Commercial Real Estate Blog by Madison

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Real Estate Trends

Parking Arrangements in Reverse Exchanges – Part 2

Lee David Medinets, Esq., Chief Counsel, MCRES, Madison Exchange a/k/a Madison 1031, and affiliates

In the last post, we began to examine the problem of what to do when a taxpayer needs to buy an IRC Section 1031 like-kind exchange replacement property before the relinquished property in that exchange can be sold. This is called a “reverse exchange” because it proceeds in the opposite direction from the common forward exchange where the relinquished property is sold first. The reverse exchange process creates a special problem in that the taxpayer cannot simultaneously own both the relinquished property and the replacement property. In a reverse exchange, either the relinquished property or the replacement property must be “parked” with some relatively friendly third-party until the relinquished property is sold.

We also examined why traditional non-safe harbor reverse exchanges are expensive, risky and rare. On the other hand, traditional non-safe harbor exchanges have the substantial advantage that there is no theoretical limit to how long a potential replacement property could be parked. In order to inject some certainty into the reverse exchange process and in order to encourage reasonable time limits on that process, the IRS has offered an alternative by creating a safe harbor in Revenue Procedure 2000-37. Continue reading

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Railroad Easements… Marvin M. Brandt Revocable Trust v. United States – Part 2

By Terence Guerriere, Esq., Executive Vice President, Madison Commercial Real Estate Services

In my last post, I wrote about how three seemingly unrelated things led to me to think about railroad easements. First, I’d recently read Robert L. O’Connell’s biography of William Tecumseh Sherman. I also visited the High Line elevated park in Manhattan and I’m following a local property owners’ group battle to stop the taking of a public street to facilitate, in part, the establishment of a land conservancy. I explored how granting rail companies land in the 1860s, converting an old railway into a park and a neighborhood fight to stop the taking of property in connection with a planned conservancy led to a collision that resulted in a Supreme Court case.

But I left a cliffhanger…. and did not divulge the Supreme Court’s decision on the issue. Here’s the outcome. Continue reading

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Railroad Easements… A Controversy 130 Years in the Making

By Terence Guerriere, Esq., Executive Vice President, Madison Commercial Real Estate Services

Three seemingly unrelated things led to me to think about railroad easements and this post. First, I recently read Robert L. O’Connell’s biography of William Tecumseh Sherman. I also visited the High Line elevated park in Manhattan and I’m following a local property owners’ group battle to stop the taking of a public street to facilitate, in part, the establishment of a land conservancy. How are these related to a discussion of railroad easements?

From O’Connell’s book, I learned of Sherman’s significant role in the planning and construction of the first transcontinental railroad. Not only was General Sherman a Civil War hero, he also worked after the war to help his former soldiers gain employment building the railroads. This pro-railroad stance included supporting the federal government’s generous land grants to the railroad companies.

The High Line is a beautiful walking trail situated on a former abandoned elevated railroad line on Manhattan’s West Side. After years of debate, the establishment of this linear park has spurred significant development beneficial to those visiting the High Line and the city’s real estate developers.

The purchase of a former country club property by a private day school has led to seeking the discontinuance of a public street which dissects part of the property. The street also serves as an important access point to the neighborhood of private homes which surround the property. The school’s plan includes a land conservancy for part of the property but only if the school is granted permission to construct its multiple building campus.

How did granting rail companies land in the 1860s, converting an old railway into a park, and a neighborhood fighting to stop the taking of property in connection with a planned conservancy collide and result in a Supreme Court case? These three isolated items coalesced in my head to inspire thoughts of railway easements and why they have become so controversial. Continue reading

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Implementation delayed for the TILA/RESPA Integrated Disclosure (TRID) Rule

By: Eli Young, Director of Title Operations, Madison Title Agency

Just as we were entering the final countdown to implement the new TILA/RESPA Integrated Disclosure (TRID) rule, the real estate industry has been granted a brief reprieve.

The August 15, 2015 effective date for the new rules has been postponed until October 2015. The delay is due to an administrative error that was made in the rules disclosure and review process. Under the Congressional Review Act, Congress and the Government Accountability Office must receive any new rule at least 60 days prior to the rule taking effect. However, the CFPB failed to submit its notice until after the 60-day deadline had passed and was forced to delay the effective date of the TRID rule as a result. Continue reading

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Developing Across the River: NYC’s Expanding Markets

By: Mark Faham, Regional Business Director, Madison Commercial Real Estate Services

Riding the subway each day to work and to closings is always an interesting experience. I recently noticed a fascinating fact which I had overlooked all these years: the strong correlation between subway ride distance and residential development in NYC. In recent years, there has been a huge amount of development right outside Manhattan, only about 15 minutes from ‘the city’ by subway. As the shortage of housing and escalating prices for housing skyrocket in Manhattan, NYC developers are creating housing in neighboring boroughs near subway transportation. Continue reading

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As Shopping Trends Evolve, Retailers Find New Ways to Leverage Brick-and-Mortar Locations

By Daniel Kasten, CPA, Chief Financial Officer, Madison Commercial Real Estate Services

On the heels of the ICSC RECON Show in Las Vegas, the shopping center sector of the commercial real estate market is encouraged that retailers are finding new opportunities to leverage the value of storefronts with their customers’ online shopping experiences. Indeed, since the ubiquitous online connection has changed the way we make decisions about shopping, retailers are finding new ways to connect online shopping with brick-and-mortar stores.

There are several trends in which retailers are combining online sales with brick-and-mortar stores to offer customers an optimal shopping experience. Continue reading

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Funding Real Estate Development Projects Through the EB-5

By David I. Tesler, Esq., President, LeaseProbe and Real Diligence

The goal of the EB- 5 Visa for Immigrant Investors is to stimulate the U.S. economy through job creation and capital investment by foreign investors.

The EB-5 program was created by the Immigration Act of 1990. It provides a method for foreign nationals to obtain a green card, by investing money in the United States. In order to obtain the visa, individuals must invest $500,000, or in some cases $1,000,000, into a project which creates or preserves at least ten jobs for U.S. workers. Requirements for the EB-5 program state that investors must invest in a new commercial enterprise, which may include a partnership, holding company, joint venture, corporation, business trust, or other business entities. The investment must create or preserve at least ten full-time jobs for qualifying US workers within two years.

The general requirement for minimum investments is $1 million. However, some areas are qualified as Targeted Employment Areas, due to high unemployment or in certain rural areas. The minimum investment in a Targeted Employment Area is $500,000. While other programs can take several years to issue a visa, the EB-5 program allows investors to obtain visas in as little as 24 months. Continue reading

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The Changing Face of Philanthropy – Will Real Estate Investors Join the Trend?

By: Elliot Zaks, Principal, Madison Commercial Real Estate Services

The Millennials generation is transforming the way the world lives, works and plays. Business as usual is no longer the case as the next generation displays changing ways of doing business. One of the major differences in the business world of Millennials versus their predecessors is the stress on business being about more than the bottom line. According to Deloitte’s 2015 Millennial survey, 73 % of Millennials believe that businesses should focus on people and purpose, not just products and profits.

In the past, it may have been traditional to give a percentage of profits to charity, or to add a charitable donation to each sale. But as the world changes, the world of business philanthropy is changing as well. In order to attract the next generation of investment dollars, entrepreneurs are making philanthropy a key part of their business strategy. Will real estate investors join the trend? Continue reading

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Tax Abatements and Exemptions Available to New York City and New York State Residential Property Owners

By: Pat Anarumo, Vice President of Sales, Madison Commercial Real Estate Services

Living in NYC or its surrounding suburbs comes at a price. Real estate and school taxes often take a big bite out of property owner’s budgets; however, all is not lost. The city and state offer various tax exemptions and abatements to residential property owners. There are many different benefits that can be taken advantage of, but for purposes of this discussion I will focus on three of them.
Continue reading

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Texas Boom, Bust or Both? Is the Texas market destined to falter?

By Sam Herskovits, Director of Title Operations, Madison Title Texas Division

Filling up at the pump to the tune of around $2.15 a gallon can be a cause for celebration. As global prices for crude oil have dropped to around $50 a barrel, consumers across the country are enjoying their road trips once more. However, the recent celebrations have also brought rise to some concerns over the state of the economy here in Texas.

The frenzy of shale oil drilling has slowed, as energy companies in the U.S. are predicted to suffer from a prolonged slump. Oil companies in Texas are decommissioning rigs and laying off employees, hunkering down for leaner times. Does this spell doom and gloom for the Texas economy overall? Is this the end of growth and business opportunity for the second largest state? Continue reading

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