The Blog

pexels-photo-872957

Each year, we compile a short list of commercial real estate terms that we think are important for you to know—whether you are in the industry or browsing commercial properties.

If you are seriously considering an investment in commercial space, the process of securing it may seem daunting. But having a baseline knowledge of commonly used terms will help you through negotiations.

Before you take the next step and negotiate your lease, check out our growing list of words and phrases that will help you steer a deal to success.

Click here for Part 1: Must-Know Commercial Real Estate Terms

Click here for Part 2Must-Know Commercial Real Estate Terms: Take Two!

Build-To-Suit

When searching for space, you may hear someone refer to a building or development as build-to-suit. This means that the space can be designed and tailored to the needs of a specific tenant. In order to meet the organizational requirements of the client/tenant, the owner or developer who operates the property builds out the space to match the tenant’s intended use, per a set of agreed-upon plans.

Ground Lease

Commercial ground leases are a specific type of agreement in which a landowner leases land for a set period of time to a lessee. Each ground lease is different, depending on the terms set by both parties involved. But these types of leases usually last for a term of 20 years or more and can even extend to 99 years.

Before a ground lease is issued, the lessee and lessor must go over what can and cannot be built upon the leased land. Once the ground lease expires, the lessor normally gains control and ownership over whatever was built upon the land during the term of the lease.

Ingress/Egress

Two terms that are, perhaps, better known than the others on this list are ingress and egress. In commercial real estate, they take on an important role when it comes to selecting a site.

The ingress and egress of a property must be clearly defined in order to ensure the intended future tenants will be able to meet the practical needs of their use. Major shopping centers will often require several points of ingress and egress that allow for a constant flow of traffic in and out of the development.

Buildings or restaurants with drive-thrus will also take ingress and egress into special consideration. If a customer, client, employee, or visitor has trouble accessing your property, it immediately affects your bottom line.

Reciprocal Easement Agreement

A Reciprocal Easement Agreement (REA) helps establish a legal right of use when it comes to shared areas between two developments, buildings, or centers. A good example would be a large parking lot that could potentially be used by two separate shopping centers. The REA would provide both parties with basic rights and outline how each can use the parking lot, common areas, easements, and even shared utilities.

Value-Add Investment

Considering potential investment properties requires a lot of research and thorough due diligence. If a property is described as a value add, it typically means that it’s an asset with existing cash flow and value that can be increased by raising rents or occupancy.

Many things can be done by owners to enhance the value of a building as well, like adding square footage, replacing older systems with modern ones, introducing sought-after amenities, improving access to the property, and much more.

Have questions about searching for or leasing a space? We are here to help you reach your goals. Contact us at info@crunkletonassociates.com!

SplitLine
Make sure you’re staying on top of the latest trends, newest developments and hottest new stores in Huntsville by subscribing to our weekly blog updates!

haley_squareHALEY CLEMONS
MARKETING COORDINATOR
CRUNKLETON COMMERCIAL REAL ESTATE GROUP
HALEY@CRUNKLETONASSOCIATES.COM

 

 

Leave a Comment