Real estate developers face constant pressure to move projects forward while managing risk, capital partner expectations, and the realities of design and construction, to get buildings completed and leased up, so they can transact and deliver the return on investment their investors expect. We work with developers across all asset classes – including industrial, multi-family mixed-use, office, and retail – to shape delivery strategies, negotiate contracts, and resolve disputes, always with a focus on protecting investments and achieving business goals.
Project Delivery Methods and Contract Negotiation
Every new project begins with choosing the best project delivery method to achieve the owner’s specific goals – and then putting the right contract documents in place so the project can move from vision to reality. We help developers select the structure that fits their goals and then draft and negotiate agreements that reflect both the business deal and the protections required by our clients and their equity partners and lenders.
On the industrial side, our real estate developer clients have repeatedly tasked us with drafting and negotiating contracts for large scale logistics facilities. We drafted agreements for a $41 million industrial development with a 431,000 sq. ft. warehouse facility featuring over 75 semi-trailer dock doors, negotiated agreements for an $11 million industrial project with a 200,000 sq. ft. building and over 40 docks, and structured contracts for a $10 million project with a 180,000 sq. ft. building and 45 truck docks, to name a few.
We represented the project owner real estate developer to negotiate an Owner-Architect Agreement for a 745-unit mixed-use development with five buildings, substantial office and retail space, and extensive infrastructure. We also helped the development arm of an integrated real estate and construction firm with a $5 billion portfolio prepare Owner-Architect Agreements for redevelopment of two shopping malls into mixed-use communities with hundreds of luxury apartments, restaurants, and retail, aligning our client’s and its capital partner’s expectations around these contract documents.
We also guide projects where phasing or complex coordination is required. For one real estate developer, we negotiated multi-phase Guaranteed Maximum Price (GMP) agreements totaling $8 million for the historic renovation of a commercial building with a tight schedule, allowing demolition and masonry work to commence while later design phases were completed.
Across these matters, the goal is the same: select the right delivery method, document the commercial terms, and negotiate contracts that keep projects moving forward while protecting the developer’s vision and investment.
Custom Agreements and AIA Contract Documents
For larger and more complicated developments, we prepare custom agreements that reflect the scale of the project and the expectations of our clients’ equity partners and lenders. We used non-AIA contract forms to help a developer negotiate a $38.4 million GMP agreement for a 550,000 sq. ft. Class-A distribution facility with nearly 100 semi-trailer docks. We likewise deployed custom non-AIA contract forms on the 431,000 sq. ft. and the 200,000 sq. ft. and the 180,000 sq. ft. logistics facilities mentioned on this page above.
We also regularly work with American Institute of Architects (AIA) standard forms, including AIA Document A102–2017, Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a GMP, and its stipulated sum counterpart, AIA Document A101–2017, Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum. For smaller scopes of work or more limited projects, we often rely on AIA Document A104–2017, Abbreviated Form of Agreement Between Owner and Contractor, with commercially reasonable but owner-sided custom edits.
We have recently prepared Owner-Contractor Agreements using AIA contract documents for our real estate developer clients on a 48,000 sq. ft. timber loft renovation, a $1.6 million tenant improvement project, the buildout of a 33,000 sq. ft. truck bay warehouse, and construction of a 68,000 sq. ft. outdoor industrial storage building.
For more substantial engagements, the best approach can be to use both AIA and non-AIA agreements on the same project. On the redevelopment of an 850,000 sq. ft. industrial campus, we began with non-AIA letters of intent, then used AIA agreements for initial demolition and minor work, paired with a non-AIA short form for early-stage professional services. As the project advanced, we prepared custom Owner-Architect and Owner-Civil Engineer Agreements to address more complex elements and investor requirements.
For projects that do not fit commercially available standard contract forms, we prepare tailored Owner-Contractor Agreements. Recent examples include lump sum agreements for an industrial outdoor storage project and a corporate office building project.
This range of contract forms – whether AIA, non-AIA, or both in combination – ensures that the
contracting structure matches the needs of the developer and the specific project.
Cost-Efficient Dispute Resolution
Even with careful planning, disputes are a reality of development. Our role is to help our developer clients avoid them entirely – or resolve them early and cost-effectively, through direct negotiation or mediation, while remaining prepared to move forward into arbitration or litigation if absolutely necessary. We also work proactively to keep projects free of mechanics liens, which can complicate financing and delay completion.
On one warehouse logistics project, we represented a developer in mediation before a former federal judge against an architect whose design negligence caused improperly sloped loading docks, misaligned support columns, inadequate space for door mounting tracks, and undersized loading dock levelers. The matter was resolved on terms favorable to our client, avoiding protracted litigation and the significant costs of trial.
We also acted quickly for a developer when a tenant published a defamatory email to its customers blaming the property owner for faulty plumbing which led to a multi-week business closure. By leveraging mechanical and plumbing plans, as-built drawings, and engineering documentation, we proved that the tenant’s own contractors were at fault, secured a prompt public retraction of the tenant’s defamation, and avoided litigation.
Disputes with general contractors also demand decisive action. On behalf of one real estate developer client, we pushed back against inflated change orders and unsupported delay claims on a federal tenant improvement project, restoring construction progress without resort to termination of the general contractor, or any of its subcontractors, or litigation.
In another matter, we guided a developer through serious geotechnical and civil engineering problems following an $18 million facility renovation and expansion that encompassed 400,000 sq. ft. and over 225 truck doors. This included orchestrating inspections, the selection and retention of expert consultants and local counsel, and taking appropriate action to make sure insurance companies could not hide behind policy language to deny coverage.
We also help real estate developers navigate regulatory and permitting disputes. On an $18 million industrial project with a 225,000 sq. ft. building on a 40-acre site, we helped our developer client to manage stormwater and environmental issues with state and federal authorities, we restructured contracts when delays required termination of the initial contractor for convenience, and negotiated new agreements so the project could move forward the following building season. We also helped the developer address storage of long lead-time items during the construction stoppage.
Across these matters, the emphasis is the same: protect the project, manage risk, avoid disputes where possible, and achieve early, cost-efficient dispute resolution without unnecessary delay or expense – and without litigation or arbitration – where possible.
General Counsel
Beyond individual projects, real estate developers rely on us as general counsel for matters that affect their portfolios and day-to-day operations. This role includes contract document and template preparation strategy, keeping projects free of mechanics liens, coordination with equity partners and lenders, fast responses to urgent issues that could affect financing or reputation, and many other issues.
For a national commercial real estate investment and development firm, we created a suite of custom non-AIA and modified AIA contract templates that allowed its non-attorney team to manage contracts across multiple projects totaling about $100 million in construction spending. This gave the client standardized agreements aligned with investor and lender expectations, for use by their project executives – while reserving our direct involvement for negotiations and strategy on larger and more complex contracts.
This ongoing support ensures that developers can focus on building while knowing that their projects, relationships, and reputations are protected.
From selecting delivery methods to negotiating contracts, resolving disputes, and serving as general counsel, we help real estate developers protect their investments and keep projects on track.
Guiding Developers Through Design and Construction
It is an exciting time for Chicago! Each day real estate developers reinvent our city through a wide variety of exciting projects. From refreshing the Loop to expanding our River North and West Loop playgrounds to countless other projects in the city and suburbs, they make Chicago a premier city to work and play.
None of this is easy. Developers are a unique breed of entrepreneur. They turn vision into reality. They know the numbers and seek the sweet spot of risk and reward. They do what other people cannot or will not do, often making highly-leveraged bets to pursue opportunity. Chicago owes much to its real estate developers.
Construction attorneys and real estate lawyers – while both important – have different skill sets. Jeremy helps developers achieve their vision through creative project structuring, smart contracts, and proactive dispute avoidance. Having represented most players in the design and construction industry, he has the knowledge, insights, and experience to help developers build – from project inception to final completion.
Dispute Avoidance and Resolution
The promise of a jury verdict – years away – often rings hollow for developers with debt to service, leases to honor, or plans to take completed projects to market. Fortunately, many construction project disputes can be avoided or minimized with early and real-time proactive intervention.
Jeremy comes from the school of ‘nip-it-in-the-bud.’ However, he stands ready to protect developers in mediation, arbitration, and litigation when that is in his clients’ strategic interests. Even during arbitration and litigation, his focus is always on early, cost-efficient dispute resolution.
He has represented prominent national and Chicago-based developers in:
- Managing extensive change order requests and project delays in real time.
- Completing distressed projects involving bankruptcy filings, mechanics liens, cost overruns, injunctions, delay, and claims against surety bonds.
- Prosecuting design and construction defect claims against architects, engineers, constructors, and design-builders in order to maximize recoveries.
- Specialty projects, including the defense of a prominent wind farm developer from a constitutional challenge to its special use zoning approvals.
- Defending against claims brought by buyers and condominium associations.
Enhancing the Project Vision
We understand the various project delivery method options and can advise developers on the pros and cons of each. We counsel clients regarding:
- Design-build, design-bid-build, multiple prime contractor, construction manager at risk (CMr), construction manager as advisor (CMa), and other delivery methods.
- Pricing methods including fixed fee, guaranteed maximum price (GMP), not-to-exceed (NTE), time and materials (T&M), unit pricing, and others.
- Creative solutions like fast-tracking or phasing projects to allow the design and construction efforts to strategically overlap.
We love helping real estate developers deliver projects on time, on budget, and without avoidable disputes. To learn more about real estate development laws of Chicago, contact Baker Law Group LLC today.
