Navigating Commercial Real Estate Transactions in 2024

The commercial real estate landscape has changed dramatically in recent years. Whether you're buying, selling, or developing, understanding current market dynamics and legal considerations is essential.

Market Trends

Office Space

The shift to hybrid work has fundamentally changed office demand. Buyers should carefully evaluate long-term tenant viability and consider conversion potential.

Industrial and Logistics

E-commerce growth continues to drive demand for warehouse and distribution space. Cap rates remain compressed, but fundamentals are strong.

Multifamily

Despite rising interest rates, multifamily remains attractive due to persistent housing shortages. Development pipelines are moderating.

Due Diligence Essentials

Environmental

Phase I environmental site assessments are mandatory. Consider Phase II testing if issues are identified. Environmental liabilities can be substantial and long-lasting.

Title and Survey

A thorough title review and updated survey can reveal easements, encroachments, and restrictions that affect value and use.

Zoning and Land Use

Verify current zoning and any variances or special permits. Consider future land use plans that could affect the property.

Financial Review

For income-producing properties, review rent rolls, leases, operating expenses, and capital expenditure history carefully.

Financing Considerations

Interest rates have risen significantly. Key considerations include:

Fixed vs. floating rate structures

Loan-to-value requirements

Prepayment penalties

Personal guarantees

Structuring the Transaction

Entity Structure

Most commercial real estate is held in LLCs or other entities for liability protection and tax benefits.

Tax Planning

Consider installment sales, 1031 exchanges, opportunity zones, and other strategies to optimize tax outcomes.

Closing and Post-Closing

Ensure smooth transitions with proper prorations, tenant notices, and transfer of service contracts.

Hamilton & Pierce Real Estate Practice

Our real estate team has closed billions in transactions. We provide comprehensive representation for acquisitions, dispositions, development, financing, and disputes.