plan that is known for making lucrative investments.

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Commercial Real Estate

Rancho Cucamonga Shopping Center Sells For $9.8 Million

RC Plaza is a popular shopping center in Rancho Cucamonga, CA. It is found where East Foothill Boulevard and Archibald Avenue intersect. It has been announced that the shopping center has been sold for $9,795,000 recently. The purchasers have been revealed to be Voit Real Estate Services and the Hanley Investment Group Real Estate Advisors. The latter is a real estate advisory and brokerage firm that has won numerous awards over the years.

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Commercial Real Estate

Orange County Commercial And Residential Properties At Risk From Climate Change

The shoreline of California is changing and the sea level is rising as a result of climate change. It is believed that this will result in many properties being at risk of flooding within the next three decades. This was revealed by a study completed by the Union of Concerned Scientists (UCS).

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Commercial Real Estate

Northern Orange County Sees An Increase In Industrial Real Estate Supply

industrial real estate in northern orange county

Orange County is notoriously low in its supply of industrial properties. However, it now seems that change is afoot. A 232,000 square foot, four building project will soon start construction in the northern part of the county.

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