Commercial Real Estate to know:
Are you thinking of entering the commercial real estate market? If you're thinking about renting or owning commercial real estate, there's some terms you should probably have a good grip on.
- Real Estate Broker - These are agents that are state licensed and have expertise in the leasing process. They help you find spaces and help you in all areas of the leasing transaction.
- Common Area Maintenance - Also known as (CAM) this is the amount of traditional rent charged to the tenant to maintain the common areas that are shared by tenants.
- Usable Square Footage - This is the square footage rented and used ONLY by the tenant
- Escalation Clause - This is a clause in the lease which allows the landlord to increase the rent in the future to reflect changes in expenses paid by the landlord.
- Tenant Improvements - This term defines any improvement to the leases space both by or for the tenant.
- Full Service Rent - This is an all inclusive rent that includes operating expenses and real estate taxes for the entire first year.
- Gross Lease - A lease where the tenant pays a flat amount for rent that covers all landlord paid expenses, including taxes, maintenance, insurance and so on.
- Net Lease - A net lease pays for all the operating costs of the building such as property taxes, insurance, maintenance and more...all in addition to your rent.
- Non Compete Clause - This is a good clause to have in your lease so that your landlord is prohibited from leasing any other areas on the premises to your direct competitors.
- Letter of Intent - This is a preliminary and informal agreement that says both parties ( you and the landlord) agree to move forward with negotiations
There are hundreds of other commercial real estate terms but these are the most common. Now, you can talk with your broker and be on the same page.