Constructing and Improving Space Protect Against Cost Surprises and Hidden Lease Issues
Many commercial office leases fail to identify or delineate all costs a tenant may incur in the initial build-out or subsequent alteration of its office space. Such costs, if not understood, negotiated upfront and documented in the lease agreement, will substantially reduce the actual dollars a tenant has available for its initial leasehold improvements from the landlord-provided tenant allowance and will increase the cost of alterations during the lease term. While not expressed in purely face-value economics, there are also many other issues which, if not addressed appropriately in the lease, will cost the tenant additional time and money. This article details some of these costs and issues and suggests ways to address them in your lease.
De-Malling: The New Alternative
In today's complex real estate world, shopping center owners are finding that redeveloping a shopping center may not be enough to remain competitive. Well-known retail analysts are commenting that consumers are tired of the mall concept that forces someone to wade through a department store to access an enclosed mall, when all they are really looking for is the quick purchase of a pair of shoes. Analysts, including PricewaterhouseCoopers and others, have concluded that as many as one-third of the nation's 1200 malls are obsolete, or nearly so. After decades of both owner and retailer consolidation, the 10 largest mall real estate investment trusts now control approximately 47% of all malls. About 20% of these are "D" level malls which should probably be de-malled. The Congress for the New Urbanism has called many of these lower-performing enclosed regional malls, "greyfields." This is a comparison to "brownfields," the term commonly used to refer to abandoned and partially contaminated commercial facilities.
In the Spotlight: A Computer Program That Can Help Building Managers Prepare for Chemical, Biological, Radiological Threats
A team of researchers at the Department of Energy's Lawrence Berkeley National Laboratory has developed an interactive computer program that building managers and owners can use to assess their vulnerability to — and to prepare for — chemical, biological, and radiological (CBR) weapons attacks or accidental toxic releases. The Building Vulnerability Assessment and Mitigation Program (BVAMP) can be obtained free through a Web site established by Berkeley Lab, which provides advice on CBR responses for buildings. (<i>www.lbl.gov</i>) CBR threats can include deliberate terrorist attacks, resulting in the release of hazardous materials, or accidents such as freight-train derailments and refinery releases. The heating, ventilation, and air conditioning system (HVAC) is often the first line of defense in the case of airborne CBR agents. Consequently, according to one of Berkeley Lab's principal investigators, preplanning and manipulating the HVAC system can significantly reduce the severity of a release.
FTC Staff Report on Franchise Rule Attracts Many Comments
In general, commenters were supportive of the proposed rule changes and praised the FTC for its detailed approach. An introductory statement in the comment from the law firm Kaufmann, Feiner, Yamin, Gildin & Robbins LLP (New York) called the Staff Report "a remarkable effort to ascertain, and as prudent, incorporate ... the desires, needs, and policy positions both of franchisors who will be regulated by the forthcoming revised Franchise Rule, and franchisees whose interests are sought to be protected and advanced thereunder."
In The Marketplace
Highlights of the latest equipment leasing news from around the country.
New Leasing Rules under the American Jobs Creation Act of 2004
On Oct. 22, 2004, the President signed the American Jobs Creation Act of 2004 (AJCA), one of the most significant pieces of tax legislation in recent years. AJCA makes a number of major changes to the tax rules applicable to capital-intensive businesses in general and to the leasing industry in particular. AJCA's major provisions include: 1) limitations on tax-exempt leasing structures; 2) improvement to the rules relating to offshore aircraft leasing and incentives for domestic manufacturing and production activities; 3) the application of "bonus" depreciation to non-commercial aircraft and syndicated lease transactions; 4) increased "Section 179" expensing; and 5) limitations on the depreciation of sport utility vehicles.
Contractual Jury Waivers: New Case Before California Supreme Court Presents a Challenge
A closely watched case now before the California Supreme Court will impact the way equipment lessors do business. In <i>Grafton Partners L.P. v. Superior Court,</i> 9 Cal.Rptr.3d 511 (2004), the California Court of Appeal held that predispute contractual jury waivers are unenforceable under the California Constitution. The case has been accepted for review by the California Supreme Court, and a decision is expected next year.
Index
Everything in this issue at your fingertips
New ADA Guidelines Will Affect Many Employers
For nearly 15 years, the Americans With Disabilities Act of 1990 (ADA) has helped clear away barriers to public accommodations, employment, transportation, government services and telecommunications for disabled Americans. This landmark legislation granted long-overdue civil rights protections and equal opportunity guarantees to individuals with disabilities, just as earlier civil rights legislation addressed discrimination based on race, color, sex, national origin, religion or age. While the ADA improved the lives of countless disabled individuals, it also created new challenges for many employers. And as of this summer, some employers will likely face an even tougher, more complex set of ADA accessibility guidelines, the impact of which is only beginning to be understood.
