Unit 10: Market Analysis and Rent Calculations in Commercial Leasing

These flashcards cover key concepts related to market analysis and rent calculations in commercial leasing, including definitions of important terms and metrics.

Macro Market

Global, national, or regional macroeconomic factors that impact economic conditions in a regional or metropolitan market.

Local Property Market

The immediate and regional markets competing for the asset, impacted by supply and demand factors.

Subject Property Market

Conditions for the real estate asset in its immediate vicinity, focusing on supply and demand for the product type.

Absorption Rate

A measure indicating the flow of leased space in a given market over time, distinguishing between gross and net absorption.

Gross Absorption Rate

The total number of leased square feet that tenants occupy in a market over a specified period.

Net Absorption Rate

The total space filled in an area over a period, minus space vacated, indicating the economic situation in commercial leasing.

Vacancy Rate

The total unoccupied space divided by the total space available to be leased and occupied, expressed as a percentage.

Common Area Maintenance Charges (CAM)

A tenant's proportionate share of costs incurred by the landlord for improvements benefiting all tenants.

Pass-Through Expenses

Expenses allocated to tenants by the landlord, covering routine maintenance and operational costs.

Floor Area Ratio (FAR)

The relationship between the total usable floor area of a building and the total area of the lot on which it stands.

Rentable Area

The total usable area in the leased space plus an allocation of common areas proportional to its size.

Usable Area

The total area enclosed by finished surfaces, excluding the space used for structural elements.

Tenant Improvements

Variations of finishing or structural upgrades provided by landlords to attract tenants, sometimes at no cost.

Security Deposits

Amount collected by landlords from tenants as a guarantee, with no cap on what can be charged.

Market Trends

Current pricing trends for leased properties based on market conditions and comparable properties.