Commercial Real Estate Terminology

To navigate the world of commercial real estate (CRE) effectively, it’s important to familiarise yourself with key terminology.

Here are some terms to get started:

• Amortization: When it comes to leases and capital investments, amortization is the method used to gradually recover the initial investment. This is done by making regular payments over a set period of time. It’s a way to spread out the repayment process and make it more manageable.
• Base Rent: Base rent is the minimum amount a tenant pays to the landlord for renting a commercial property. It’s the basic rent without any additional charges or fees.
• Comparables: In the valuation process, “comparables” is a term used to refer to sales of similar properties that are used for comparison purposes. It helps in assessing the value of a property by looking at similar properties that have been recently leased or sold.
• Due Diligence: Due diligence involves conducting thorough research and investigation before making a real estate transaction. It includes examining financial records, inspecting the property, and gathering essential information to make an informed leasing or purchase decision.
• Exclusive Listing: An agreement between a landlord and a commercial real estate agent, granting the agent exclusive rights to market and lease/sell the property for a specified period.