Commercial Real Estate Newbie Here - Need Help Understanding Lease Terms
Hi All,


I am a total newbie when it comes to commercial real estate, but I'm looking into opening a bar in my town - I've never started my own business before, but I found a promising location and I was hoping to get some help in better understanding what I'm reading.


Basically, ELI5 this listing: 

http://www.nnerenmls.com/nne/maildoc/boa873_1389126647-Jan-07-2014-3_30_47pm.html


Specifically, my main goal here is actually figuring out a cost estimate for my monthly payment, and what exactly that comes with.  What I've been able to figure out so far-

4400 Sq Ft at $16/sf per year for the lease:

4400 x 16 = 70,400 per year = 5867 per month


$4 CAM - Is this per year per square foot as well? So:

4400 x 4 = 17600 per year = 1467 per month ?


Gross Taxes $15,551.32 - is this for just my space, or for the whole building?  I would assume just my space, but I wasn't totally sure because they give a lot of numbers regarding the entire space, too, and it had the word gross. So:

15551.32 per year = 1296 per month ?

That would bring us to a total estimate of ~8650 / mo - does that seem accurate?


Is there any more useful information I can glean from this to help aid in my decision?  It's a 'vanilla box' right now, as they say - looks best set up for an office (with office carpeting) but it also seems like it can be pretty flexible, zoning-wise.


What is enterprise zoning?

What is that traffic count number?


Thanks in advance for any help you can offer-

Matt
[{"id": "celebj2", "text": "First of all, keep in mind that everything is negotiable. You're right about the rent. CAM at $4 seems high. Not sure about taxes. Enterprise zoning means its zoned for enterprise (business). Reading the listing makes me think this isn't an ideal location for a bar, but what do I know? **Call the listing agent.** Only way to know for sure.", "replies": [], "depth": 1}, {"id": "cellop0", "text": "I'm a broker in FL, so some aspects may be slightly different... You did the calculation right, but you may need to also add sales tax onto the monthly rent as well (we do in FL), so $20 x 4,400sf = $7,333.33 x 1.053 = $7,722/mo. The gross taxes are probably property taxes, which you pay in your NNNs ($4), and are only really applicable for the sale of the property. The building you're looking at is a proffessional office, so it is unlikely that you would be able to put a bar there due to zoning issues, but there is 3,900sf available over at 370 Shelburne Rd for the same price, if they'll allow the use. [https://maps.google.com/?ll=44.45472,-73.20768&amp;z=19&amp;t=h](https://maps.google.com/?ll=44.45472,-73.20768&amp;z=19&amp;t=h)", "replies": [], "depth": 1}, {"id": "cellr5x", "text": "Oh and enterprising zoning is probably future land use category that would allow for a variety of commercial uses to promote business in the area. Traffic Count is the average annual daily count of cars that pass by that location, the numbers are usually put together by you're state's department of transportation.", "replies": [], "depth": 1}, {"id": "celm0g9", "text": "I'm a commercial appraiser, not a broker but I can tell you that you're going to have to get more info from the listing agent. For one, I can't find anywhere on the listing where it states what type of lease is being offered at $16/SF. Is that a triple-net lease rate? Full-service? The difference between the two is important. Retail properties are typically leased triple-net (NNN) but office space is often (though not always) leased Full-service or modified gross. Under NNN, in addition to the $16/SF face rent, you (the tenant) are also responsible for your pro rata share of operating expenses. These could be the $4/SF CAM charges that are listed but it's not clear. Under a full-service lease that $16/SF lease rate includes those expenses in the rent. The property taxes that you mention are for the entire property. Your share of the property taxes may be included in the $4/SF CAM charges. In addition, a significant amount of tenant improvements (TIs) will be required to convert the space for a bar. You would need to negotiate a TI allowance with the landlord. TIs could cost $40/SF or more to build out the space. The traffic count number is the average number of cars that pass by that location on any given day. 12,000 is not many for a retail location but I'm not familiar with the market there so who knows. In short, I would recommend doing a lot of research into commercial lease negotiations as well as owning a small business. You've probably heard this but, statistically speaking, your bar faces tough odds of succeeding so act prudently.  ", "replies": [], "depth": 1}]