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Wilkes-Barre Business Law Blog

How to launch a successful startup

Throughout its journey, any startup faces numerous obstacles along the way whether it is based in Silicon Valley or Pennsylvania. Fortunately, earlier startups, both those that succeeded and those that failed, have offered the world a wealth of experience and lessons that can help guide any budding enterprises.

No matter what an entrepreneur has in mind, every startup should pass through the following steps should it wish to thrive. To start with, a startup must be based on an idea that addresses an actual problem people have; otherwise, it will fail to give people a compelling reason to part with their hard-earned cash.

SBA loans to start off the New Year

For small business owners and entrepreneurs in Pennsylvania, the year 2018 holds significant promise. The economic recovery enjoyed in recent years is poised to continue, and the overall climate for doing business is likely to improve with the passing of the Tax Cuts and Jobs Acts of 2017, which means that the New Year will present opportunities for those seeking small business loans.

The United States Small Business Administration offers substantial assistance to entrepreneurs who cannot obtain adequate financing from investment partners or other sources such as commercial banks. The SBA is not a lender per se; however, this federal agency can provide the guarantees necessary for a bank to extend a business loan. In some cases, the SBA also offers grants to qualified enterprises along with loan guarantees.

Tax plan may be helpful to commercial real estate investors

Pennsylvania residents may be impacted in a variety of ways by the GOP tax bill. Those who profit from commercial real estate holdings may benefit in a couple of different ways. First, it may be possible to create a pass-through entity and receive a 20 percent tax deduction on those earnings. This may be available to individuals who are making less than $157,500 or joint filers making less than $315,000.

According to some analysts, the idea is to get people to stop worrying about preserving capital and start using it to grow the economy. Ideally, the new tax code will provide motivation for people to start building and investing in new commercial real estate projects. However, some say that the new tax code is nothing more than short-term thinking. In the long run, tax rates may be less important than the overall health of the economy when it comes to commercial real estate.

Commercial real estate leasing

Pennsylvania business owners that are looking for commercial real estate to lease and property owners with available space should expect to have to negotiate their leasing terms. Due to the condition of the commercial real estate market, business owners may have the upper hand. For example, someone who owns a business park that is sparsely occupied may allow generous concessions in order to obtain a commercial tenant. However, if the commercial real estate market is thriving, or the commercial space in question is a highly sought-after space, it may be the business that is attempting to lease the space that may have to allow significant concessions.

Rent price should be carefully considered before agreeing to commercial leasing terms. A negotiation of the price may be possible depending on certain factors, such as location and market conditions.

Getting out of a commercial lease

A business owner in Pennsylvania may eventually find that their current workplace no longer meets their needs. The reasons for this could include significant business growth, a need to downsize or other changes that make the current facility unsuitable. If the business is currently operating in a rented space and the lease is not about to terminate, the business owner may need to develop an exit strategy.

Business owners should first review their current lease to see if it includes a termination clause or the right to amend the lease at a later date. Knowing this can make future negotiations go more smoothly.

Industry experts identify 2018 CRE trends

Most commercial real estate markets in Pennsylvania and around the country should continue to provide healthy returns for investors, according to a panel of industry experts. At a Nov. 3 meeting of the National Association of Realtor's Commercial Economic Issues & Trends Forum, leading economists and bankers talked about the opportunities and challenges real estate developers and investors may face in the year ahead. They also pointed out that the economic data does not always align with prevailing media narratives.

Media outlets have reported in recent years that suburban office parks are struggling to lure companies from major metropolitan areas, but the figures reveal that most new office construction is taking place outside big cities. Much has also been written in recent years about deserted shopping malls and the death of brick-and-mortar retail. However, the data indicates that retail sector rents are rising and more stores have opened than closed in 2017.

Property law has not caught up with drones yet

Pennsylvania commercial real estate owners and developers may find the potential benefits of drone technology to be very appealing. Drones may be used to survey properties, help to control autonomous heavy equipment and more. However, it is important for commercial real estate owners to consider potential issues that might arise before they start using drones.

Since drones are fairly new, there are multiple holes in real estate and property laws in which they are not addressed. For example, commercial real estate owners should determine how high they would need to fly drones over the properties of others in order to avoid violating their property rights. They would also need to determine whether or not they might need easements in order to use the airspace over peoples' homes.

Pop-up stores taking over malls

Large malls in Pennsylvania and other areas of the country look forward to the Halloween season. It usually means more stores opening for a short time to fill a void left by larger companies until a permanent tenant is in place. It can take several months to complete the paperwork for a tenant to get into a mall, so pop-up stores like Spirit Halloween are a good way to bring customers to the mall. The popular Halloween store started in 1983 and is now known as one of the leading pop-up stores across the country.

The store sets up in strip malls and larger malls for a few weeks, selling everything from costumes to party supplies before closing after Halloween. The company is open online year-round. There will be an estimated 1,300 Spirit Halloween stores in 2017.

Due diligence and commercial real estate purchases

Ensuring that short cuts are not taken during the due diligence process can save commercial real estate buyers in Pennsylvania and around the country both time and money. The inquiries performed during due diligence may raise questions about the condition of a building or its suitability for a particular purpose, and buyers sometimes back away from the table or demand more attractive terms when property inspectors or attorneys make discoveries that shed new light on pending deals. Accountants are also called upon during due diligence to study financial documents, bank records and projections for inconsistencies and irregularities.

Commercial property transactions do not generally become binding until the due diligence process has been completed and the parties involved have reached agreement about how the issues raised should be addressed. Time is often of the essence in commercial real estate deals, and buyers and sellers who wish to keep matters moving may choose to allow the due diligence period to begin after signing a letter of intent. Parties can also wait until a purchase agreement has been drafted and extend deadlines when necessary, and buyers may insist that the due diligence period not begin until all of the documents needed to complete the process have been provided.

Commercial real estate vacancy rates continue to fall

Commercial real estate vacancy rates in Pennsylvania and around the country are expected to fall to below 12 percent by the end of 2017 as the nation's economy continues to grow and add jobs. Economic growth during the last quarter was a robust 3 percent, and the National Association of Realtors believes that even the beleaguered retail sector will benefit as a result. Retail vacancies are expected to drop by 0.4 percent by the end of 2017 while the amount of industrial space available is set to fall by 1.1 percent.

However, falling commercial real estate vacancy rates may not lead to lower prices in all parts of the country. Industry experts say that foreign investors have been less active recently, and they believe this will cause prices to plateau in a number of key markets. Expensive projects in exclusive areas could feel the impact most as Class A properties have been especially popular with overseas buyers in recent years.