The new Tax Act was signed into law on December 22, 2017. Holders and developers of commercial real estate will be impacted by certain provisions of the new Tax Act, such as its treatment of real property depreciation deductions, 1031 like-kind exchanges, and pass-through rates. We direct you to our recent Legislative Tax Alert for a more detailed overview of certain relevant provisions of the new Tax Act. If you have questions or concerns about how the new Tax Act will impact you or your business, please contact Russell B. Bershad, a Director in the Gibbons Real Property Department, or Peter J. Ulrich, a Director in the Gibbons Corporate Department. Andrew J. Camelotto is an Associate in the Gibbons Real Property Department.
Author: Andrew J. Camelotto
The dramatic increase in the number of shoppers purchasing goods online continues to drive demand for warehouse and distribution space in the northeast. According to Census Bureau estimates, e-commerce now accounts for more than 8% of all U.S. retail sales, a near doubling of e-commerce’s retail market share in five short years. With internet shopping becoming the new norm, customers expect shorter and shorter delivery schedules. Speedy delivery options, such as same-day shipping, can create a competitive advantage in the New York metropolitan area, but retailers can only capitalize on that advantage if goods are stored close to their final destination. Enter the modern warehouse and distribution facility in northern New Jersey. With millions of affluent residents and easy access to Manhattan, this area is the perfect location for retail operators to establish a warehouse and distribution center. The problem is that existing, vacant warehouse space is not so easy to find in a competitive market that’s highly regulated and over-developed. According to The Wall Street Journal, certain savvy owners, developers, and redevelopers have already recognized the shortages on the supply side and are converting large office buildings into big box warehouse space. Vacant properties with good access to major highways,...
The state legislature took no action to further extend New Jersey’s Permit Extension Act (“PEA”) during the recently concluded legislative session, which means that permits and approvals extended by the PEA’s tolling period either have expired or will expire soon. Pursuant to the terms of the act, the expiration date for most approvals covered by the PEA are tolled through June 30, 2016, with certain approvals expiring before that date, making right now the time to evaluate projects approaching construction to determine which existing approvals were extended by the PEA, the exact expiration date of such approvals, and whether further extensions are available under other laws. After such an evaluation, developers and project managers can then determine whether approval rights can be fully vested prior to their expiration date and, if not, whether an extension, amendment, or renewal of the approval is required.
New Jersey Supreme Court Decides 62-64 Main Street, L.L.C. v. City of Hackensack, Clarifies Definition of “Blight” in Context of Redevelopment
On March 23, 2015, in 62-64 Main Street, L.L.C. v. City of Hackensack, the New Jersey Supreme Court determined that property does not need to have a negative effect on surrounding properties in order to be deemed “blighted.” Prior to the Court’s decision in this case, it was unclear whether a negative effect on surrounding properties was a prerequisite to a finding of blight, or simply one way to establish it. Because the New Jersey constitution allows municipalities to exercise their powers of eminent domain to redevelop blighted property, the Court’s decision could encourage more municipalities to move forward with the condemnation of property for private redevelopment.
On Friday, December 26, Governor Christie signed into law a one year extension of New Jersey’s Permit Extension Act (“PEA”). As noted in our recent blog, the PEA previously was set to expire on December 31, 2014. Initially enacted in 2008 in response to “the crisis in the real estate finance sector of the economy,” the purpose of the PEA was to toll the expiration of various approvals necessary for development through the end of 2012. The PEA was later amended to extend the tolling of the expiration of those approvals through the end of 2014. The further amendment enacted on December 26, designated as P.L.2014, c.84, tolls the expiration of those approvals through December 31, 2015, thereby providing projects with permits set to expire another year in which to move forward.
No Specific Waiver, No Arbitration: Enforceability of Arbitration Provisions in New Jersey Real Estate Contracts in Doubt Following Dispenziere v. Kushner Cos.
Companies doing business in New Jersey and accustomed to settling contract disputes through binding arbitration should carefully review their contracts – and carefully draft all future contracts – to ensure that each arbitration provision contains clear and unambiguous language that the parties are waiving their rights to sue in court. An arbitration clause stating that all disputes will be determined through binding arbitration, but failing to contain this explicit waiver, may not be enforceable in accordance with the recent holding by the Appellate Division in Dispenziere v. Kushner Cos.
New Jersey Supreme Court Adopts O’Brien Factors For Determining When Real Estate Transactions Constitute an Equitable Mortgage
Founded on the principle that equity looks to substance over form, courts will find an equitable mortgage to exist when a deed or contract, while lacking the characteristics of a typical mortgage, is used to pledge an interest in real property as security for a debt with the intention of acting as a mortgage. On September 9, 2014 in Zaman v. Felton, the New Jersey Supreme Court decided that when determining whether a particular transaction gives rise to an equitable mortgage, a trial court must utilize the eight factor test set forth by the Bankruptcy Court for the District of New Jersey in O’Brien v. Cleveland.