Tag Archives: Jason Wolf
Let’s take a quick look at some 2018 tax law changes affecting commercial real estate tax deduction restrictions. Below please find some insight into recent tax changes affecting commercial real estate tax deductions.
Here are some items that come to mind:
(1) The Tax Cuts and Jobs Act enables investment real estate owners to still defer capital gains taxes using section 1031 like-kind exchanges. There were no new restrictions on 1031 exchanges of real property made in the law. However, the new law repeals 1031 exchanges for all other types of property that are not real property. This means like-kind exchanges of personal property will no longer be allowed after 2017 for collectibles, franchise rights, heavy equipment and machinery, collectibles, rental vehicles, trucks, etc. The rules apply to real property not generally held for resale (such as lots held by a developer).
(2) The capital gain tax rates stayed the same so a real estate owner selling an investment property can potentially owe up to four different taxes: (1) Deprecation recapture at 25% (2) federal capital gain taxed at either 20% or 15% depending on taxable income (3) 3.8% net investment income tax (“NIIT”) when applicable and (4) the applicable state and local tax rate.
(3) The tax law creates a new tax deduction of 20% for pass-through businesses. This gets tricky but here goes. For tax years 2018-2025, an individual generally may deduct 20% of qualified business income from a partnership, S corporation, or sole proprietorship. The 20% deduction is not allowed in computing Adjusted Gross Income (AGI), but is allowed as a deduction reducing taxable income.
Restrictions on Tax Deductions
(1) Mostly, the deduction cannot exceed 50% of your share of the W-2 wages paid by the business. The limitation
can be computed as 25% of your share of the W-2 wages paid by the business, plus 2.5% of the unadjusted basis
(the original purchase price) of property used in the production of income.
(2) The W-2 limitations do not apply if you earn less than $157,500 (if single; $315,000 if married filing jointly).
(3) Certain personal service businesses are not eligible for the deduction, unless their taxable income is less than
$157,500 for singles and $315,000 if married. A “specified service trade or business” means any trade or business involving the performance of services in the fields of health, law, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners, or which involves the performance of services that consist of investing and investment management trading, or dealing in securities, partnership interests, or commodities. (It appears President Trump liked real estate people but did not like professionals like lawyers, doctors, accountants and other consultants).
(4) The exception to the W-2 limit and the general disallowance of the deduction to personal service businesses is phased out over a range of $50,000 of income for single taxpayers and $100,000 for married taxpayers filing
jointly. By the time income for a single taxpayer reaches $207,500 or $415,000 for a married-filing-jointly
taxpayer, the W-2 limitation will apply in full (i.e. personal service professionals get no deduction).
(5) The new tax law increased the maximum amount a taxpayer may expense under Section. 179 to $1,000,000 and increased the phaseout threshold to $2,500,000. Interestingly, the new law also expanded the definition of Section. 179 properties to include certain depreciable tangible personal property used predominantly to furnish lodging. It also expanded the definition of qualified real property eligible for Section 179 expensing to include the following improvements to nonresidential real property: roofs; heating, ventilation, and air-conditioning property; fire protection and alarm systems; and security systems
(6) State and local taxes paid regarding carrying on a trade or business, or in an activity related to the production of income, continue to remain deductible. A rental property owner can deduct property taxes associated with a business asset, such as any rental properties. Don’t confuse such with the itemized deduction for your personal residence or vacation home which is now limited.
(7) While the prior law generally allows a deduction for business interest expenses, the new tax act limits that deduction to the business interest income plus 30% of adjusted taxable income. However, taxpayers (other than tax shelters) with average annual gross receipts for the prior three years of $25 million or less are exempt from this limitation. Real estate businesses can elect out of the business interest deduction limitation, but at the cost of longer depreciation recovery periods—30 years for residential real property and 40 years for nonresidential real property. If a real estate business does not elect out of the interest deduction limitation, then residential and nonresidential real property depreciation recovery periods are maintained at 27.5 years and 39 years, respectively.
Phew-there you have taste of what we’re going or at least as we see general changes directly or even indirectly
affecting real estate peeps. As you can see, the new law will bring a lot of changes (both good and bad) to individual and business taxpayers. On the plus side, this means more planning opportunities for many although looking for answers can be problematic as we all try to navigate through uncertain territory. These comments only touch the surface of one of the biggest tax overhauls in the nation’s history. Stay tuned and do stay close to your tax attorney and accountant.….
Let’s take a look at New Jersey Construction Lien Law. For builders and contractors alike, the words “construction lien” can be anxiety inducing. Contractors, on the one hand, know that a lien can be a valuable tool for recovering outstanding money; however, the requirements of a New Jersey Construction Lien Law claim are not intuitive, and failure to strictly comply with statutory requirements may result in a waiver of lien rights. Owners, on the other hand, know that encumbrances, even wrongfully filed ones, may threaten the timing of a transaction and cause unforeseen expenses.
The New Jersey Construction Lien Law, N.J.S.A. § 2A:44A:1 et. seq. (“Lien Law”), contains many specific provisions and must be carefully followed. A few essential pointers are highlighted below.
New Jersey Construction Lien Law for Claimants:
1. The filing requirements for lien claims in commercial and residential projects are very different. For commercial construction projects, a lien claim must be filed in the county where the project is located within 90 days of the last date that work, services or material were provided to the project. For residential construction projects, a Notice of Unpaid Balance (“NUB”) is a prerequisite to the filing of a lien claim and must be filed within 60 days of the last date that work, services, or material were provided. There are numerous additional requirements that flow from these preliminary deadlines. Claimants must be cognizant of the type of job they are performing in order to ensure that they do not violate filing deadlines.
2. Be aware of the “last date” of work. Under the Lien Law, the “last date” on which work, services or materials were provided marks the date on which the clock starts ticking on a contractor’s right to file a lien. For practical purposes, contractors should interpret the “last date” as the date on which they achieve substantial completion. Contractors often mistakenly assume that because they were still “on the job,” that the clock did not start to run on their lien rights. This is an incorrect assumption. “Punch list,” warranty, or other corrective work will not extend the deadline for the filing of a lien claim or notice of unpaid balance.
3. Be sure that the contract and all change orders are accepted in writing. Contractors have no right to file a lien claim in connection with work that was not performed pursuant to an executed contract or change order. Handshakes and verbal directives in the field will not pass muster, regardless of whether the work was accepted and approved. Contractors that do not have written agreements may be able to recover payment through a separate lawsuit for breach of contract, however, they will not have lien rights.
4. Do not forget to actually file suit on the lien claim, and to do so on time. A lien claim is a pre-requisite to a lawsuit, but it is not an actual lawsuit. Short of settlement, in order to obtain payment after the filing of a lien claim, the claimant must file a legal action based upon the lien claim. This must be done, not within 1 year of the filing of the lien claim, but within 1 year of the last date of work. It is critical that a claimant understand this distinction and meet the deadline for filing.
New Jersey Construction Lien Law for Owners:
1. Obtain a lien release and waiver with each payment. Owners should not make payments for work, services
or material without simultaneously receiving corresponding progressive, written lien releases and waivers
from their contractors and suppliers. Contractors should, in turn, should be required to obtain releases and waivers from their own subcontractors and suppliers.
2. Consider using joint checks. Making payment by joint check can help ensure that funds reach their intended destination and prevent claims for non-payment by lower tier subcontractors and suppliers.
3. Consult with counsel to scrutinize the filing. Experienced counsel will be able to determine whether any number of substantive or technical requirements have been violated by a given lien claim, including but not limited to: filing deadline errors, service errors, improper identification of the property or project, whether a balance is overstated, whether a claimed balance is based upon a sufficient writing, and whether the claimant is a proper claimant given its tier. Claimants who file improper or overstated lien claims may be forced to pay costs associated with discharging the wrongfully filed lien, such as attorney’s fees.
4. Post a bond. Particularly in instances in which a property is pending sale or transfer, the owner or its contractor (if the lien is filed by a lower tier subcontractor) may post a bond with the clerk of the county where the lien was filed in an amount equal to 110% of the lien claim. The county clerk will then mark the lien as discharged. The claimant’s rights will be unaffected, but the property will be free of the lien, and the pending transaction should be able to proceed. There are carrying costs associated with the posting of a bond; however, use of a bond can be a valuable tool in many instances. If a bond is posted, consider the option of demanding that the claimant file suit within 30 days in order to accelerate resolution of the matter.
The Lien Law is a highly technical statute with numerous requirements; however, when used correctly, it can be a tremendous vehicle for recovery. Claimants and owners should always confer with counsel in order to ensure that their rights and interests are effectively guarded.
Want More Information on New Jersey Construction Lien Law?
The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.
Daniella Gordon, Esquire
Hyland Levin LLP
6000 Sagemore Drive, Suite 6301
Marlton, NJ 08053-3900
January 8, 2018 – Marlton, NJ – Wolf Commercial Real Estate (WCRE) proudly announces the promotion of Chris Henderson to Principal and Shareholder of the firm effective January 1, 2018. Chris Henderson joined the firm in 2014, and was previously promoted to vice president at the end of 2016. He has been recognized for his tremendous leadership skills, collaborative approach, entrepreneurial spirit, and a boundless work ethic that has served him well within the company and the community.
“Chris’s new role within the company is well deserved, and I am proud to welcome him to the WCRE partnership,” said Jason Wolf, Managing Principal of WCRE. “Our firm’s growth and success relies on the strength and development of our team, our clients, and our communities. Chris has helped to define the integrity, quality, teamwork, and focus that are the essence of the WCRE brand.”
WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long-term growth and success.
Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.moorestownofficespace.com, www.moorestownmedicalspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.
Let’s look at how the recent tax reform bill impacts commercial real estate. The Tax Cuts and Jobs Bill was signed into law on 22 December 2017. The tax reform bill is one of the most substantive changes to the tax laws passed in over 30 years. With the current administration’s background in commercial real estate and understanding of the challenges in the industry, it’s no surprise that certain provisions would be included that might help propel real estate development and commercial real estate transactions. Here’s a quick summary of a few of the critical pieces that affect the commercial real estate business. This isn’t a full compendium or review of the bill and it’s not tax advice but it will help guide you in developing some strategies to take advantage of these laws with your CPA in 2018.
Tax Reform Bill Lowers Taxes on Pass Through Corporations
Pass-through businesses—partnerships, S-corporations, and limited liability companies—are corporate entities that allow business income to “pass-through” to the owner, thereby paying a personal income rate, as opposed to a business rate. For most this is a tax cut from 40% down to 25%. So, let’s say you have a rental income entity organized as an LLC, this new regulation could be significant tax savings to you. Also, be sure to ask your accountant about the “Corker Kickback” which further amplifies this benefit through a 20% deduction subject to income thresholds.
Tax Reform Bill Offers Tax Deductions for Property Developers:
New provisions allow developers to deduct interest expenses for a variety of real estate activities, including construction, management, and property development. This should help developers free up some necessary cash to keep projects moving.
Tax Reform Bill’s Impact on 1031 Exchanges
Like-kind exchanges enable owners of property to sell at a large capital gain but defer any tax as long as they use the proceeds to buy some other property. In essence, owners of commercial real estate can keep flipping the properties until they die without ever paying any capital gains tax. (And if the estate tax is abolished, the gains might go untaxed forever.)
Tax Reform Bill’s Impact on Carried-Interest
There was lots of talk that the “carried interest” loophole would be closed for hedge fund managers. Carried interest essentially allows for taxation at lower capital gains rates rather than ordinary income rates for assets held at least one year. The new reform changes the hold period to three years but this won’t affect most hedge funds as the average hold on assets is three years.
In the real estate context, the change doesn’t make much difference to investors who have a long-term hold strategy. However, for real estate investors who operate on a fix-and-flip strategy this could affect you directly.
There are more aspects in this tax reform bill that are favorable to real estate investors and you should be consulting your CPA as soon as possible to start planning for 2018 if you haven’t already. While every action has an equal and opposite reaction, most experts agree that these new regulations should spur additional investment in the commercial real estate sector from development through purchase of real estate for rental income purposes.
For more information, contact:
Marc Snyderman, Esquire
923 Haddonfield Road, Suite 300
Cherry Hill, NJ 08002
Antonella Colella, Esquire
150 Monument Road, Suite 207
Bala Cynwyd, PA 19004
When it comes to applying asphalt sealant, pavement maintenance contractors have several options to offer property managers. They can employ any of the following:
• a spray system
• a piece of ride-on equipment with squeegee and/or spray application options
• a squeegee or a broom to apply material by hand
So, which asphalt sealant option is the best choice for the job? According to manufacturers, the decision hinges on several variables including application, material being used, personal preference, and budget.
Squeegee and Spray Asphalt Sealant Applications:
Both the squeegee and spray methods have their own set of advantages. The pressure from the squeegee application method allows the asphalt sealant to fill any cracks which help to create a high quality bond with the surface of the pavement. In contrast, the spray method lends itself to better control of how much material is being used, and a more precise application process. Oftentimes, spraying asphalt sealant is misunderstood if the operator ‘thins’ the material, or uses a low spread rate to apply it to the surface. When managed properly, both the squeegee and spray methods can lay sufficient asphalt sealant for the customer’s needs.
TWO ARE BETTER THAN ONE:
Property owners and managers may know that when seeking a pricing estimate for their asphalt sealant needs, they will generally be given a price for one application type. However, the best of both sealant worlds includes using both the squeegee and spray sealant applications together. Sealcoating application is dependent upon weather conditions; requiring a temperature of over 50°F in order to be applied. If conditions are ideal, the contractor will apply the initial base coat. Utilizing the squeegee machine, pavement sealer is poured on top of the asphalt and is pressed into all of the pores before removing excess material. The first coat generally takes one to two hours of dry time before spray coating the second application. Applying the squeegee method first creates the proper
bond to the asphalt, but can leave behind pin holes and other slight imperfections. Spraying on a second coat of asphalt sealant will help to fill those holes, allowing the surface to have a cleaner appearance by eliminating squeegee marks and any blotches. Once the second sealcoat has been applied, the area requires 24 hours of drying time before resuming use of the surface.
While one coat of asphalt sealant leaves the parking lot, or street nicely covered, the second coat will help to keep out water, leaving a longer lasting application. Plus, spray coating the second layer uses less material and takes about half the time to apply than the initial coat.
When considering the long-term value, employing both sealcoating methods for a total of two coats is the best option for longer-lasting results. Used in conjunction, the two methods will yield a longer lasting result as opposed to the typical two spray coat applications. Starting the maintenance process within three years of the initial paving installation is important in order to preserve, and protect your asphalt. Repeating the sealcoating application every five years can beautify and extend the life of your asphalt as long as 30 years. While the initial investment for the squeegee and spray coat application costs more than other methods, it will ultimately give you a better return on your investment in asphalt maintenance.
For more information, contact:
The proposed tax reform bills are a topic you can’t escape these days. With proposals in both the House and the Senate, we thought it would help to review some changes that could affect your business in 2018. Alas, this time around, year-end tax planning for our business clients is complicated by the possibility of major tax reform that could take effect next year. The business tax reform proposals are ambitious in scope and would generally be good news for many businesses and owners we advise (for which we thank you). However, tax rate cuts and other pro-business changes could be balanced by eliminating some longstanding tax breaks. There is no guarantee that any bill will actually get through Congress and become law. Stay tuned for developments, and be ready to move fast near year-end once the future becomes known.
Anyway, considering the proposals in both the House and the Senate, we thought it would be helpful to at least
review some changes we at Abo and Company think may affect your business in 2018. Not a business or self-employed, pass this email along.
• Section 179 Deduction. For tax years beginning in 2018 through 2022, the House tax reform bill would increase the maximum Section 179 deduction to a whopping $5 million per year, adjusted for inflation. The maximum deduction would phase out at $20 million (adjusted for inflation). The Senate would increase the maximum annual Section 179 deduction to $1 million and increase the deduction phase-out threshold to $2.5 million (both numbers would be adjusted annually for inflation).
• Bonus Depreciation. Both the House and Senate tax reform bills would allow unlimited 100% first-year depreciation for qualified assets acquired and placed in service after 9/27/17 and before 1/1/23.
• Tax Rate on Pass-through Income. The House bill would install a maximum 25% federal income tax rate for income from a pass-through entity, subject to certain restrictions. The Senate bill would generally allow an individual taxpayer to deduct 17.4% of business income from a pass-through entity.
• Corporate Tax Rate. The House bill would tax C corporation income at a flat 20% rate for tax years beginning in 2018 and beyond. The rate for personal service corporations would be a flat 25%. The Senate bill would also install a flat 20% corporate rate, but it wouldn’t take effect until tax years beginning in 2019.
• Net Operating Losses (NOLs). Under both the House and Senate tax reform bills, taxpayers could generally use an NOL carryover to offset only 90% of taxable income (versus 100% under current law). Under both bills, NOLs couldn’t be carried back to earlier tax years but could be carried forward indefinitely.
• More Businesses Could Use Cash-method Accounting. The House tax reform bill would allow a C corporation or partnership with a C corporation partner to use the cash method of accounting if its annual gross receipts for the prior three years don’t exceed $25 million. The Senate bill would set the threshold at $15 million.
• Limits on Deducting Interest Expense. Under the House tax reform bill, deductions for business interest expense in tax years beginning in 2018 and beyond generally couldn’t exceed 30% of the business’s adjusted
taxable income (subject to exceptions). Under the Senate tax reform bill, business interest expense for tax years beginning in 2018 and beyond would be limited to the business interest income plus 30% of adjusted taxable income.
• Deductions and Credits. Both the House and Senate bills would eliminate the domestic production activities deduction and certain tax credits.
Other important changes have been proposed. Stay tuned….
FOR MORE INFORMATION:
Martin H. Abo, CPA/ABV/CVA/CFF is a principal of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.
Let’s explore why performing pre-construction due diligence prior to the acquisition of a site or proceeding towards construction is critical.
We’ve heard it all before:
- “Do your homework.”
- “Measure twice….cut once.”
- “A little bit of knowledge is a dangerous thing.”
- “Hindsight is 20/20”
- “Snooze, you lose.”
My father didn’t author any of those lines, but he said them so often I thought he might have. And quite frequently, I can still hear his voice in my head giving me such sage counseling. But it was more than fatherly advice; it was sound advice that helped prepare me for the world of design and construction; as he would say: “Always be prepared.” He never used the term “due diligence;” but I knew what he meant.
Now that I’m all grown up, his words seem even more to the point. Performing pre-construction due diligence prior to the acquisition of a site or proceeding towards construction is critical. You need to protect your interests and investments of time and money, and the best way to accomplish that is to assess potential risks in every
It may sound like a simple task, but it is a complex process to identify and analyze the risks and arrive at sound and level-headed solutions to obstacles that may arise. After that, you’ll need to address and mitigate each through the planning and construction processes. If the obstacles appear too great, or reveal other issues that verge on being unsurmountable, it may be a good time to rethink and retool the project.
Pre-Construction Due diligence must be done for every project, no matter how big or small…be it single family home or multifamily housing, commercial, office or retail, educational or worship, healthcare or hospitality, industrial or government. So, before you take that leap and make the decision to proceed with a site and/or building project, take the time and effort to perform the investigation and assess if it (and its context) are suitable for a particular project, and if it is in balance with the other various risks involved.
Thorough pre-construction due diligence is critical to your project…from the selection of the site, to the designer and builder, delivery method and materials, to compliance, financial assessments and budget. Nothing can place you on a better course than proper pre-construction due diligence. It’s just as my dad said: “measure twice, cut once.”
Paul Stridick, AIA is Director of Design/Build at The Bannett Group. He is an award-winning architect that also has extensive government experience. Prior to joining TBG, Paul was the Director of Community Development for Cherry Hill Township, NJ, a 26-square mile suburban community in the Philadelphia metropolitan area. Before that, he was the Director of the Division of Housing and Community Resources for New Jersey’s Dept. of Community Affairs. His last article “IS THERE AN EASIER WAY TO GET SOMETHING BUILT?” was published on WCRE’s blog in August 2017.
The Bannett Group is a South Jersey firm that was founded in 1970. Since then, we’ve become one of the fastest growing design and construction firms in the region, with a portfolio of work that spans the country. The Bannett Group always views our design & construction services as a set of tools available to complete each job. We’ll pick the best tool or delivery method for each job…general contracting, construction management or even a fully integrated Design-Build package. Whatever the tool, we get the job done. With our steadfast history and fine-tuned in-house talent, we’re able to complete each project on time…on budget…every time.
There have been some proposed modifications to the Philadelphia Mixed Income Housing Bill. On June 22, 2017, City Councilmember Maria Quiñones-Sanchez introduced a bill proposing to provide for new affordable housing requirements in Philadelphia in the commercial real estate context. The bill, as originally drafted, would amend the Housing Code to require residential developers to include affordable housing units in their new and redeveloped residential projects. In return, developers would be rewarded with height and floor-area ratio bonuses. Since its initial introduction in June, the bill has been recently modified by its sponsor as part of the Planning Commission review process, resulting in certain substantive changes to its original form. A November 27 public hearing revealed dissension against the bill from neighborhood groups, housing advocates and developers, resulting in Councilmember Quiñones-Sánchez putting a hold on the bill. Further amendments to rectify the differing viewpoints are to be expected, and another hearing as well as a vote has been scheduled for December 5, 2017.
Background of the proposed modifications to the Philadelphia Mixed Income Housing Bill
Legislating affordable housing requirements in the commercial/residential real estate context is not a new trend in major cities nationwide. San Francisco and New York City, for example, have long had robust mixed income housing programs. Given Philadelphia’s high poverty rate, city officials view this bill as a way to provide increased affordable housing to its residents while still recognizing and meeting the needs of private developers.
Philadelphia Mixed Income Housing Bill NO. 170678
The bill directs private developers of new residential projects or substantially rehabilitated projects containing more than 10 units to set aside 10 percent of the units for affordable housing. The amended bill specifies, however, that its affordable housing requirements do not apply to student or subsidized housing. Under the original bill, the affordable units would have been available to prospective renters whose incomes were between 30 percent and 50 percent of the area median income (AMI) and to purchasers between 50 percent and 80 percent of the AMI, depending on the location of the units. Now, under the amended bill, the units would be available to prospective “low income” renters at or below 50 percent of the AMI and “moderate income” renters at or below 60 percent of the AMI. The amended bill would also make the units available to prospective “low income” purchasers at or below 70 percent of the AMI and “moderate income” purchasers at or below 80 percent of the AMI.
Originally, the bill applied to the entire city; as amended, however, the bill would only affect high-density zoning districts of RM-4, RMX-3, CMX-3, CMX-4 and CMX-5. These modifications result in both the affordable housing requirements and the incentives offered being inapplicable in zoning districts other than those listed above. The bill defines an affordable unit as one whose cost—whether rental or purchase—is 30 percent or less of the applicable maximum qualifying income level. These units were initially proposed to them should they opt to build affordable units. The amended bill grants substantial height and floor-area bonuses to developers who incorporate the affordable housing proposals, although the specifics of these bonuses may change in the next version of the bill. These developers will have enhanced development opportunities as a result of their assistance in providing homes to a wide range of Philadelphians.
The bill, if passed into law, would go into effect on July 1, 2018. Should it pass, the bill will not apply to construction pursuant to valid zoning permit applications that were filed prior to the effective date. Currently, a Rules Committee public meeting and the vote on the bill have been set for Tuesday, December 5, 2017.
Want More Information about the proposed modifications to the Philadelphia Mixed Income Housing Bill?
This Alert has been authored by Aaron R. Feinblatt, an associate in Duane Morris’ Real Estate Practice Group. If you have any questions about this Alert or otherwise, please contact Brad A. Molotsky at 856-874-4243.
In its Fourth Year, WCRE’s Thanksgiving Food Drive Brings A Community Together
Wolf Commercial Real Estate (WCRE) wrapped up its fourth annual Thanksgiving Food Drive today by delivering 130 bags of food and $1,200 in supermarket gift cards to the Jewish Family and Children’s Service food pantry.
As in previous years, the firm spent the past several weeks collecting food and grocery store gift cards from friends, clients, and colleagues throughout the region. More than thirty area businesses contributed to the effort.
“Over the course of just a few years, WCRE has become an integral charitable partner in our efforts,” said Marla Meyers, MSW, executive director of Samost Jewish Family and Children’s Services of Southern New Jersey. “We thank Jason Wolf and the entire WCRE team for their generosity and leadership today and throughout the year.”
The food drive is part of WCRE’s Community Commitment program, which also includes donating a portion of the proceeds from every transaction to one of several local charities. In September the firm hosted its second annual celebrity charity hockey game, in which local business leaders played alongside several former Philadelphia Flyers. That event raised more than $65,000 that was shared among several local charities.
WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.
Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.com, www.southjerseyindustrialspace.com, www.southjerseymedicalspace.com, www.southjerseyretailspace.com, www.phillyofficespace.com, www.phillyindustrialspace.com, www.phillymedicalspace.com and www.phillyretailspace.com.
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Let’s look at ways to encourage office creativity. Most people think that working hard is the most effective way of working. However, that is not always the case. A great way to accomplish everything on your to-do list is to do smart work instead of hard work. To encourage office creativity and welcome various thoughts from different channels at the work place, there needs to be a collaborative working environment. Here is a list of activities that will help you achieve maximum levels of creativity within your office.
1. Arrange for some games that encourage a team-building attitude to encourage office creativity
You should plan a small game for your employees and schedule it once every few weeks. Introduce such games that are to be played between teams. This will help you to educate your staff about the importance and benefits of team work.
2. Entertain employee suggestions to encourage office creativity
You should dedicate an area where employees can come and share their creative thoughts or suggestions. You can hang a notice board in a corner so that the employees may write their thoughts on paper and pin it on the notice board or you can place a suggestion box where employees can raise their concerns without revealing their identity. Make sure that you value their suggestions and reward them for creative ideas.
A notice board is preferable, as the content on the board can be seen by other employees as well and it provides a platform to interact. Employees can pin up suggestions as well as any challenges they are facing while accomplishing any given task. This way they will get input from others to get problems solved. This improves collaboration and teamwork.
If you have a huge office with thousands of employees, you can replace notice boards with digital
3. Encourage brainstorming to encourage office creativity
Brainstorming sessions are the best way to get the creative ideas flowing. Try to make every employee a part of the brainstorming sessions where everyone should be given freedom to express their thoughts.
4. Treat all your employees equally to encourage office creativity
A workplace is full of people with different backgrounds and thoughts. Everyone must be treated equally, and there should not be any bias to any particular group of employees. Plan a few informal get-togethers’ where all the employees gather and spend few hours together irrespective of their designation in the workplace. It is an awesome sight to see the director talking to a trainee and getting to know about him/her; an accounts person talking to a technical person and sharing thoughts; and many more such interactions. This is the sign of a great work culture within an organization.
Creativity is directly linked to the flow of ideas. The better the flow of ideas, the more creative your team will be. Creative resources are the assets of an organization and the creative atmosphere results in the best quality output. Give it a try today and let us know how successful your working environment
Josh Smargiassi: Principal
6950 Sherman Lane
Pennsauken, NJ 08110
Open Floor Plans: No issue generates more discussion in our industry than the architectural Pandora’s box: commercial open floor plans. In cities like Philadelphia, the workforce now skews younger; millennials tend to favor collaborative work environments. An open floor plan doesn’t intimidate them—they’re used to team cultures from their college years onward. However, wide-open spaces aren’t necessarily productive ones for an older generation that cherishes the privacy of four solid walls and a door. Per a 2017 Forbes Coaches’ Council blog post, the pros and cons of an open floor plan are subjectively debatable.
open floor plans can simultaneously:
• Disrupt deep work
• Offer a 360-degree viewpoint
• Drain introverts
• Foster inclusion and communication
An approach to open floor plans coincides with a crucial point in the article: it depends on your culture and line of work. If your company encourages constant collaboration as part of the workflow process, a hybrid open floor plan is a good idea. That’s because: you’ll still need secure spaces for confidential meetings. (We’ve NEVER seen a completely open floor plan!)
Industries most conducive to modified open floor plans include:
• Creative-design or engineering firms
• Light-industrial production and staff assembly
• Product engineering and fabrication
• Small offices with tight spaces
• Technology start-ups
The practical benefits of an open floor plans:
1. Reduced wall, door, and partition costs
2. Lighting can be an open grid
3. Day lighting can flood the space better
4. Both fire suppression and HVAC design are easier
5. More people can occupy less dense floor plans.
Whether you’re a light-industrial manufacturer in need of collaborative design-fabrication space or a business suffocating from “we’re all walls” syndrome, A corporate or industrial architectural firm can reformulate the ideal layout. To discuss opening up your workplace, please contact us at either 856-547-6414 or firstname.lastname@example.org. Anchor Point Architecture, Inc.
About Anchor Point Architecture, Inc.
Our clients, CEO’s, Facility Managers and Investors are Building projects in the Industrial Fabrication, Corporate office and Real Estate Development Project Sectors. They find value in early Budgets, Planning approval assistance and Design that improves Branding and Employee increased productivity.
Eliseo “Lee”: DiPrinzio, RA, PP
Anchor Point Architecture, Inc.
Audubon, NJ – Princeton – Philadelphia
Let’s explore how Tenant Improvements and Betterments impact insurance. Suppose that a landlord leases a storefront to a retailer that makes improvements to the facility by adding features to help sell its products. During the lease, a fire breaks out and damages the building, including the features added by the retailer to improve the space. When the insurance claims are made, the following questions arise:
• Who did the improvements belong to?
• Who is responsible for paying the damages?
Defining Tenant Improvements and Betterments
While legal definitions vary, improvements and betterments are anything that a tenant attaches to the landlord’s real estate that becomes a permanent part of that real estate. Under most leases, such improvements become the property of the landlord and tenants are responsible for repairing or replacing the improvements in the event of loss. However, property policies can be customized to determine whether tenants’ improvements and betterments are covered under the building category or under the contents category.
A Landlord’s View of Tenant Improvements
When a tenant makes substantial improvements and betterments to a building, it adds to the building’s value. In order to realize this added value, the landlord needs to clearly establish who is responsible for damages to that property to avoid insurance complications. In doing so, the landlord typically has to make one of the following decisions:
1. Increase the limits of the property insurance policy to account for this extra value.
2. Add a clause to the rental contract stating that the tenant is responsible for damages to improvements and betterments.
In the absence of one of the aforementioned decisions, the landlord may face penalties in the event that he or she has to make an insurance claim. For example, if a tenant makes $100,000 worth of improvements and betterments to a property that was initially worth $500,000, and a fire destroys the entire building, the insurance adjuster will value the property at $600,000 when processing the claim. But, since most landlords’ property policies consider improvements and betterments as covered property, the landlord may be charged an underinsured penalty if the building’s policy hasn’t been increased to reflect the amount of the improvements
A landlord who does not wish to insure for the values of the improvements and betterments should specifically exclude them.
A Tenant’s View of Tenant Improvements
If the lease requires the landlord to repair or replace tenants’ improvements and betterments that become damaged, the tenant does not need to insure them. In contrast, if the lease does not require the landlord to repair or replace tenants’ improvements and betterments, tenants need to make sure they are covered under their own property policy.
Tenant Improvements – Considerations When Entering a Lease
When entering into a new lease or renewal, it is critical for both landlords and tenants to carefully review the terms of the lease to ensure that it adequately delegates the responsibility for insuring tenant improvements and betterments. It is also important to make sure that each party’s insurance policy is adequate enough to properly protect the scope of the tenant improvements agreed upon in the lease. When reviewing the lease, both the landlords and tenants should discuss the following questions:
• Who owns the improvements?
• Who is responsible to replace the improvements if damaged?
• Which insurance policy covers the improvements—the landlord’s or the tenant’s?
• Is the policy adequate?
Insuring Tenant Improvements and Betterments
Tenant Improvements and betterments are not difficult to insure, as a building’s insurance forms automatically cover them. However, many landlords expect their tenants to insure any improvements and betterments that are
made, and some landlords refuse to increase the value of their building policies to reflect the new value of such changes. Therefore, it is important to understand the insurance ramifications of tenants’ improvements and betterments. Hardenbergh Insurance Group can help you identify your exposures and make appropriate recommendations.
For more information on Tenant Improvements and Betterments
Brian Blaston, Partner
Hardenbergh Insurance Group
phone: 856.489.9100 x 139