Commercial Real Estate

By:   Date: 26 December 2009

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An Introduction to Commercial Real Estate:

Commercial real estate prices refers to a real property that is used for a trade or business and consists of office and buildings with industrial or retail purposes. A commercial real estate is usually a multi-family property that can be bought or sold. Financing a commercial real estate is the most difficult task on the part of the buyer. A serious attempt to understand the different forms of leases available in the market ask the buyer to understand his needs and make a thorough study of the movement of the market.

Commercial real estate has caught public eye because:

Commercial real estate has grown by leaps and bounds over the last few years. This has included shopping centers, hotels, resorts, industries etc. The different agencies involved in this global market involves a variety of commercial estate leases and errors and omissions insurance. The leasing of an office in a major cities is distinct from a shopping center in the suburban area. The most common leases are:

  • Net Lease- In this case the tenant has to pay a fixed rent as well as a part of the costs related to the operating costs and maintenance fees.
  • Gross Lease- this terminology divides the burden on loan equally on the tenant and the landlord. The tenant has to pay a fixed rent whereas the landlord has to pay the costs related to the owning of the property such as taxes, insurance premiums etc.
  • Triple Net Lease- the triple net lease is applicable to the freestanding facilities in which the tenant just pays for all operating costs.
  • Shopping Center Lease- this is the most complicated form of all leases. Here the tenant has to make a rent depending on the area of the retail store. He also must pay a pre-determined percentage of the sales revenue in addition to some common charges. A shopping center lease may also have other conditions like the landlord having the power to allocate the tenant to a new position.
  • Land Lease- this possibility allows the tenant to take the land/ground on lease and build a property. At the end of the lease period, the land along with any added investment is returned back to the land owner.
  • The commercial real estate has given a boost to the economy. The rise in prices of commercial real estate has been caused by the mortgage available at low rates and easy terms and conditions.

 


  • Dot Div
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