Real Estate Industry Alerts Tracker - February 2021 Issue #1

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IRS Extends Opportunity Zone Deadlines
 
The Internal Revenue Service (“IRS”) recently extended the investment period for taxpayers to invest in a Qualified Opportunity Fund (“QOF”) in order to defer 2019 capital gains. On January 19, 2021, the IRS issued Notice 2021-10, which further extended several of the deadlines that were previously extended. Investors facing a deadline to invest qualified capital gains into a QOF between April 1, 2020 and March 31, 2021 have until March 31, 2021 to invest the gains. Additionally, the new notice tolled the thirty-month period during which real property that qualified as an eligible investment for a QOF or a Qualified Opportunity Zone Business (“QOZB”) must be substantially improved. The “substantial improvement” period is tolled from April 1, 2020 through March 31, 2021 and the thirty-month clock to complete such improvements re-starts on April 1, 2021. The new notice also grants “reasonable cause” automatic relief for QOFs with a testing date between April 1, 2020 and June 30, 2021 that fail to meet the requirement to have 90% of its assets invested in qualified opportunity zone property.

Additional information may be found here.
 

Institutional Investors Expect Turnaround and Higher Transaction Volume in 2021

The majority of the institutional lenders that responded to a recent survey conducted by FTI Consulting and Real Estate Fund Intelligence generally expect that transaction volume will increase in 2021, but their expectations for recovery varied across commercial real estate sectors. Among those surveyed, 75% of respondents predicted a V-shaped recovery for the industrial sector, while 13% expected a slower U-shaped recovery for that industry. For multifamily properties, expectations varied for urban and suburban properties, where 56% predicted a V-shaped recovery for urban properties (while 15% expected a V-shaped or W-shaped recovery), and 41% predicted a V-shaped recovery for suburban properties (while 33% expected a V-shaped recovery and 22% predicted a W-shaped recovery).

Looking forward, institutional investors expect that transaction volume will increase overall in 2021, with 44% of respondents believing that transaction volume will be above average or better if vaccines are readily made available, and 87% of investors believing that there will be more or similar amounts of institutional investment in 2021 than last year.

Additional information may be found here.
 

Office Lease Trends

According to research conducted by CBRE, office leasing decreased 36% last year as compared with 2019. Leasing renewals accounted for 43% of the top leasing transactions in 2020, and the 100 largest office leasing transactions accounted for 19% of total office leasing activity. However,  those 100 transactions involved 29 million square feet, which represents a 32% drop from 2019. Technology, life sciences and the energy sector accounted for the vast majority of the top 100 office leases (84%), with the top markets located in Manhattan, Washington D.C., Seattle, Boston, Houston, and Atlanta.

Additional information may be found here.
 

More than Half of Office Tenants Received Rental Relief Last Year

A new report by Visual Release revealed that 50% of the companies surveyed received monetary relief last year, including Paycheck Protection Program loans, leveraged insurance policies and lawsuits. Approximately 54% of companies received some sort of direct rent relief from their landlord, whether by rent deferrals (17%), rent reductions (13%), rent abatements (13%), early terminations (6%) or application of security deposits (4%).

Additional information may be found here.
 

Kelley Drye's Real Estate Partner Appointed Office Managing Partner in Stamford, CT Location

Commercial Real Estate partner, Jennifer Bedoya has been appointed Office Managing Partner of the firm’s Stamford, CT office. In addition to her credit for building the firm’s Connecticut real estate practice, where she and her team continues to serve our growing Connecticut, Westchester and nationally based clients, Jennifer will also assume day-to-day office management responsibilities.

In a recent Law360 interview article, Jennifer discusses her new role and shares her secret to balancing a successful practice and being involved in firm life.

The Kelley Drye Stamford, CT office is located at Canterbury Green, 201 Broad Street, Stamford, CT 06901, and is home to Kelley Drye lawyers with extensive experience handling commercial real estate, litigation, employment law, bankruptcy law, and corporate transactions.

The article can be found here.
 

NYC Recognizes LGBT-Owned Businesses as Minority-Owned Businesses

In a decision that is sure to make a profound impact on businesses in New York City, LGBT-owned businesses are now recognized as minority-owned businesses in the competition for billions of dollars of government contract business. Kelley Drye’s Litigation team recently published a client advisory covering the January 19, 2021 decision by New York City’s Department of Small Business Services (SBS) in partnership with the National LGBT Chamber of Commerce (NGLCC).

According to the NGLCC, SBS has approved a measure to include NGLCC Certified LGBT Business Enterprise (Certified LGBTBE®) suppliers in public contract and procurement opportunities throughout the city. The SBS, in partnership with the NGLCC, will fast-track LGBT-owned businesses into New York City certification programs, including the Minority and Women-owned Business Enterprise (M/WBE) and Emerging Business Enterprise (EBE) Programs.

To read our full advisory, click here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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