Flashcards in Chapter 19 - Commercial and Investment Properties 1 Deck (19)
Owner/user motivated to find a location from which to house and operate a business vs. an investor wants to put their money where it will make money.
Magnet store strategically located in shopping centers to generate traffic for smaller stores
In industrial/manufacturing properties - open space between inside faces of support members. What can fit?
Common Area Maintenance
Paid pro-rata by tenants - their share reflects what percentage of the building they are occupying.
Consumer Price Index (CPI)
Basic indicator of inflation in the US. Some escalation clauses link to the CPI.
Allows landlord to raise rent at an agreed on time during lease - typically in commercial leases, allows landlords to compensate for inflation over a long term lease
Mixed use, minimally furnished interior, lower rent, originally manufacturing/industrial converted for retail, restaurant, office, and residential use
Loss Factor / Load
100% - usable (net) sq ft / rentable (gross) sq ft
What a property will fetch in price at a specific place at a specific time.
Tenant pays rent as well as some or all of three additional expenses: taxes, maintenance, and insurance. Number paid is reflected in single, double, or triple net lease. Easier for landlord and cheaper for tenant.
Allow landlords to pass along unexpected increases in operating costs to tenants. Tenants typically negotiate an expense cap.
Porter's Wage Escalation Formula
Ties escalation clauses to the wages of the building's cleaning and building maintenance personnel - reflective of NYC economy.
Proportional basis. Commercial tenants pay building expenses based on their usable area relative to building's. If a tenant has 25% of a building's usable area, they pay 25% of its expenses.
Rentable Square Footage / Gross Square Footage
Absolutely everything. Used to determine commercial leases.
Retail Investment Property
Profitability dependent on location and demographics of customer base, market appeal, accessibility, traffic flow, parking, visibility and signage, competition, tenant mix, and anchor tenants
Usable Square Footage / Net Square Footage
Space in tenant's premises that can be used.
Floor Area Ratio
Building square footage / Land square footage
Tenant pays fixed monthly base as well as percentage of gross sales above a designated breakpoint. Common in retail/seasonal.