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Houston Business & Commercial Law Blog

Trade secret protection is important for any size business

Almost any size enterprise engaged in any type of business has what may qualify as trade secrets that are worthy of protection. A trade secret may be as mundane as a customer list or a certain in-house manufacturing process, but it is something that has value to that specific business. Texas has adopted the Uniform Trade Secrets Act guidelines to protect this form of intellectual property.

IP legal experts can explain that a two-pronged test is initially employed to determine if a trade secret exists. The information, which is a term broadly defined in the UTSA statute, must derive its economic value from not being publically known, and importantly, reasonable efforts must be made to maintain its secrecy under the given circumstances. Multiple parties may share the same trade secret, but if it appears the information has become common knowledge, no intellectual property rights will attach.

Texas has strong markets for commercial real estate investment

Investors at all levels have opportunities to enter the commercial real estate market. According to the National Association of Realtors, 2018 has been a strong year for growth, especially in Houston and Dallas-Fort Worth. Growing employment has contributed to demand for commercial properties in multiple sectors. The long-term leases that are typical among commercial tenants help to protect owners from low occupancy rates and establish consistent cash flow.

Many niches exist within the commercial market, and investors can choose properties that match their skills and interests or are performing well in their region. For example, coin-operated car washes or laundromats work well for an owner with mechanical expertise or a relationship with a mechanical company that can maintain the equipment. Storage unit buildings attract investors who want to avoid high operating and maintenance costs. Flexible warehouse spaces represent another type of building that an owner could market toward businesses ranging from microbreweries to technology startups.

The different ways to invest in real estate

Investing in Texas commercial real estate could offer unique opportunities for a portfolio. However, there are many different ways to invest. For instance, an individual could choose to be a private money lender. This involves giving money to developers and others who wish to make use of land or existing commercial buildings. It is also possible to purchase a building or a portion of a building. This enables an investor to find tenants and take other steps to maximize return on investment.

One can also indirectly invest in commercial property by purchasing shares in a real estate investment trust (REIT). With this type of investment, one is entitled to a share of any profits generated from the property. As with private money lending, a REIT is generally considered a passive form of investment.

Transit authority faces lawsuit from contractor

Some people in Texas who work in construction or development may be familiar with contract disputes over buildings. In California, such a dispute has gone to court as the contractor that built the Salesforce Transit Center and Transbay Transit Center, Webcor/Obayashi Joint Venture, filed a lawsuit in the San Francisco Superior Court on Oct. 17 for $150 million against the Transbay Joint Powers Authority.

The project has been plagued with problems. The transit center went over budget and took longer to build than scheduled. After its completion, support beams developed cracks, and the building remains closed. This suit is unrelated to those cracks and claims that TJPA is trying to avoid paying its bill by blaming WOJV for costs, delays and more and that TJPA would not lengthen the contract despite knowing why the problems were happening.

Texas city to pay $15 million in hurricane housing dispute

The city of Galveston, Texas, has been ordered to pay a housing contractor $15 million due to breach of contract. The suing party was a company overseeing some of the federally insured recovery efforts in the area after the devastation caused by Hurricane Ike in 2008. The decision to award judgement to the contractor was made by a jury on Sept. 25.

The contractor suing the city of Galveston was hired for recovery efforts in 2009 and fired in 2012. Representatives of the city claim they were fired for unsatisfactory performance and misrepresenting its level of expertise in hurricane relief. The company says that they fulfilled all their contractual duties. The city says they plan to appeal the jury decision as soon as possible.

Finding a facility for a business

An entrepreneur in Texas may find that owning the building in which their business is housed can be beneficial in many ways. However, someone interested in buying a commercial building should take time to consider their options and ask pertinent questions.

The business owner should consider whether the option they are pursuing provides a functionality that is suited for their company. This includes verifying if there is a functional layout, sufficient space and the right amenities. The potential buyer should know exactly how much electrical power, space, clear height and parking area will be needed for the business to function properly. Whether or not the site is able to accommodate overhead cranes and have ample enough storage and a sufficient electrical power grid for machinery may also be factors to consider.

Tech industry dominating the commercial real estate market

In some Texas cities, it's not too difficult to find plenty of commercial real estate space occupied by some type of tech-based company. A new report issued by a leading global commercial real estate services company suggests the tech industry is indeed dominating the commercial real estate market throughout the United States. In fact, according to the report, tech companies now account for just over 40 percent of the square footage within the top 100 leases in North America.

Another aspect of commercial real estate that has been impacted by tech-related businesses is office rentals. The price per square foot for office areas in the top 25 tech cities identified in the report has spiked nearly 60 percent since the dawn of the 21st century. There's also an overlap between cities that are a hotbed for new construction and ones considered major tech markets. This suggests a connection between demand for new office space and industry demand.

Contracts can control costs in construction projects

It is often possible to mitigate risk in the future with careful contract drafting. Clearly-defined agreements, fairness and good communication help parties avoid Texas construction contract disputes. Among the ways contracts can be used to mitigate future risk are by clarifying unallowable labor, defining change order reporting, setting rates and caps on equipment and including bidding procedures.

It's easier to manage the cost of a construction project when there are well-defined unallowable and allowable labor rates. This depends on whether labor costs are based on predetermined rates or actual wages. All parties should understand what rates are billed to and associated with a particular project. If the contract language is not clear on this point, disputes may arise.

How blockchain technology may affect commercial real estate

The commercial real estate market in Texas may be changing, at least when it comes to how transactions are conducted. This is because of new technology referred to as blockchain, a digital ledger that works on a decentralized system. It's an appealing method of exchanging funds because it basically cuts out the middleman with digital contracts. However, there is still some debate over just how this form of encrypted digital technology will impact the commercial real estate world.

The general consensus is that blockchain won't dramatically affect the commercial real estate market all at once. Instead, changes in how transactions are conducted will happen over time as blockchain evolves and gains wider acceptance. The main impact will be in how property transfers are handled. Credible transactions can be completed with "smart contracts" without third party involvement.

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