Risk Management Is a Necessary Undertaking for Massachusetts Commercial Real Estate
As anyone in commercial development and construction knows, the ups and downs of the economy affect the demand for office, hotel, retail and residential construction. The deep recession that began in 2008 clearly illustrated that fact.
Now, however, we have much good news relative to economic growth in the greater Boston area. PricewaterhouseCoopers and the Urban Land Institute’s “Emerging Trends in Real Estate 2013” shows that Boston ranks among the leading U.S. and Canadian cities for overall real estate development prospects, with investor interest focused on the region’s employers in the high-technology and biomedical research industries. Of note, investors see particular benefits in residential apartments.
Developers and investors need solid legal advice when working in Massachusetts for many reasons, largely relating to the regulatory environment. They need to consider some specific issues:
- Environmental compliance. The Massachusetts Department of Environmental Protection in particular helps ensure that wetland, asbestos and hazardous materials rules are not violated in construction or renovations.
- Construction-phase liability – Massachusetts courts have recently delivered nuanced rulings concerning when third parties can be sued for injuries within the rules that govern workers’ compensation statutes. (Key learning — Ambiguous contracts can be costly.)
- LEED-certified building leases. The proliferation of environmentally friendly buildings is welcomed by most. But several new concerns, such as how the building is managed, who pays for equipment replacement and performance, and who benefits from tax incentives, should be considered in lease negotiations.
In fact, large-scale development, construction, leasing and ownership are rife with opportunities and vulnerabilities in the emerging economy. When embarking on any phase of real estate transactions, be sure to confer with a seasoned Massachusetts commercial real estate attorney so risks can be identified early in the process.