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3 Commercial Real Estate Terms That You Need To Know

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Ten-X Commercial
3 Commercial Real Estate Terms That You Need To Know

If you’re seeking a shopping center for sale, then there are certain commercial real estate terms you are most likely to hear being used. Though your local agent might be your guide through various commercial property investment processes, the vocabulary that’s regularly used within the property industry might sometimes turn out intimidating.

If this happens to be your first time of leaping from residential to commercial property sales/investment, you might not initially feel as confident when discussing with sellers. Being informed and aware of the under-listed terms can help to clarify all misconceptions you or your business might have as regards the commercial property market, and could potentially save you money and time in the long run. This article has compiled a list of the foremost phrases you need to be mindful of on your journey to commercial properties investment.

  1. Option to buy

Tenant(s) might desire their contract to comprise an option to purchase the property along the way. This might apply whether it’s a multi- or single-tenant property situation. If so, you will certainly desire to include particular terms and details under which your tenant can potentially buy the property aside the price you can anticipate, provided you decide to sell. The ‘option to buy’ feature is usually implemented at the conclusion of the initial leasing terms. If it’s a multi-tenant property, you might be inclined to sell the property. You will see lots of listings featuring this option on any real estate sale platform. To avoid unpleasant situations at the lease agreement’s termination, it’s crucial to watch the fine print.

  1. Landlord representative

The decided landlord representative acts as the property’s leasing agent. The agent manages and represents the landlord’s interests. As a multi-tenant property owner, the landlord representative becomes your most crucial ally and eventually your best friend, thus conducting your due diligence in selecting the appropriate candidate for the position would be in the best interest of your business. It’s the landlord representative’s responsibility to get you the highest possible rent amount while ensuring that expense to the landlord are at their barest minimum.

The individual in the position negotiates with tenants’ representatives on your behalf, thus maintaining a line of trust with him is of key importance to ensure he has your firm’s best interests at heart at all times. The representative is the point person in drafting agreements, handling security deposits, tenant enhancement allowances, and more, while having rental costs optimized. Choosing the wrong representative could end up being more of a liability than anything, thus be very careful.

  1. Right of expansion

You might add a right of expansion clause in your leasing contract. If that’s the case, you, as the landlord, accepts the liability of providing extra space for leasing before presenting the same to the general public. Here, you are liable to leasing extra space to such tenants. Expansion requests might not turn into a problem within certain spaces; nevertheless, the more tenants in a commercial property, the more right of expansion in a lease agreement can turn into a compound problem among multiple tenants.

In conclusion, when out seeking a shopping center for sale, you should know and understand these three commercial real estate terms.

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