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Orange County Legal Blog

Suing a landlord may not be as easy as a commercial tenant hopes

Some rental relationships do not work out as the parties intended. One of them may not fulfill the obligations outlined in the lease. If a commercial tenant believes the landlord has breached the lease agreement, the first inclination may be to file a lawsuit pursuing monetary and/or non-monetary restitution. However, litigation may not be an option -- at least not right away. 

The odds are high that an Orange County business owner's commercial lease contains either an arbitration or mediation clause. These clauses usually require the parties to participate in an alternative method of dispute resolution before heading to court. Some of these clauses require participation in binding arbitration, which precludes filing a lawsuit at all.

Should you add that exclusivity clause to your leasing contract?

If you are a landlord of commercial retail tenants, exclusive use clauses are going to become a factor at some point. From the tenant's perspective, it makes good business sense to exclude competition in their own back yards. By inserting exclusive use clauses in the leases, your tenants can increase their profit margins.

The landlord or property owner has to weigh their tenants' desires for exclusivity against their own needs to have a broad pool of potential commercial renters to fill their properties. When those desires and needs are badly misaligned, legal disputes and other problems can arise.

A commercial tenant may want to check out a potential landlord

Finding the right property to rent here in Orange County could take some time. A potential commercial tenant considers a variety of factors in choosing a place to set up shop, and the landlord ought to be one of those considerations. In fact, doing some research of a potential landlord could end up saving a tenant some headaches later.

No matter how "perfect" a property may seem on the surface, if the property owner is having financial difficulties, maintaining and repairing the property could become an issue. If a landlord is desperate to get tenants to fill a space, the quality of an Orange County business owner's neighbors may not be up to par, which could potentially drive away much-needed customers and clients. These shortcomings could outweigh any perceived benefits from the location and the configuration of the space.

Popular retail giants who won't be around in the new decade

Many of the country's shopping centers have relied on certain anchor stores for decades. However, many of them failed to survive the 2010s. The retail industry took several hits during the last decade, and as a new decade begins, store owners, developers and property owners will need to rethink how they do business. Keeping up with online stores like Amazon has proved expensive for many retail giants who used to serve as profitable anchor stores for shopping malls and shopping centers across the country, including many here in California.

The last decade saw a significant change in how people shop. As more and more people discovered the ease and convenience of shopping from their living rooms, brick and mortar stores struggled to keep up. They spent millions of dollars trying to do so, and it resulted in bankruptcy for some chains.

The retail industry relies on data to maximize sales

Any edge could make the difference for an Orange County business. When it comes to the retail industry, this often means paying attention to the data. Consumers are shopping differently than in years past, so it is vital for a business to pay attention to what the statistics and other data says about what people in a certain area want.

Retail businesses are working to reduce their size while maximizing their sales. The data tends to indicate that combining an in-store shopping experience with an online one could do the trick. Many stores are also looking to enhance the shopping experience with an entertainment element. For example, clothing stores are sponsoring yoga classes and kitchenware stores are sponsoring cooking classes.

Giving new life to old retail developments

There is no denying that brick and mortar stores here in California and elsewhere are suffering due to the ease and convenience of online shopping. Retail locations across the country are closing, and property owners are trying to figure out what comes next. It may be possible to give new life to these empty retail developments by converting them to distribution centers and/or warehouse space.

In some markets, opening new stores in an old space may be feasible, but not everywhere. Moreover, after cycling through many lives as a retail space, some property owners want a change that could possibly last. Considering the fact that online stores need a place to store their wares and a place from which to distribute them, this makes sense.

New construction litigation: Protect your rights

Building a new home is supposed to be one of the most enjoyable times of your life. You get to choose everything from the layout to the features to the location. However, just because you're building a home, as opposed to buying a preexisting property, doesn't necessarily mean everything will go as planned.

It's possible you could find a serious defect with the home, thus putting you in a compromising position in the future. On one side of things, you want to enjoy your home. On the other, if you simply let the problem slide, it could lead to additional safety and financial concerns down the road.

A landlord may want to consider some insurance against tenants

Many Orange County property owners believe that their general liability insurance policies are enough to cover anything that could happen on the property. However, that might not be the case when it comes to the commercial tenants occupying the building. Since that is a special relationship, a landlord may want to obtain some extra protection for issues that arise with a commercial tenant occupying the property.

Lessor's risk-only insurance specifically protects a landlord from claims filed by tenants leasing a commercial space. Many insurance companies require the landlord to not occupy more than 25 percent of the property in order to issue a policy. It covers a variety of bodily injury and property damage claims that could come from a tenant.

Commercial real estate development could break records in 2020

Since the great recession, the commercial property market has steadily recovered here in California and elsewhere. Many factors have contributed to the rebound of the market to this point, but 2020 could break commercial property development records. According to CBRE Group, investments could range between $478 billion and $502 billion.

Retail, multifamily housing, office space and data centers are just some of the projects that could see growth next year. The potential for a banner year rests at least partially in low interest rates, increase flow of capital, strong consumer spending and low inflation. These factors may the forecast bright regardless of some economic challenges that could keep the economy from growing faster.

Negotiating exterior factors in a commercial lease

When searching for the perfect rental property in Orange County, business owners often spend a great deal of time on the interior space and common area maintenance, or CAMs. However, when considering a space and negotiating a commercial lease, it is also necessary to pay attention to the exterior aspects of the space as well. Three of the most important exterior factors include access, parking, and signage and visibility.

How will clients or customers access the leased space? Adequate parking and visibility will not mean much if the access to the building is difficult because the entrance is not readily visible. Of course, those with GPS may not have as difficult a time, but the route could still be convoluted.