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Commercial real estate landlords commonly face this scenario: one of your tenants sends you a letter indicating that it has sold its business to a third party and has assigned the lease to the third party. Your tenant’s letter requests that you countersign and return the letter acknowledging your consent to the assignment of the lease to the third party. What should you do in response to the tenant’s request? This is Part II of Jay Gitles' article. Part I (steps one through three) ran on Wednesday. Step Four: Evaluate the proposed form of Consent to Assignment and Assumption of Lease and modify, as necessary. The assignor’s and assignee’s form of Consent to Assignment and Assumption of Lease is routinely deficient in many respects, and landlords should expect to modify the consent provisions. Most landlords will want a Consent to Assignment and Assumption of Lease to include that the landlord consents to the assignment of the lease by the assignor to the assignee (and reflects that the same is made in consideration of the payments by the assignor to the landlord as described in the Assignment of Lease, as well as the assumptions, covenants, promises and agreements of the assignee …

As in every economic recovery period, there are both positive and negative indicators in the stabilization process. For each encouraging sign we see, there is another signal that reminds us that it will be a long time before the U.S. economy is self-sustaining. We are seeing signs of recovery in the commercial real estate market, but the market is bifurcated and the recovery will be very uneven. Demand for some institutional-level properties where capital is in ready supply and investors are eager to buy is increasing. But as reported by many CCIM members in response to Real Estate Research Corporation (RERC) surveys, there is also a lack of demand for second- and third-tier properties in most locations, and rents and pricing may remain flat or even erode further before recovery takes hold in some areas. Since the health of the commercial real estate market depends on the health of the economy, and the economy—despite all its improvements—remains fragile (although strengthening), commercial real estate is also fragile. Not only are the fundamentals for each of the major property types weak, and will remain so as long as unemployment remains high, the investment side of this asset class continues to struggle, except …

“Be Zen in Ten” should be the motto of the commercial real estate industry throughout 2010 as it comes to grips with the reality of the deepest recession since the 1930s that has seen an estimated 8.4 million jobs disappear from the economy. The impact of those job losses on office and industrial space in Georgia and across the country has been substantial, with vacancy rates at record highs, rents depressed, significant negative absorption rates and virtually no new commercial construction starts. Nationally, commercial property values have fallen more than 40 percent in the past three years. Although initial reports show that the GDP grew at a 5.7 percent annual rate during the fourth quarter of 2009 — the best performance since 2003 — it is unlikely that those numbers will be repeated in the near future. Approximately 3.5 percent of the GDP growth resulted from inventory restocking orders, as companies that held back during the recession rebuilt their reserves. Unless demand for manufactured goods increases, the boost will be a one-time occurrence and growth will remain sluggish. Mark Zandi, an economist with Moody’s Investor Services, says that the federal stimulus added approximately 2 percentage points to fourth quarter growth. …

Commercial real estate transactions are harder to close today than perhaps ever before, but the reasons may not be what you would expect. During the recession of the late 1980s and early 1990s, there was a significant lack of capital that constrained transactions. Lack of capital does not appear to be the case this time around. Real Capital Analytics reports that total commercial transactions are down by 87 percent nationally from peak closing levels in 2007. Because of the availability of agency debt from Fannie Mae and Freddie Mac, the multifamily transaction volume has been thought to be more stable. However, according to the Real Capital Analytics data, the multifamily sector is down by 85 percent nationally. In the Southeast, multifamily markets have been hit harder than at the national level. Atlanta and most tertiary markets in the Southeast have experienced an 88 percent drop in apartment transaction volume. Secondary markets like Birmingham and Memphis have experienced a greater drop at 97 percent. The market in the Southeast with the lowest drop has been Nashville, with an 82 percent drop in volume. Apartment operations have suffered as well. Dale Henson Associates reports that street rents in Atlanta garden-apartment properties have …