Commercial Real Estate For Dummies — confusing listings
I’m interested in buying or leasing a commercial property to host events and charge for rental space. This will be my first time purchasing commercial real estate so these listings are a bit confusing. The footage is always listed X/SQ. FT. Then X Total SQ FT. Are you just multiplying that number to obtain the price? Why aren’t they just listing the final cost?? Dumb this down for me.
[{"id": "if69jh9", "text": "Normally lease rates are displayed as $/SF - this is the annual rent per year per square foot of space. It makes it easier to compare different spaces that way (for instance, 4k sf at $80k a year vs 2k sf at $50k a year, or you could say one space is 4k at $20/sf and the other is 2k at $25/sf) \n\nJust make sure you pay attention to reimbursements. NNN leases can add ~$10/SF per year in additional expenses vs gross leases.", "replies": [{"id": "if6f4f2", "text": "Depending on location and business, most owners will want NNN. Do keep in mind though that NNN means your base rent might be slightly lower as compared to Gross or MG.", "replies": [{"id": "if6mka3", "text": "What\u2019s MG?", "replies": [{"id": "if6r8rq", "text": "Modified Gross Lease falls between a gross lease and a net lease. Gross lease is where the landlord pays for operating expenses, while a net lease means the tenant takes on the property expenses. The modified gross lease means that the operative expenses are borne by the tenant and the landlord.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "if6mj13", "text": "I love you for this.\n\nI\u2019ll look more into NNN leases.", "replies": [], "depth": 2}], "depth": 1}, {"id": "if850n0", "text": "Think of it as if you are at the grocery store.  While they show you the price of the product, they also show you the price per unit so you can easily comparison shop.\n\nNote, agents may quote $/sf.  However, if you are leasing, you need to:\n\n1) get clarification if this rate is base rent only (i.e. you may need to also pay opex (all or part), and if so, how much)\n\n2) depending on what market you are in, $/sf could be $/sf/mo or $/sf/yr \n\nIf you are buying, the $/sf allows you to compare against other properties for sale as well as if you had to build the property from ground up.\n\nWhether buying or leasing, pay attention to what the sf represents (i.e. gross, rentable, etc) so you can compare apples to apples.", "replies": [], "depth": 1}, {"id": "if8ihk5", "text": "Hire an attorney to go over things with you. It sounds like you may get screwed", "replies": [{"id": "ifa8is7", "text": "Ha! That\u2019s probably a great piece of advice. Thank you.", "replies": [], "depth": 2}], "depth": 1}, {"id": "if8tfct", "text": "how much is the building? $876k\n\nor how much is the building? $155psf - now you have a number you can compare to every other property as opposed to a lump sales price that doesn\u2019t give you valuable information to make a decision", "replies": [], "depth": 1}, {"id": "igurgkg", "text": "You've got a great explanation below breaking it down for you - I will just add that you should consider hiring a commercial real estate broker (at no cost to you, the owner typically pays commissions). CRE brokers can help you negotiate terms, even for a lease. CRE leases are far different than a typical residential lease and it's common to negotiate more on certain terms. Not to mention all the different CRE lingo! Additionally, CRE purchases can get very complicated and having a professional there to walk you through would be VERY beneficial. Best of luck!", "replies": [], "depth": 1}]