O'Brien Legal Services LLC

Commercial real estate is growing: What investors must know

2021-04-27T19:09:25Z

Many investors choose to enter the real estate market because it offers great promise and stable success. It can be a demanding market, but a rewarding one.

A recent report found that investors in commercial real estate could face significant rewards in the near future – as long as they manage the competition effectively.

Commercial real estate forecast looking promising

According to the World Property Journal, commercial real estate opportunities and pricing power will remain strong in the coming year. The report specifically lists the particular areas of real estate showing promise, including:

Office areas
Industrial properties
Retail properties
Hotels
Multifamily properties

For Colorado commercial investors, this means that they could potentially face a significant amount of competition in these areas over the next few years. Investors know that competition in the market is a good thing – it is a sign of a healthy market.

However, investors must approach competition strategically to protect their best interests and investments.

What should investors do when facing competition in the market?

Competition in commercial real estate has been increasing for several years now. If investors wish to succeed in a competitive market, there are a few things they must remember:

Conduct careful research into market trends and consumer interests for every investment;
Take time to focus on marketing strategies to differentiate yourself; and
Make personal connections, which can go a long way in real estate.

Investors strive for the best deal, but they must also ensure they protect their investments effectively. O’Brien Legal can help investors navigate commercial real estate transactions and investments with professional care and quality service.

Brick and Mortar on the Comeback Trail

2020-03-09T21:19:47Z

Few innovations have had more of an impact on physical retail centers than the rise of e-commerce. From strip malls to mega shopping complexes, convenience of one-stop shopping in a single building once represented endless convenience.

Fast forward to today. “Endless convenience” has a new definition, particularly for Colorado retailers.

The Impact of E-Commerce

Shoppers can buy products at all hours from the comfort of computers and smart devices in their homes. The changing tide turned into a quantum shift that cut into the bottom lines of “brick and mortar” retailers. Witnessing the changing tide, big-box stores are forced to literally and figuratively think “out of the box” and adapt to their ever-changing customer base and their purchasing habits.

Their efforts, particularly in Colorado, seem to be paying off.

Shopping centers statewide have gone beyond weathering the storm created by Amazon and other e-commerce companies, both large and small. They have thrived, expanding 20 percent over the course of the past decade. Structures in “trophy areas” featuring Starbucks and other high-profile anchors – specifically King Soopers and Whole Foods – continue to attract shoppers looking to leave the confines of their homes.

The explosion of actual foot traffic has made Colorado one of the most desirable markets nationwide. Investors are not only honing in on Denver which has enjoyed average annual retail rent growth of five percent from 2016 to 2019. There is also a particular focus on secondary and tertiary markets outside of the capital city that benefits from the booming economy that provides investors better yields.

Investing in real estate is risky, particularly in an ever-changing world. What was “old” is now “new” again. The insight of an experienced attorney can be the first step towards rewards beyond the risks.

Construction Going Green

2020-03-09T21:19:43Z

For real estate investors, it’s never been easier “being green.”

Environmentalist groups have turned their attention towards the construction industry due to their purported role in climate change. Their current pursuit is backed by the United Nations Environment Program’s claims of buildings and associated construction accounting for 40 percent of worldwide carbon dioxide emissions.

Investors Eyeing Potential in a Changing Industry

The shift to “greening” is in response to large cities throughout the United States strengthening their regulations to reduce carbon emissions. With dire predictions of potential natural disasters that could drive down property values, investors are taking notice of the trend. Adding new, “ground-up” green construction to their portfolios is more desirable investment-wise due to the high costs of updating noncompliant buildings.

The process will be gradual for both builders and those that invest in properties while both traverse the path of “decarbonization.” That road is long in selecting and constructing sustainable structures. Portfolios need to be updated to secure the tools that factor in climate-related risks.

Investors enjoy a certain level of power and influence in the day-to-day operations of construction companies. They could use that power via their greener portfolios. More environmental awareness among stakeholders could see them using their influence to convince companies to employ more environmentally and socially responsible methods.

Sustainable buildings are still in the early stages and a sign of the real estate industry’s evolution. As investors take on new ventures, the help of a skilled attorney staying on the cutting-edge of new trends is paramount to success.

Investing in a vacation property? Remember seasonality.

2021-04-27T19:09:12Z

Many people consider purchasing a home or property in their favorite vacation spot. They dream of having a getaway for their family to use for generations.

However, owning a vacation property in addition to your full-time home can have a significant effect on your finances. That is why many people make the investment and rent out their vacation homes when they are not using it to earn extra income.

There are a few things you must consider when investing in a vacation home with plans to rent it out. One of the most important factors is seasonality.

Take seasonality of the property into consideration

When looking to purchase a vacation rental property, there are several metrics that you must consider, including:

The rental demand in the area;
Whether revenue has increased or decreased in this area;
The real estate regulations of the area; and
Seasonality.

Since vacation homes have a largely seasonal nature, seasonality is one of the most important of these metrics. Conducting thorough research is essential to take advantage of the peak rental season.

For example, if you purchase a vacation home near Vail, it is critical to know that the peak ski season is between December and March. It might be beneficial to plan to rent during that time and stay in the home in the off-season to increase income opportunities.

Seasonality can also determine when you buy

The seasonality of a property not only impacts rental demand, but also the price you pay for the property. Essentially, if seasonality influences rental prices and demands, it will also affect the asking price for the buyer looking to invest in the property.

Buyers should look for the best deal, and approaching a sale with strategic insight is critical to protect your best interests. O’Brien Legal can help you safeguard your assets and interests now and in the future when it comes to real estate investments.

Denver Remains a Desired Destination

2020-02-14T01:38:20Z

Few areas of the country have seen more expansion in population than Denver. Over the past ten years, the population of Denver has grown by more than 20 percent. A new decade sees new residents continuing to stream in with many attracted by the growing number of employers setting up shop.

The Trend Towards Renting

More people equals the need to create more places to reside. While homeownership is up 21 percent as are real estate prices with 104 percent growth, construction companies also swooped in to meet the demand of those looking to rent. Newly built multifamily homes and apartment complexes currently enjoy an occupancy rate of 94 percent, well above the national average.

A significant part of the real estate expansion in Colorado’s capital city includes apartment construction, an area where Denver ranks high in the nation. Developers seized on the opportunity to increase the number of units to attract wealthier Denver Metro residents to high-end housing.

Specific data includes:

More than 61,000 rental units were built over the past ten years, putting Denver in the top ten nationally.
Renters increased by 17 percent, with average monthly rental payments skyrocketing by 85 percent.
No age segment was left behind with increases in all categories with 35 to 59 year-olds leading the pack at 29 percent growth since 2010.
The sixty and older demographic came in second with increased occupancy of 25 percent.
Wealthy Denverites seem more drawn to renting, pushing Denver to 11out of the top 20 cities while significantly increasing the overall number of high-wage earners.
State residents enjoying significant largesse compose a little more than four percent of the renter population, an increase of nearly 300 percent over the decade, doubling the national numbers.
The growing trend towards renting in the suburbs saw tenancy increase 19.5 percent compared to urban areas at 18.5 percent. Both numbers exceeded the national average.

Both owning and renting carry their share of benefits and drawbacks. Ultimately, the decision for a prospective owner or tenant comes down to their respective financial pictures. Such an important decision may require the help of an experienced, Denver-based real estate attorney.

The Landlord’s Guide to Service Animals and Emotional Support/Assistance Animals

2023-10-18T18:37:27Z

If you're a landlord, there's a good chance that you're going to encounter the issue of service animals or emotional support animals (ESAs), also known as assistance animals, at some point in your career. Service animals and ESAs/assistance animals are important to many people throughout the United States. You probably already know that as a landlord, you have laws to follow concerning service animals and ESA/assistance animals.

Colorado Housing Laws Regarding Service Animals and ESAs/Assistance Animals

Colorado's housing laws regarding service animals come from both United States federal law and Colorado state law. The purpose of allowing service animals is to ensure that people with disabilities have equal access to housing. In general, a tenant has the right to have a service animal or ESA/assistance animal, even if the rules of the housing unit don't allow pets. You can't charge a deposit or an extra fee for a qualified service animal. You can reject an individual animal if it poses a real, direct threat to the health and safety of others or is not housebroken.

What is the Difference Between Service Animals and ESAs/Assistance Animals?

To understand service animals generally in a landlord-tenant situation, you must first understand what a service animal is. In fact, there are two kinds of animals that help people with disabilities: service animals and ESAs/assistance animals. Under federal law, service animals are generally specially trained dogs, although miniature horses also are eligible. ESAs/assistance animals are not limited to dogs and miniature horses. The difference between service animals and emotional support animals is that service animals are dogs (or miniature horses) that have been individually trained to perform specific tasks or do work for the benefit of someone with a disability, while ESAs/emotional support animals assist a person without performing any particular task and without a training requirement. For example, a service dog may be trained to remind someone to take their medication. They may know how to recognize the signs of a seizure or diabetic shock. An ESA doesn't perform any specific task. Instead, merely by its presence, the animal provides support.

A Landlord Must Accept Both Service Animals and ESAs/Assistance Animals

Colorado law requires that landlords provide accommodation for both service animals and ESAs/assistance animals. Even though the two types of animals help in different ways, they're both legally considered animals that assist with disabilities. As a landlord, you must accept both types when the tenant meets two legal requirements:

The tenant has a real, recognized disability.
The animal is related to, and assists with the disability.

As a Landlord, Can You Verify a Tenant's Disability?

Under Colorado law concerning emotional support animals, if the disability isn't immediately obvious, a landlord may ask for a letter (an "ESA letter") from a licensed medical professional, on their letterhead, that confirms that the tenant has a disability and that the ESA can help such tenant. To qualify a tenant to have an ESA, the doctor must meet with the patient in person or by formal telemedicine. The doctor must be familiar enough with the person and their disability to make a determination. The doctor must also be qualified professionally to make a determination regarding the appropriateness of the ESA. Under federal laws concerning service animals and assistance animals, if the tenant's disability is obvious or already known to the landlord, the landlord may not inquire further. If the disability is not obvious and not already known to the landlord, only limited inquiries are allowed. In such case, a landlord may only inquire: (1) is the animal a service animal required because of a disability, and (2) what work or task has the animal been trained to perform. Under federal law, a landlord cannot ask about the person's disability, require medical documentation, require a special identification card or training documentation, or ask that the animal demonstrate its ability to perform the work or task.

Can You Charge a Pet Deposit or Pet Rent for a Service Animal?

No, you cannot charge a pet deposit or pet rent for a service animal or ESA/assistance animal. Because a service animal is a reasonable accommodation, the tenant must be able to rent their property without paying any additional fees for the animal. Remember, a service animal or ESA/assistance animal isn't legally regarded as a pet. They're there to help the tenant have equal access to housing. Because of their role in providing equality, you cannot charge a pet deposit or pet rent for a service animal.

Who Pays for the Damage If a Service Animal Damages the Property?

In Colorado, the tenant pays for damage if a service animal damages the property. Colorado law 24-34-803 makes tenants liable for damage to rental properties caused by their service animal. The owner is liable even if the animal doesn't have a propensity to cause harm or if the tenant didn't have a reason to believe that the pet would cause harm.

Are There Any Grounds to Lawfully Reject a Service Animal?

Yes, there are some grounds by which a landlord may lawfully reject a service animal. For example, if the service animal poses an unreasonable risk of physical harm to others or has a high likelihood of property damage, the landlord may reject the animal. The key thing to remember is that the risk must be reasonable and apparent. You may not deny an animal based on certain breeds alone. In addition, you may still place other, lawful requirements on renting a property that would apply to any tenant, with or without a service animal. However, remember not to use another reason as an excuse for rejecting a service animal; your actions may be subject to scrutiny, and you may be opening yourself to legal action.

Landlords and Service Animals

As a landlord, remember that tenants have rights and obligations when it comes to service animals and ESAs/assistance animals. However, you have rights and obligations, too. An experienced attorney can help you understand your rights and defend yourself if you have questions with landlord service animal requirements.

An Airtight Approach to Energy Efficiency

2020-02-14T01:38:22Z

Soon, blower doors testing will be coming to a Mile High City building near you. All new construction and major renovations in Colorado will undergo these examinations to ensure that the structures are energy efficient and airtight.

Uncovering a Lack of Efficiency

In 2014, the National Institute of Standards and Technology studied 400 buildings residing in cool climates similar to Denver. A total of 70 were constructed between 2004 and 2014.

The results were alarming, revealing a significant lack of energy efficiency. Seventy-one percent were anything but airtight. Significant leaks resulted in 55 percent more natural gas consumption, and 28 percent were using more electricity.

The Financial and Environment Benefits of Energy Savings

One of the more significant expenses for owners of homes and commercial buildings is energy costs. The new code can potentially increase property cash flow and reduce the cap rate. Improving efficiency can potentially create 4,000 jobs and more than a billion in energy savings over ten years.

The financial perks are only the beginning. Employees in those buildings can work in more comfortable environments with significant noise reduction. Those important factors can increase both staff performance and overall productivity.

A new initiative originally introduced in Fort Collins six years ago that mandated the aforementioned blower door testing is making its way to Denver. An enterprise of this nature can improve the overall quality of life combined with more jobs and a stronger economy.

With building codes continuously changing, legal help from a skilled and experienced attorney can ensure that your project is in compliance with those rules and regulations.

The Ever-Changing Colorado Real Estate Landscape

2020-02-14T01:38:30Z

U-Haul is synonymous with “Kleenex” and “Jello.” When people think of renting a moving truck, they naturally think of “U-Hauls,” even if they choose a different company.

While continuing to dominate its industry, the well-known transportation rental provider for homeowners on the move has seen better days, particularly in the state of Colorado.

Inventory and Price Presents Challenges

Once residing in the top twenty for the “states to move to” listing – specifically 16th – the “Centennial State” has dropped to 42nd. The fall from real estate grace is the result of slim pickings for prospective homebuyers that are driving up prices as inventory shrinking.

Metro Denver, in particular, saw a reduction of nearly 30 percent by 2019’s end compared to the previous year. While sales were up six percent, the inventory of available single-family homes was 28.9% lower at the end of 2019 than it was at the end of 2018, according to the report.

The end of the year saw precipitous drops with September-to-October sales dropping 32.8 percent and November to December sales falling 29.5 percent.

Garfield, El Pason, and Pueblo counties were the hardest hit in the inventory department while Larimer, Weld and Mesa saw smaller declines.

An increase of new construction that will attract not only new homeowners but also those looking to increase their square footage. Colorado remains an attractive state with employment opportunities galore combined with weather that entices snowbirds currently feeling the freeze of a harsh winter.

The real estate industry is never stagnant when it comes to home prices and availability. In any market, the decision to purchase a home presents some risks and even more complexities. Having the help of an attorney with such an important investment is paramount.

Is Slowing Real Estate Growth a Trend or an Anomaly?

2020-02-14T01:38:34Z

When this past year came to a close, Denver once again showed its continued strength in the real estate market. Yet, the growth was significantly smaller. Even with a strong December that revealed solid numbers, the increases were significantly smaller than in years past.

Sales volume for the previous year continued the increases. Specific data that fueled that continuing trend includes:

Average sold prices grew by three percent increase ($460,801 to just over $475,571)
Inventory rose one percent from 51,665 to 53,788
Average list prices grew to $505,558, up four percent from 2018

Homes selling for $1 million or higher also saw small growth at one percent ($1,526,999 to 1,535,900). Additionally, time on the market decreased by 14 percent from 72 days to 62 days.

Denver's Real Estate Market: The Good and the Potentially Bad

The past decade has been good for Denver. Since 2010, average gains have been much higher with 2018 reaching 7.2 or 7.9 percent growth, depending on the study. Many locations in the city showed promising consistency for the first part of the year before seeing a decline.

With 2019 at an end, the year's findings are tempered as experts express concerns about the reductions in growth. Some fear that the final numbers could be part of a larger problem that may continue throughout 2020 and beyond.

The news is not all dire statewide. The smaller amount of affordable options in metro Denver is forcing buyers to look elsewhere in the Centennial State. Communities such as Fort Collins and Colorado Springs are set to reap the rewards and outperform within five years, according to the National Association of Realtors.

Regardless of trends, the purchase of real estate is a personal process for any Coloradan. The best bet for success is to place your trust in a skilled and experienced real estate lawyer.

Five specific aspects of commercial real estate transactions

2020-02-14T01:38:37Z

Colorado attracts all types of entrepreneurs and large corporations due to it’s growing economy and population of younger Americans. However, it’s challenging to secure the perfect property when you are dealing with other competitors in the area.

Luckily, knowing the specifics of a commercial real estate transaction helps you find the perfect property for your needs while keeping your costs low.

Unique details in commercial real estate

Commercial transactions are like residential in the step-by-step process. However, commercial real estate has its unique complexities:

More money involved – commercial sales typically involve much more funds than residential transactions, which makes the escrow process more complex and tightly-controlled for sellers and buyers.
Less regulation – Also, there is less regulation for commercial real estate deals during escrow, so buyers need to act diligently to protect themselves and their investments.
Deals with legal entities – For most residential properties, buyers and sellers are listed as individuals in the contract. But commercial real estate deals with legal entities instead – limiting liability and increasing tax advantages for the entity.
Asks for signing authority – When buying a property, a corporation cannot sign the transaction. Instead, one person will have signing authority on behalf of the corporation and act as a representative throughout the deal. It involves more paperwork and authorization from the board of directors to execute the purchase.
Concerns surrounding zoning – Since commercial properties are intended for a specific use, most buyers need reassurance that the property is properly zoned for their intended use before closing. You would want a full report on the zoning search and possibly letters from local officials from the area.

These details are crucial for buyers to know before purchasing a specific property. Without that knowledge, you may end up with the wrong property or location for your company.

One way to help balance the legal complexities of a commercial real estate transaction is to hire an experienced attorney. O’Brien Legal works diligently to listen to clients and act swiftly to accomplish their goals.