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Houston Business & Commercial Law Blog

Shutdown could negatively impact the CRE industry

The ongoing partial government shutdown is negatively impacting the commercial real estate sector in Texas and across the U.S. Multiple federal agencies and government contractors play an important role within the industry. When they are not at work or are greatly short-staffed during the shutdown, their absence can harm commercial real estate businesses.

According to a report in Bisnow, the shutdown is causing harm to commercial real estate companies in multiple ways. Small businesses are unable to secure financing through the Small Business Administration, which has stated that it will remain closed until appropriations are made. Banks also lend money to fewer companies during shutdowns.

Getting involved in commercial real estate

For many people interested in branching out to expand their investment interests in the Houston area, commercial real estate can provide important opportunities. Initially, it can be confusing to many people new to the industry as documents about real estate investments can be laden with jargon. The sums of money involved in a project can be substantial, especially for major commercial developments. However, there are a number of ways for people to enter the market and benefit from the opportunities provided; these types of investments are well-known for providing a stable home for funds and protection from volatility in the stock market as well as significant potential for profit.

People don't need to be experts in real estate to benefit from the commercial real estate market. Sponsors play an important role in the industry, bringing funds together from multiple investors to make a deal possible. Investors may make deals with the sponsor of a project, laying out the responsibility of each party and the mechanism by which the investor will obtain income from the property. There are also a number of opportunities that allow people to get involved in the market by owning a small portion of an overall project.

Vans and Target in dispute over sneaker design

Canvas sneakers are popular casual footwear in Texas and across the country. This has helped lead to an intellectual property dispute between a shoe manufacturer and a major retail giant. Vans is suing Target in California, alleging that the discount department store's Carmella Lace-Up sneaker infringes on its trademarks for the Old Skool sneaker silhouette. The footwear company said that the appearance of the product is likely to create confusion among consumers about what they are buying.

As part of the lawsuit, Vans cited customer reviews on the Target website, some of which referred to the sneakers as "fake Vans." Vans also said that the retailer is trying to benefit from the popularity of its shoes and to use Vans' reputation to promote a larger line of its own products, called Wild Fable. The specific Carmella sneakers are a part of this collection. While the Target sneakers, made of polyester and polyurethane, retail for $15, the Vans version are made of suede and canvas with a signature waffle-patterned sole. These shoes sell for $60 online and in stores.

How to evaluate a commercial real estate opportunity

The details of a commercial real estate transaction can vary depending on the type of property purchased. For instance, the due diligence process for an industrial building may differ from the process surrounding the purchase of a multifamily home. How long it takes to complete may depend on where the property is located. Therefore, if the property is located in Texas, a buyer should look up permit and other requirements needed when evaluating a potential purchase.

An individual who wants to buy an industrial property may need to meet the environmental requirements set forth by a state. It will also be worth conducting an inspection of the building itself. This should be done by a professional who can check the roof, HVAC system and any other important components of the structure. It may also be a good idea to have a professional review any reports already created in an effort to determine if a building is worth purchasing.

Reducing liability as a commercial real estate owner

There were over 53,000 personal injury cases filed throughout Texas and the rest of the United States in 2017. While this is down from more than 76,000 in 2014, it is still important for property owners to take steps to prepare for a possible legal claim. In some cases, property owners are named as defendants in premises liability cases even if they weren't the ones who caused the accident to happen.

One reason why property owners may be sued is because they have insurance to cover the expense of the claim. However, it is important that those who own commercial real estate have the proper kind of coverage. Ideally, those who own retail or other types of buildings will purchase premises liability coverage. Prior to buying a specific policy, it is important to review available options to avoid purchasing coverage that has too many exclusions or other loopholes.

As Texas's unemployment drops, non-compete litigation will rise

New economic data indicates that Texas' unemployment rate reached a record low of 3.7 percent. In step with this state-wide trend, economic indicators also predict positive growth for Houston.

Austin, a burgeoning tech hub in Texas, has seen tremendous growth. This is partially why it recently ranked as the second-best city in the United States to find a job. Dallas filled the number one spot.

Commercial real estate remains a growth industry

Potential investors in Texas may be particularly interested in the commercial real estate market, especially as the National Association of Realtors reported that the industry had grown over the past year. In its 2018 report, NAR said that its members who dealt with the market had reported increased sales volume and gross income. The survey included real estate agents who focus their business on commercial projects, including sales, leasing and land development in office, industrial, retail and multifamily spaces.

The president of the association said that the commercial real estate industry is rising with the economy. He noted that there has been a slight decrease in transactions, but volume of sales and the prices involved had increased over the past year, leading to a rise in median gross income over the year. He also noted that professionals reported increased interest in their offerings and growth in their business activity. Tightened inventory was reportedly the reason for the smaller number of transactions, which declined from an average of eight per member in 2016 to seven in 2017.

How crowdfunding impacts investment portfolios

In the 21st century, institutional investors in Texas and throughout the country have increasingly invested in commercial real estate (CRE). In 2000, CRE made up about 4 percent of the average portfolio. From 2010 to 2015, it grew from 5.6 percent to 9.6 percent of the aggregate institutional investment portfolio. Although it has become more popular for institutional investors, CRE has not necessarily been as popular for private investors.

One reason that individual investors don't put a lot of money in commercial properties is that it can be expensive to gain exposure to the sector. However, crowdfunding platforms are being created that allow access to this sector for as little as $5,000. This compares to the tens or hundreds of thousands of dollars traditionally required to invest in CRE. These platforms are allowed to exist because of Title III of the JOBS Act.

Movie star caught up in contract dispute over jewelry

Contract disputes can be an ongoing fact of life for many Texas businesses, but they can also embroil major celebrities. Movie star Sarah Jessica Parker is engaged in an ongoing legal dispute with a jewelry company that is accusing her of breaking an agreement to endorse the company's products. Kate Florence Design has also accused the actress of refusing to return jewelry provided under the contract.

The former "Sex and the City" star allegedly agreed to license the use of her name and appearance for a line of jewelry. The line was under creation by Kate Florence Design. Parker would reportedly receive $7,500,000 in payment for the use of her image to market the jewelry line. However, the company says that Parker failed to live up to her contractual agreements, causing the line to fail. The celebrity is accused of refusing to engage in interviews about the product or make appearances to promote the jewelry. The company also alleged that the actress failed to return $150,000 in borrowed jewelry.

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.

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