CRE Auction Glossary

Welcome to CRER – Chicago Real Estate Resources, Inc., your trusted Chicago Commercial Real Estate Brokerage specializing in Commercial Real Estate Auctions.

 

As you navigate the complexities of the commercial real estate landscape, we’ve compiled an extensive glossary to help you understand key industry terms and concepts.

 

Following this introduction, you can list the glossary terms provided.

  1. Absorption Rate: The rate at which rentable space is filled or becomes occupied in a given market.
  2. Amortization: The process of paying off debt over a period of time, often with a fixed repayment schedule.
  3. Anchor Tenant: A large, prominent tenant in a shopping center or mall, which can draw significant customer traffic.
  4. Appraisal: An estimate of a property’s value, often conducted by a professional appraiser.
  5. Build-to-Suit: A method of leasing property in which the landlord builds a new building specifically to suit the tenant’s needs.
  6. Capital Expenditure (CapEx): Funds used by a company to acquire, upgrade, or maintain physical assets such as property, buildings, or equipment.
  7. Capitalization Rate (Cap Rate): A measure of the potential return on an investment; calculated as the net operating income divided by the property’s purchase price.
  8. Common Area Maintenance (CAM): The cost of operating and maintaining common areas, often passed on to tenants on a pro-rata basis.
  9. Due Diligence: An investigation or audit of a potential investment to confirm facts, figures, and to evaluate its potential risks.
  10. Equity: The difference between a property’s value and the amount owed on it.
  11. Gross Lease: A lease in which the landlord pays all or most of the property expenses.
  12. Net Lease: A lease in which the tenant pays some or all of the property expenses.
  13. Triple Net Lease (NNN Lease): A lease in which the tenant pays base rent plus property taxes, insurance, and maintenance costs.
  14. Usable Square Footage: The actual space that a tenant can use for their purposes, not including common areas.
  15. Rentable Square Footage: The usable square footage plus a proportionate share of the building’s common areas.
  16. Loan-to-Value Ratio (LTV): The ratio of a loan to the value of the property it is used to purchase.
  17. Occupancy Rate: The percentage of all rental units (like apartments or offices) that are currently rented.
  18. Operating Expenses: The costs associated with running and maintaining a property.
  19. Tenant Improvement (TI) Allowance: An amount of money set by the landlord to be used for improvements or customizations of a leased space.
  20. Vacancy Rate: The percentage of all rental units that are vacant or unoccupied at a particular time.
  21. Yield: The return on an investment over a period of time, usually expressed as a percentage.
  22. Zoning: Municipal or local government laws that dictate how real property can and cannot be used in certain areas.
  23. Liquidity: The ability to quickly sell an asset and convert it to cash.
  24. Mixed-Use Property: A type of real estate that combines multiple uses within the same building, such as residential, office, and retail.
  25. Pass-Throughs: Operating costs that are initially paid by the landlord but then passed through to the tenant for payment.
  26. Real Estate Investment Trust (REIT): A company that owns, operates, or finances income-producing real estate in various sectors. Investors can buy shares on public stock exchanges.
  27. Base Rent: The minimum rent due under a lease, not including any other additional costs like CAM charges or property taxes.
  28. Broker: A person licensed to represent buyers, sellers, landlords, or tenants in real estate transactions in exchange for a commission.
  29. Common Area: Shared areas in a commercial property, such as lobbies, hallways, restrooms, or parking lots.
  30. Demising Wall: The physical boundary that separates one tenant’s space from another’s or from the building’s common areas.
  31. Escalation Clause: A provision in a lease allowing the landlord to increase rent in the future based on a pre-defined criterion (e.g., inflation).
  32. Fit-Out: The process of making interior spaces suitable for occupation, often in reference to end-use requirements, such as office fit-outs.
  33. Footprint: The ground area taken up by a building or structure.
  34. Highest and Best Use: The most profitable, legally permitted, feasible, and physically possible use of a piece of real estate.
  35. Infill Development: The development of vacant parcels within previously built areas.
  36. Joint Venture (JV): A business arrangement between two or more parties that agree to share resources for a specific real estate project.
  37. Leasehold: An interest in real property which provides the holder the right to use and occupy the property for a specified period of time, typically through a lease agreement.
  38. Master Lease: A primary lease that controls subsequent subleases. It might be used by an entity that leases a property from an owner and then subleases units to individual tenants.
  39. Net Operating Income (NOI): Total income from a property after operating expenses have been deducted, but before deducting taxes and interest payments.
  40. Percentage Lease: A lease in which rent is based on a percentage of the sales volume made on the leased property.
  41. Pro Forma: A financial statement that projects future income and expenses for a property.
  42. Sale-Leaseback: A financial transaction in which one sells an asset and then leases it back for the long term, thereby freeing up capital while still being able to use the asset.
  43. Sublease: A lease given by a tenant for some or all of a rented property. The original tenant retains some rights and/or responsibilities to the property.
  44. Takedown: The process of acquiring land with the intent of developing it later.
  45. Underwriting: The process used by lenders to assess the creditworthiness or risk of a potential borrower.
  46. Valuation: The process to estimate what a property is worth.
  47. Variable Costs: Costs that vary depending on the level of output or usage, often in relation to property management or maintenance.
  48. Workspace Density: The amount of space provided per employee within an office environment, often measured in square feet per person.
  49. Yield on Cost: The annual return on a real estate investment, calculated by taking the property’s annual net cash flow and dividing it by the total cost of the investment.
  50. Zero-lot-line: A type of construction where a building is situated right up to or very near the boundary of the property line.
  51. 1031 Exchange: A provision in the U.S. tax code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes.

Contact Us

Chicago Real Estate Resources, Inc.
800 W. Diversey Pkwy. #300
Chicago, IL 60614
773-327-9300
info@CRER.com

About CRER

CRER (Chicago Real Estate Resources Inc.) is a full-service, commercial real estate firm devoted to providing exceptional service for your every real estate need. Whether it is commercial and investment property sales, leasing, tenant representation, property management or receivership services; we are here to assist you around the clock.
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