Call Us Toll Free at:
800-240-1305
In This Section

Los Angeles Business & Commercial Law Blog

Sales figures suggest that CRE markets are cooling

The commercial real estate markets in major California cities like Los Angeles, San Diego and San Francisco have been extremely active in recent years, but property sales data for the first quarter of 2017 suggests that investor enthusiasm is waning. First-quarter property sales in New York City were down by 58 percent compared with the same period a year ago, according to data released by the brokerage firm Cushman & Wakefield. Analysts say that overbuilding and political uncertainty may be to blame.

The business community generally reacted positively when Donald Trump was elected president, but many top executives are now expressing doubts. Some business leaders feel that Trump will be unable to pass the tax cuts he has promised, and others worry that the reduced taxes and increased spending the president is championing could lead to higher inflation, soaring interest rates and slower growth. These fears are particularly pronounced in sectors like real estate that are heavily reliant on financing and debt.

Breach of fiduciary duty 401(k) lawsuit moves forward

A lawsuit against Starwood Hotels is moving forward in a California federal court. In a ruling on May 1, a judge moved forward the claim that Starwood's record-keeping and administrative fees were so excessive as to breach the company's fiduciary duty to 401(k) plan participants.

The judge noted in his opinion that the plaintiffs in the case have not yet specifically alleged exactly how Starwood's fiduciary duty was breached. However, the facts that they have so far brought forward were sufficient in order for the case to continue.

What Happens in California Stays in California - Employees Working and Residing in California Now Have a Right to Litigate in California and Under California Law.

A new California statute - California Labor Code § 925 - that became effective January 1, 2017, prohibits employers from requiring employees who live and work in California from litigating their employment claims elsewhere. Section 925 also prohibits attempts to limit the application of California law to employee claims.

Growing businesses don't always have to relocate

As many California entrepreneurs can probably attest, it can be challenging to sell commercial real estate. So business owners who have discovered that their enterprises are outgrowing their current facilities might want to consider a few other alternative plans before making the huge commitment to move.

While moving to a different location can be expensive and time-consuming, business owners could lose profits if their current facilities cannot meet their companies' needs. While many people automatically think the best way to accommodate their growing enterprises is to move to larger buildings, it could be more beneficial for them to remodel their present locations. Not only will doing so create more space, it will also increase the market value of the facility. However, the costs of adding office space should be carefully compared to those involved with purchasing a larger facility. Those who choose this option should keep in mind that most industrial buildings require four parking spaces for every 1,000 square feet of office space.

Enforceability of a Former Employee's Promise Not to Seek Re-Employment

Settlement agreements with departing employees - whether done in the context of a pending lawsuit or a severance package - quite often include the departing employee's promise never to seek to be re-hired. Given that neither side is - at the time - all that happy with the other, this would seem a pretty unremarkable arrangement. A California federal court decision, however, raises questions as to the ultimate enforceability of the promise.

Navigating California's State & Local Minimum Wage Requirements

The California state minimum wage increased as of January 1, 2017, with additional annual increases scheduled through January 1, 2023, when the minimum wage for all employees will reach $15.00/hour.  California Labor Code § 1182.12; Minimum Wage Order 2017.  Until then, employers with 25 or fewer employees are subject to a lower minimum wage requirement than those with more than 25 employees.  For example, as of January 1, 2017, the minimum wage for employers with 25 or fewer employees is $10.00/hour, but is $10.50/hour for employers with more than 25 employees.

California's Fair Pay Act

California's Fair Pay Act (California Labor Code § 1197.5) became effective on January 1, 2017.  Briefly, the law prohibits pay differentials as between men and women, as well as among both races and ethnicities, for "substantially similar work."  Exceptions are allowed in the context of seniority systems, merit systems, systems measuring the quantity or quality of production, or other "bona fide" factors other than sex, race and ethnicity.  In the face of a lawsuit, however, the employer bears the burden of proving the existence of an appropriate exception.

Separating Arbitration Agreements From Employee Handbooks

Consistent with what many consider an employment 'best practice,' all manner of employers distribute employee handbooks and have their employees sign a separate, written acknowledgement that they received a copy of the handbook.  Most of these handbooks contain clear statements that the employment is 'at-will.'   In addition, many of these handbooks contain language requiring that all employment disputes be submitted to arbitration, rather than decided in a court with a jury.   In late-2016, the practice of putting the important at-will language and the arbitration requirement in the same document became problematic.

Optimism about CRE persists despite interest rate hikes

Many California real estate developers have prospered in recent years as major markets like Los Angeles and San Francisco have thrived. Commercial property prices in other gateway cities have also risen sharply since the 2008 financial crisis, and both entrepreneurs and leading executives expect this rapid growth to continue. However, government regulators have raised questions about lax underwriting standards, and the Federal Reserve has once again started to raise interest rates to keep inflation in check and curb risky borrowing.

Rising borrowing costs do not appear to be dampening the enthusiasm of the business leaders. The Federal Reserve announced the third interest rate hike in four months on March 15, and economic experts expect at least two more increases before the year ends. The business community generally reacts to such news with caution, but a Business Roundtable poll of 100 leading CEOs reveals that enthusiasm remains extremely high. Another survey from the National Federation of Independent Business suggests that small business owners are just as bullish.

California commercial real estate shortage most acute in Pasadena

A shortage of available office and retail space is impacting prices in several California markets, and rents in areas like Pasadena have increased by as much as 25 percent over the last 12 months as a result. Much has been written by industry experts in recent years about the struggling and sluggish retail sector, but brokers report that vacant stores in Pasadena are rarely available for long. The vacancy rate for Class A office space in the city sits at 12 percent, but a lack of new construction has caused Class B and Class C vacancies to fall to just 6 percent.

Major commercial construction projects can take years to complete, and most observers believe that vacancy rates in Pasadena will continue to fall during the next few years. Local business leaders have worked closely with city planners to ensure that Pasadena remains an attractive destination for visitors and investors alike, and this may explain why the city's retailers have bucked national trends and continue to fare well.

Office Location

Rodi Pollock Pettker Christian & Pramov, A Law Corporation
444 South Flower Street
Suite 1700
Los Angeles, CA 90071

Toll Free: 800-240-1305
Fax: 213-895-4921
Map & Directions