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Common Commercial Real Estate Terms You Need to Know

Posted on: June 2, 2016

Attempting to navigate the professional jargon or the business lingo of commercial real estate can be difficult for newer investors or those who aren’t familiar with the industry. While just a few of these terms will be explained here there are many others.

Mark Schecter is a knowledgeable South Florida commercial real estate attorney who can explain these or any other commercial real estate terms to you in detail, especially in the context of a lease, purchase agreement or other important contract.

Building Classification Terms

In commercial real estate, most markets refer to building classifications using “Class A,” “B,” “C,” and occasionally even “Class D” properties. Properties which are classified as “A” properties are usually newer buildings with superior construction and have been finished in an outstanding location.

“Class A” properties also generally have a variety of amenities such as covered parking or on-site management available. As you might expect, this classification of properties often has the highest rental rate. A potential “Class A” property may have highly desirable construction but may be lacking in certain features that you may need such as ease of access, so properly class should never be your main consideration.

Properties that have less desirable qualities such as a worse location, inferior building construction, or an older age will have a lower classification but may represent good investment opportunities.

Seeking the counsel of a commercial real estate attorney can help you navigate building classifications in southern Florida and ensure that you make the right choice if you’re looking to buy a property.

Return on Investment

Commonly referred to as ROI, return on investment is a measure of performance that is used to either evaluate an investment’s efficiency or to compare the efficiency of several different investments.

This measure is calculated by dividing the investment’s benefit or return by the investment’s cost. The result is then expressed as a ratio or as a percentage. A South Florida commercial real estate attorney can help you calculate and understand this performance measure for a particular property you may be interested in.

Common Area Maintenance

In addition to the base rent of a commercial property, common area maintenance can be charged to a tenant in order to maintain any areas within the property that are shared by the tenants. This can often refer to snow removal on sidewalks or parking areas, outdoor lighting, insurance, and more.

In order to fully understand the meanings and the importance of the commercial real estate terminology listed here, get in touch with someone who knows the industry well. Mark Schecter at Schecter Law is an experienced South Florida commercial real estate attorney who can help you become acquainted with these and other terms commonly used in commercial real estate leases, purchase agreements, and other important documents. Contact Schecter Law today by calling (954) 779-7009.