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Long Beach Business & Commercial Law Blog

Commercial real estate can be a stable investment choice

Some California investors in commercial real estate have concerns about falling values. Over two decades, returns on investments in the sector skyrocketed. In 2016, however, the returns fell below the 10.1 percent average for the first time since the financial crisis of 2008. Some forecasts envision that returns in 2018 and 2019 will hover in the range of 6 percent.

In general, the cyclical commercial real estate market goes through routine upswings and downswings. Despite the expectation of an eventual downturn in the sector, however, it may not be coming soon. Colliers International predicts continued growth in 2018. Since no crash is expected in the commercial real estate market, investments should continue to be profitable in the future.

California's Coinbase hit with class-action lawsuit

San Francisco-based Coinbase, a cryptocurrency exchange, is now the target of a class-action lawsuit for allegedly engaging in insider trading. The lawsuit was filed on March 1 by a man who is representing a group of investors who placed trades between Dec. 19 and Dec. 21, 2017.

According to the court documents, the plaintiffs allege that Coinbase launched bitcoin cash trading in December 2017. Coinbase allegedly tipped off some insiders prior to the launch. This allegedly resulted in the price of bitcoin cash spiking just before the official launch of trading on Dec. 20.

Growth in Los Angeles commercial real estate

Los Angeles is a fast-growing commercial real estate market. While traditionally cities such as New York, London and Tokyo have topped the global CRE market, they are now being challenged by several other cities, and Los Angeles appears to be at the top of this new wave. With transactions totaling $22.9 billion in 2017, Los Angeles surpassed New York City in world rankings and was second only to London.

Los Angeles is more affordable than many of the traditional leading cities, and there are also more opportunities there for investors. Other factors are its size, its economic strength, its connectivity to the rest of the country, and its diverse economy. All of the cities that are rising up to challenge the traditional commercial real estate markets share additional traits such as multiple clustered specializations and global capital's trust.

Tax cuts create optimism in commercial real estate world

The results of a biannual survey of commercial real estate executives in California have started the year on an optimistic note. Produced by a partnership of the UCLA Anderson Forecast and Allen Matkins, the Winter/Spring 2018 survey findings showed an uptick in optimism among investors and developers who six months earlier had believed that the state's CRE markets were peaking.

Survey respondents attributed their improved outlook to the changes in federal income taxes. They expect the new tax plan to improve returns on commercial property investments. Compared to six months earlier, responses from developers showed renewed interest in building offices throughout San Francisco, East Bay and Silicon Valley. Executives knowledgeable about San Diego, Orange County and Los Angeles foresee improvements in rental and vacancy rates.

Trends that will influence retail going foward

eCommerce has had a significant impact on the retail sector in recent years. However, companies in California and around the country will need to take a look at other factors to help them meet customer needs today and into the future. One factor that must be taken into account is the fact that roughly 1 million people per week are moving into cities. This trend is happening throughout the world, and it may result in an increase in spending.

The way that people experience shopping is different today and will be different going into the future. Customers want attractions within retail stores to keep them occupied while there. Furthermore, customers are going to be less excited about short delivery windows as they are already used to next day or similar shipping options. While retailers should stimulate customers as much as possible, they should avoid overloading them with too much choice.

Commercial real estate can be an excellent investment

California residents who are looking to develop their portfolio and enter a new, lucrative arena of business may be considering investing in property. While residential real estate can be the first form of property investment that comes to mind, whether in the form of buying and re-selling homes or through becoming a residential landlord, commercial properties can be an excellent investment for many. Commercial buildings can bring a different kind of business that many investors prefer for its profitability and stability.

Commercial landlords, for example, are unlikely to deal with late-night emergency calls. Unlike residential tenants, commercial property tenants are usually businesses that have their own maintenance staff or contracts. Even in cases where the landlord provides repair and management services, most of these issues take place during business hours. Rather than the intimate relationship that can be part of residential rentals, commercial real estate is often characterized by highly professional relationships.

Office rents and vacancies both on the rise in Los Angeles

Office ents in Los Angeles increased 9.3 percent in the final quarter of 2017 compared to the same time period in 2016. That translated to an increase of $3.29 per square foot despite the fact that vacancies were also on the rise in that market. Vacancy rates were at 15.1 percent in 2017 compared to 14 percent in 2016. This was partially attributed to new construction creating more space for lease.

It is believed that 4.8 million square feet of rental space will be completed in the next two years, which could further exacerbate vacancy rates in the future. However, consumer preferences are also playing a role in increasing vacancy rates as companies do more with less space. The Westside portion of Los Angeles seems to be bucking those trends. Demand is seen to be strong with less new construction being forecast in upcoming years.

Army claims NHL team violates trademark rights

California hockey fans may be excited about the Vegas Golden Knights' inaugural season. However, the Army is claiming that the Golden Knights name is a violation of their intellectual property. It claims that it has used the term Golden Knights since the 1960s for public relations and recruiting purposes. The Army also claims to have rights to the black-and-gold and yellow-and-white color schemes used by the NHL franchise.

Furthermore, the Army says that the colors worn by the NHL franchise are similar to those worn by West Point hockey players. The color scheme is also used in Tate Arena, where the Army plays its home games. Therefore, it is possible that the NHL team could confuse the public if its request for a Vegas Golden Knights trademark is approved. The team disputed this claim in a statement, saying that it wasn't aware of any confusion from those attending games.

Cosmetics company accused of selling used products

The lead plaintiff in a federal class action lawsuit filed on Jan. 26 against Ulta Beauty, a cosmetics company, is a California resident. The lawsuit alleges that the company repackaged returned cosmetics and sold them to customers as though they were new.

On Jan. 9, a former employee of the company made the allegations about the company's practices on Twitter. The lawsuit says that dozens of other employees nationwide then said similar practices occurred at stores where they worked. One ex-manager described being rebuked in conference calls if the store went over a weekly quota in damaged merchandise. The former manager also described foundation and mascara as particularly likely to be put back because it was difficult to tell if those cosmetics were used. Another former employee claimed to have worked at three different stores that followed the same practices.

Investing in commercial real estate

Investing in commercial real estate means being responsible for keeping those properties in good condition. It may also mean that California residents have to be aware of legal issues related to owning and leasing property. Typically, investors can choose to do the work themselves or outsource it to a third-party service provider. Those who are new to real estate investing should consider several factors related to a property before investing in it.

One of these factors is the possibility of new construction altering current market conditions. The growth rate in and around the area where the property is located should also be taken into consideration before making an investment. After buying a property, it may be necessary to find and manage tenants. Hiring a property management company may be the best way to handle late rent payments, repairs and other items that come with owning a property.

Creative Solutions for Complex Legal Issues

Contact Henry B. LaTorraca

400 Oceangate
Suite 700
Long Beach, CA 90802-4306

Phone: 562-216-2942
Fax: 562-216-2943
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