• Key Terms Used in Commercial Real Estate Key Terms Used in Commercial Real Estate

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    Key Terms Used in Commercial Real Estate

    Regardless of industry, most professionals use special terminology to communicate with one another. Pilots, engineers, scientists, farmers, accountants and commercial real estate investors all have to understand the language associated with their profession — and it can get confusing.
    If you're new to commercial real estate, these 13 key terms to help you in becoming a pro when it comes to the lingo.

    1. Letter of Intent (LOI)

    A letter of intent is an agreement(s) between two or more parties before an actual agreement, such as a lease, is finalized. It is similar to a term sheet or memorandum of understanding (MOU). While LOIs may not be binding, provisions of them can be, e.g., non-disclosure and exclusivity. The intent is to protect both parties in the transaction until the transaction is executed. This is "The Letter" you will be sending out when you are ready to go full force into the Commercial Real Estate Investment scene.

    2. Build-to-suit
    A building is designed and tailored for a specific tenant, often because the tenant is unable to find suitable space in the speculative market. Sometimes (but not always), a build-to-suit project includes specific design features not commonly found in the speculative market, thus compelling the tenant to have a special facility built. The build-to-suit project is usually contracted with a developer who owns and operates the completed facility occupied
    by the tenant. Generally, a build-to-suit project becomes a single-tenant building upon completion.

    3. Direct Vacancy Rate
    The total amount of physically vacant space divided by the...

    Regardless of industry, most professionals use special terminology to communicate with one another. Pilots, engineers, scientists, farmers, accountants and commercial real estate investors all have to understand the language associated with their profession — and it can get confusing.
    If you're new to commercial real estate, these 13 key terms to help you in becoming a pro when it comes to the lingo.

    1. Letter of Intent (LOI)

    A letter of intent is an agreement(s) between two or more parties before an actual agreement, such as a lease, is finalized. It is similar to a term sheet or memorandum of understanding (MOU). While LOIs may not be binding, provisions of them can be, e.g., non-disclosure and exclusivity. The intent is to protect both parties in the transaction until the transaction is executed. This is "The Letter" you will be sending out when you are ready to go full force into the Commercial Real Estate Investment scene.

    2. Build-to-suit
    A building is designed and tailored for a specific tenant, often because the tenant is unable to find suitable space in the speculative market. Sometimes (but not always), a build-to-suit project includes specific design features not commonly found in the speculative market, thus compelling the tenant to have a special facility built. The build-to-suit project is usually contracted with a developer who owns and operates the completed facility occupied
    by the tenant. Generally, a build-to-suit project becomes a single-tenant building upon completion.

    3. Direct Vacancy Rate
    The total amount of physically vacant space divided by the...

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