How can you determine the rent for an industrial, retail, or office property? Is there a market rent?
Residential rental properties seem easy, since you could just follow the market to determine the rent.
[{"id": "ib7831y", "text": "Generally speaking, it\u2019s the same. There\u2019s a market rate.", "replies": [], "depth": 1}, {"id": "ib78bys", "text": "Of course there is a market rent, absence of such would not make any sense.\n\nThe issue is, where do you find market rents and comparables. This information is valuable to a class of people so it's not usually widely shared or distributed freely.", "replies": [{"id": "ib79tz3", "text": "JLL publishes this market data quarterly for the major markets. I believe CBRE also puts out info as well.\n\nYou can also search for space on platforms like loopnet and see what's being listed and for how much but these may only help you arrive at a base rent. Depending on lease structure you may have additional CAM charges to consider.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ib7c3gm", "text": "Yes", "replies": [], "depth": 1}, {"id": "ib7ejha", "text": "Yeah...totally different approach with commercial:  \n\nYou just follow the market to determine the rent.", "replies": [], "depth": 1}, {"id": "ib7i1cn", "text": "Speaking specifically for retail, i disagree with the notion of a \u201cmarket\u201d rent.   You can of course determine a range of rents within the market, but two retail spaces of the same size are not directly comparable even at the same property.   There are far too many factors to consider (visibility, parking, co-tenancy, etc.).    \n\nThe rent on any space is determined by what a tenant or tenants are willing to pay.   For example an existing retail tenant with a successful business will typically pay more upon renewal (up to but not beyond what their sales would support) than a new tenant.   Likewise a bank looking to protect market share is typically willing to pay above the high end of a \u201cmarket\u201d range.\n\nHowever if you only have one interested party for any given space, you can only push the rent so far within the \u201cmarket\u201d range.", "replies": [{"id": "ib7k0xl", "text": "Thanks", "replies": [{"id": "ib93qc1", "text": "You need to do some leg work and get the local comps and asking terms by calling around to owners, brokers, tenants etc.  Any listed info from Jill, CBRE, Newmark will be too general and not too useful for a specific property. Besides the rent, the TIA, free rent, delivery conditions also make a big impact on the deal structure.", "replies": [{"id": "ib9d5n2", "text": "Thanks", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ib8efdr", "text": "So you're saying that the rent is determined...by the market?\n\nEdit: my comment isn't helpful, it's snarky. Don't upvote me, it sends the wrong message.", "replies": [{"id": "ib8tr98", "text": "No dummy, the rent is determined by the intersection of supply and demand. Its all about what the local players will bear. Its the price point at which the inventory will sell to the interested buyers. I dont see what any of that has to do with a market.\n\n\n\n\n\n\n\n\n\n\n\n/s", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ib7muub", "text": "Yes and no. To be honest there are so many specific features or offerings that establish an all encompassing market rent. Some spaces are significantly more improved than others in terms of power, plumbing, infrastructure, HVAC, location, visibility, access, and many more which can make spaces right next to one another worth significantly different rents. Market rent can be established but often times brokers will have to curate truly comparable properties instead of just properties in the area that are all retail.", "replies": [{"id": "ibbm449", "text": "Literally all those things go into estimating a market rent. So there\u2019s no \u201cno\u201d to what you said.", "replies": [{"id": "ibsgqtr", "text": "But each one of those things change from property to property so there is no \u201cmarket rent\u201d for restaurant space in LA for example. Depends on what part of LA, parking, patio, utilities layout, signage, etc. When we price assets, that pricing is specific to each asset and each space. Nobody can tell you restaurant space in X city has a market rate of X per square foot.", "replies": [{"id": "ibsjl3y", "text": "Dude it\u2019s an estimation, just like value. You use restaurant as your example but you could use literally any property type and say there isn\u2019t a market rent because each property is different (yea no shit, 99% of all properties are different from each other in some facet). Should we not have sale comps anymore because properties differ from one another? That\u2019s why you make adjustments and make an estimation.", "replies": [{"id": "ibzwgh8", "text": "I understand what you\u2019re saying. Good points. Just my perspective on the question. I do BOV\u2019s and use adjusted comps all the time to determine a \u201cmarket value\u201d. The nuance is just underestimated so often by those asking \u201cwhat\u2019s market\u201d.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ib7ohop", "text": "Thanks", "replies": [], "depth": 1}, {"id": "ib994py", "text": "Yeah, market rent/psf", "replies": [], "depth": 1}, {"id": "ibabe2i", "text": "You find other properties that have rented, and see what's available advertising at whatever rate. You figure it out the same way its just a bit more work to get the numbers.", "replies": [], "depth": 1}]