Jump to Navigation

Houston Business & Commercial Law Blog

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.

Business owners can prepare for litigation

Texas business owners may face disputes that arise out of customer issues or contract problems. When the threat of litigation arises, it is important for businesses to protect themselves and prepare for the future. Litigation doesn't need to hurt the company seriously, and taking steps can help firms to handle it properly. By working with a business lawyer, companies can develop a plan to address serious issues as they arise.

In general, lawsuits over business disputes do not suddenly appear; instead, they will come out of long-standing issues with another party. In many cases, small businesses want to try to keep costs down and may try to resolve these issues themselves. However, once litigation arises, it is important for a company owner to rely on an attorney for professional help. All of a business' communications can become fodder for discovery, so it is important to take clear guidance on the conversations to follow.

Youth culture is changing real estate

When Texas real estate developers consider new projects on the horizon, they may be influenced by the appeal of youth culture. Generation Z, which is the generation after the Millennials, includes people born in 1996 or later. While many of these individuals remain too young to be significant investors, buyers or tenants of commercial real estate properties, the oldest members are graduating from college, entering the workforce and developing their portfolios. In addition, youth appeal now can mean long-term viability for projects in the construction pipeline.

Some of the effects of youth culture may be seen in choices for retail developments. While much has been said about the rise of online shopping, young people continue to prefer mixed-use developments with a strongly walkable and urban feel even when they are located in traditionally suburban communities. These environments promote social gathering spaces that attract customers when online shopping does not. In addition, restaurants continue to be a primary driver of retail markets. Going out to eat can be an event that provides a unique social experience. However, food delivery services in the "gig economy" are also on the rise. Restaurants may consider expanded kitchen space and reduced dining areas in order to meet the demand for delivery.

fill out our 1-step form ›

Let Us Help You -
Contact Our Firm Today:

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Office Location

The Jackson Law Firm
3900 Essex Lane Suite 1116
Houston, Tx 77027

Local 713.574.5181
Toll Free 877.475.3058
Fax 713.527.8850
Houston Law Office Map

Review Us
FindLaw Network Subscribe to this blog's feed ►