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Commercial real estate industry slowly embracing data analytics

In Missouri, some commercial real estate brokerages have been hesitant to adopt the latest technology because of past problems that they have encountered. While the industry has been notoriously slow in embracing technology, the availability of curated data sets is leading more stakeholders to move forward.

Commercial real estate companies have gained advantages over their competition by gathering and having more data. Data analytics firms have made the data more readily accessible to everyone, increasing the transparency of the industry. In order to get the needed data, brokers would spend a lot of time trying to track it down. If the companies instead use data analytics companies to get curated data, they can save a lot of time and resources that they would have otherwise spent trying to uncover it on their own.

AIA dispute resolution revisions raise questions

Contracts developed by the American Institute of Architects often serves as a foundation for agreements between parties on a construction project in Missouri. Every 10 years, the organization revises documents, and it has added language to documents A101, B101 and A201 that is raising new questions and concerns.

Although owners, contractors and architects want to focus on success when creating a deal, careful consideration of dispute resolution processes remains necessary. The new version of A201 General Conditions document includes some important changes. Claims now may clearly include a party's request to alter contract time. A change to contract time must adhere to specific timing and notice deadlines. A second change states that an owner does not necessarily have to make a claim for liquidated damages if a delay occurs. The contract addresses liquidated damages in other section, but, if the owner does not make a claim, then the contractor might not realize the need to ask for a time extension. This inaction could cause a contractor to miss a deadline for preparing a defense to claims for damages.

Commercial real estate markets hold steady

Missouri investors may wish to keep their money in U.S. commercial real estate. According to NAI Global, demand was healthy in the second quarter of 2017 and should continue to remain steady in the second half of the year. Lower vacancy rates and higher rental rates mean that investors may see steady returns over the long term.

In the industrial sector, rents increased by 1.7 percent in the first quarter and 1.6 percent in the second quarter. Vacancy rates were at 5.1 percent, which held steady near 20-year lows. The office sector also experienced lower vacancy rates and generally higher rents throughout the country. However, decreases in rents in the New York and Chicago markets resulted in the national average dropping slightly. Vacancy rates were at 9.6 percent for the third straight quarter, which is at a 10-year low.

Judge refuses to dismiss Pepsi Cola ad copyright case

Missouri residents may know that companies spend hundreds of millions of dollars each year to advertise their products during the Super Bowl. The game's halftime extravaganza generally features top performers and Hollywood-level production values, and companies with huge marketing budgets often clamor for the few advertising spots available. Pepsi Cola paid for such an ad during the 2016 Super Bowl halftime show to promote its brand and attract new customers, but the decision has left the company mired in a copyright dispute with a Connecticut-based advertising agency.

The advertising agency claims in its lawsuit that it came up with the idea of an ad using a human jukebox performing songs from various decades and musical genres. The agency alleges that Pepsi refused to pay the agreed $5,000 for the concept before shooting the commercial using the soul singer and actress Janelle Moore. Reports suggest that Pepsi had a change of heart and agreed to pay the $5,000 when news emerged that an intellectual property infringement lawsuit was being prepared, but the agency chose to reject the offer of payment and proceed with the legal action.

Commercial real estate market looking good in 2017

A growing economy has lead to greater consumer confidence and higher levels of spending from consumers in Missouri and throughout America. Business spending and confidence are also high. In the last quarter, the economy expanded by 3 percent, and the belief is that it can continue to expand into the end of 2017. This was according to the chief economist of the National Association of Realtors.

This growth has caused a tightening in commercial real estate vacancies. Overall, the vacancy rate is projected to decline 1.1 percent to 11.9 percent. Vacancy rates in the multifamily sector are set to decline 0.5 percent to 6.1 percent. Decreases in vacancy rates are also projected to occur in the retail and industrial sectors. Despite the reduction in available space, prices are expected to remain flat. This may cause investors to look in smaller markets to find opportunities for steady returns.

How to handle issues relating to due diligence

When a Missouri buyer is interested in purchasing real estate, due diligence must generally be done first. Buyers are typically interested checking out the structural integrity of a property, whether or not it is zoned properly or if there are environmental issues to worry about. While sellers understand that buyers want to do their homework before a deal closes, there may be some tension as to how long to provide for such research.

In some cases, a buyer and seller may agree on a set period of time in which due diligence can be completed. It is also possible that a buyer and seller agree on different amounts of time based on what is being studied. For instance, buyers may be given less time to look into title issues as opposed to looking into zoning issues.

Smart building technologies may help CRE developers

Commercial real estate developers and property owners may do well to learn about how the internet of things may help them to gain a competitive advantage with their properties. Smart building technologies may allow Missouri developers and owners to differentiate their spaces, making them more attractive to potential tenants and buyers as compared to other buildings.

By 2020, experts believe that around 50 percent of the American workforce will be freelance workers. On average, today's students will have worked at eight to 10 different jobs by the time they turn age 38. These changes to the economic landscape mean that it is imperative for commercial property owners to make their spaces more attractive in order to attain full occupancy.

What survey says about investor sentiment

According to a NREI/Marcus & Millichap Investor Sentiment Survey, commercial real estate investors in Missouri and around the country are less enthusiastic about that sector compared to 2014. While they still believe that commercial real estate is still worth investing in, they are worried about long-term returns. There are several factors that have led to the softening in investor sentiment such as uncertainty about President Trump.

However, factors such as tightening credit markets and increasing property prices were also cited as reasons why investors aren't as bullish today about the commercial real estate market. The latest survey found that 49 percent of respondents thought that construction levels would rise over the next two years. However, that number was 56 percent in the survey taken just after Trump was elected in November 2016. Furthermore, 27 percent of respondents thought that the United States would enter a recession in the next two years. That was higher than the 18 percent who held this sentiment in the last quarter of 2016.

Atari sues Nestlé for copyright and trademark infringement

Missouri gamers might be interested in learning that Atari is suing Nestlé SA, a Swiss corporation, for infringing on its trademarks and copyrights. The lawsuit concerns a video game from Atari called Breakout.

According to the court documents, Nestlé infringed on Atari's Breakout video game by incorporating elements from it into Nestlé's multi-million dollar ad campaign for its Kit Kat bars. Atari alleges that Nestlé took the classic game's interface, which depicts a brick wall, by replacing the bricks with the Kit Kat bars and inviting viewers to "breakout".

Summer has been strong for commercial real estate

Missouri businesses that are considering purchasing or leasing commercial property might think that August is a slow period for these types of transactions. The first half of August this year has been different than in previous years. Sales and leases from coast to coast have been stronger than in previous years as well as in earlier quarters of this year.

According to a report in Forbes, hot markets across the country have seen major upticks in commercial real estate business this summer. In the San Francisco area, businesses leased 2.4 million square feet during the past 90 days. By contrast, businesses leased 700,000 square feet in the first quarter of the year.

Our condo association was faced with monumental construction issues thanks to the original developer of our complex. We were cash poor and in no position to get legal representation without a contingency fee arrangement. Luckily for us, Scott Long and Burke Robinson were willing to take us on as clients. Their work ethic, professionalism and knowledge of condominium construction served our association very well. Any association would be well served in hiring these gentlemen to represent them.

Board of Directors - Plaza Gardens on the Lake Condominium Owners’ Association Lake of the Ozarks, MO

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