Why commercial real estate’s rollercoaster year has made good legal advice a necessity

The commercial real estate sector, like every other industry in the world, has had a rollercoaster of a 2020: ups and downs, some big thrills, and the occasional moments of nausea. We’ve seen investment in the Asia Pacific region fall by 31%, due to lower commitment from large Real Estate Funds, but this has been offset by increasing activity from private equity investors and their teams of lawyers and financiers, many of whom scent opportunity amongst the turbulence.

If 2020 has taught us anything, it’s that it’s risky to rely too much on projections, but for the foreseeable future, it does seem wise to rule out two things for the commercial property market: predictability and stability. If a COVID-19 vaccine is found quickly, the result may be a sudden boom in commercial property, but if the after-effects of the pandemic last longer we will likely see even more sales, restructurings and reconfiguring of properties. Either COVID-19 scenario will keep the market in a state of busy agitation and will require businesses in the sector to stay well informed and agile to adapt and take advantage.  That means you will need the best legal advice.

Now is the time to have the sharpest lawyers on your side

If you don’t already feel you have the sharpest property lawyers advising you, now is the time to remedy that. Commercial retail is one of the most legally complex industries in Australia and no matter what your plans for the future are, getting the right advice from the start is the only way to safeguard yourself from future litigation. To use an obvious metaphor, you wouldn’t start building a property without laying foundations, and you shouldn’t be building or growing your business without equally sturdy legal support.

You need experts who can help you on two pandemic-related legal fronts: the immediate impact of emergency legislation, and the laws you will need to keep in mind as you plot your post-COVID future.

Where the immediate impact is concerned, the Australian Government has tried to reduce the economic impact of the virus by introducing a number of new laws, regulations, schemes and codes to protect businesses. Many of these affect commercial property owners, particularly April’s code to regulate leasing arrangements, which protected the rights of renters but restricted owners’ room to maneuver. First-class lawyers will be monitoring future developments closely.

Some of the legal challenges the sector anticipates

When it comes to the future, one of the biggest legal challenges to anticipate is that the sector is also likely to see a bump in takeovers, which generally are always more likely during economic turbulence. Maria Sicola, a founding partner of CityStreams Solutions, a consultancy firm in commercial real estate put it like this: “Opportunistic investors are likely already keeping an eye on the market to swoop in on distressed properties. The risk-averse will remain on the sidelines. There will likely be more acquisitions and takeovers.”

In other words, those who have weathered the crisis well could be looking to absorb those who have not and either expand their Australian portfolios or create one for the first time. This is when top-class legal advice is a matter of business life or death. Whether you want to expand by taking over another business, protect your business from the ambitions of others, or simply get the best deal possible if you have decided to get out of the game, you will need a good commercial and property lawyer at all times.

Your next steps

It should be a given that any legal adviser you choose should understand Australian law intimately. Legislation regulating commercial real estate is complex in this country, with each state maintaining its own laws. Then there is the Native Title Act 1993, which rightly safeguards land that belongs to or is significant to indigenous people. International advisers have made mistakes in the past by not understanding how important this aspect of local land law is when planning new deals, and it’s not an error you can afford, since the public relations damage can be worse than the litigation.

Whatever your plans are, buckle up for the ride ahead. There’s been much discussion of a new normal, but in commercial real estate, you should get ready for a new abnormal, a time of nonstop change, challenge and opportunity. Times like this create winners and losers: getting the right legal advice can make all the difference to which group you end up in.

Picture of Barry Lazarus

Barry Lazarus

We’d be lying if we told you that this bloke isn’t the big honcho of our team, but his name is a dead give-away. The founder of Lazarus Legal, Barry Lazarus is an old school, tough as nails lawyer. They don’t forge litigators like this anymore. With decades of experience in both Australia and South Africa, his wisdom is as renowned as his name.

You may also like

Leave a Comment

Your email address will not be published. Required fields are marked *