{"id":538,"date":"2022-09-29T11:22:50","date_gmt":"2022-09-29T11:22:50","guid":{"rendered":"https:\/\/sisproj.com\/pioneer_local\/?p=538"},"modified":"2024-08-16T11:25:06","modified_gmt":"2024-08-16T11:25:06","slug":"commercial-real-estate-terms-you-must-know","status":"publish","type":"post","link":"https:\/\/sisproj.com\/pioneer_local\/commercial-real-estate-terms-you-must-know\/","title":{"rendered":"Commercial Real Estate terms you must know"},"content":{"rendered":"
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If you are planning to invest in commercial real estate, it\u2019s very crucial that you acquaint yourself with some key terms linked to this segment. At the end of the day, a thorough knowledge of relevant terms in the domain of commercial real estate can only boost your return on investment. Here are some common but essential terms you might want to know about:<\/p>\n

# Incidental expenditure:<\/b>\u00a0Whenever a commercial space is taken on rent, it involves certain extra costs over and above the base rent. These could include property tax, insurance, utilities, CAM charges, repairs, etc. These costs clubbed together are referred to as incidental expenditure.<\/p>\n

# Gross rent lease:<\/b>\u00a0It\u2019s a simple form of paying the rent and incidental expenses together either on a monthly or bi-monthly basis as per the agreement with the landlord.<\/p>\n

# Altered gross lease:<\/b>\u00a0There can be a slightly modified or tailored version of the gross lease pact with the landlord amenable to picking up the tab for certain incidental costs, or part-paying insurance, property tax or CAM charges. The shared payment pattern must be agreed upon by both the parties.<\/p>\n

# Option to buy:<\/b>\u00a0Sometimes, the lease is structured in such a manner that the tenant is given the option to buy out the commercial property at the expiry of the lease term.<\/p>\n

# CAM (Common Area Maintenance) charges:<\/b>\u00a0CAM fees go towards operating expenditure of all the common areas of the commercial property, including elevators, stairways, lobby spaces, hallways, public washrooms, parking lots, etc.<\/p>\n

# Usable square footage:<\/b> This is the wall-to-wall actual amount of space being leased out to and reserved for the tenant. It\u2019s extremely crucial to be aware of this usable space before inking the deal.<\/p>\n

# Percentage rent lease:<\/b>\u00a0This is a mixed payment arrangement which has two components. One is the base rent which is constant for the lease period and the other is a fraction of a pre-agreed minimum-guarantee gross sales. This arrangement is very common in retail malls.<\/p>\n

# Sops to tenants:<\/b>\u00a0The landlord might offer the tenant certain incentives like a rent-free period, reduced CAM charges or paying for any renovation\/improvement work. These are referred to as \u2018tenant inducement\u2019.<\/p>\n

# Trade fixtures:<\/b>\u00a0These are usually movable items like pieces of furniture, computers\/laptops or any other equipment that you can take along without damaging the property in any manner when you are vacating the leased space. It is always advisable to properly delineate and mark out the \u2018trade fixtures\u2019 before the lease agreement is signed.<\/p>\n

# LOI or Letter of Intent:<\/b> The LOI is a document that incorporates the terms of the lease including lease time period, concessions, etc and is used for both leasing as well as purchasing commercial properties. This document is signed by both the parties before the deal is finalized.<\/p>\n

# Turnkey improvements:<\/b>\u00a0These are modifications carried out by the developer to add value to the commercial property and make it more attractive to the tenant.<\/p>\n

# Leasehold improvements:<\/b>\u00a0Such improvements entail modifications carried out by the landlord according to certain specifications laid out by the tenant to suit his\/her type of business better. Such customized improvements usually become part of the property and can\u2019t be removed, except in certain agreements where this clause has been built in.<\/p>\n

# ROFR:<\/b>\u00a0The Right of First Refusal (ROFR) means that the tenant will be offered any extra space available on lease at any given point on a first-priority basis and has the right to either accept or reject that offer.<\/p>\n

# Sublease cause:<\/b>\u00a0Sometimes there is a sublease clause built into the agreement by dint of which, the tenant can lease out a part of the property to another party for a certain duration.<\/p>\n

# Escalation clause:<\/b>\u00a0This is a convenient tool to figure out the annual increase in rentals. The calculation is usually based on factors like operating costs, the consumer price index and property tax<\/p>\n<\/div>\n

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Disclaimer :\u00a0<\/b>Information contained and transmitted by us are for information purposes only. All views and\/or recommendations are those of the concerned author personally and made purely for information purposes. Nothing contained in the articles should be construed as business, legal, tax, accounting, investment or other advice or as an advertisement or promotion of any project or developer or locality. Pioneer Property Management Ltd. does not offer any such advice. No warranties, guarantees, promises and\/or representations of any kind, express or implied, are given as to (a) the nature, standard, quality, reliability, accuracy or otherwise of the information and views provided in (and other contents of) the articles or (b) the suitability, applicability or otherwise of such information, views, or other contents for any person\u00e2\u20ac\u2122s circumstances. We shall not be liable nor shall be held responsible in any manner for any action taken based on the published information (whether in law, contract, tort, by negligence, products liability or otherwise) for any losses, injury or damage (whether direct or indirect, special, incidental or consequential) suffered by such person as a result of anyone applying the information (or any other contents) in these articles or making any investment decision on the basis of such information (or any such contents), or otherwise. The users should exercise due caution and\/or seek independent advice before they make any decision or take any action on the basis of such information or other contents.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

If you are planning to invest in commercial real estate, it\u2019s very crucial that you acquaint yourself with some key terms linked to this segment. At the end of the day, a thorough knowledge of relevant terms in the domain of commercial real estate can only boost your return on investment. Here are some common […]<\/p>\n","protected":false},"author":1,"featured_media":548,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-538","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/posts\/538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/comments?post=538"}],"version-history":[{"count":1,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/posts\/538\/revisions"}],"predecessor-version":[{"id":549,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/posts\/538\/revisions\/549"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/media\/548"}],"wp:attachment":[{"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/media?parent=538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/categories?post=538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sisproj.com\/pioneer_local\/wp-json\/wp\/v2\/tags?post=538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}