by Chad Massaker | Mar 29, 2023 | Commercial Real Estate, Flex, Ft. Lauderdale, Industrial, Land, Leasing, Miami, Office, Palm Beach, South Florida
Commercial leases are agreements between a landlord and a tenant that allow the tenant to occupy a space for commercial purposes. There are several types of commercial leases, each with its own unique features and benefits. Here are some of the most common types of commercial leases:
- Gross lease: A gross lease is a lease in which the tenant pays a single flat rate for rent, and the landlord is responsible for paying all of the property expenses, including utilities, taxes, and maintenance.
- Net lease: A net lease is a lease in which the tenant pays a base rent and also pays for some or all of the property expenses, such as property taxes, insurance, and maintenance. There are three types of net leases: single net lease, double net lease, and triple net lease, each with different levels of responsibility for the tenant. gg
- Percentage or Performance lease: A percentage lease is a lease in which the tenant pays a base rent plus a percentage of their sales revenue. This type of lease is often used for retail properties.
- Modified gross lease: A modified gross lease is a lease in which the tenant pays a base rent, and the landlord is responsible for paying some property expenses, while the tenant is responsible for paying others. This type of lease is often used for office spaces.
- Ground or Land lease: A ground lease is a lease in which the tenant leases only the land and is responsible for constructing any buildings or structures on it. This type of lease is often used for long-term commercial developments, such as shopping centers.
The type of commercial lease that is most appropriate for a particular business depends on a variety of factors, including the nature of the business, the length of the lease, and the financial resources of the tenant.
by Chad Massaker | Mar 27, 2023 | Flex, Ft. Lauderdale, Industrial, Land, Leasing, Miami, Palm Beach, Retail, South Florida
by Chad Massaker | Mar 15, 2023 | Commercial Real Estate, Commercial Real Estate Investment, Flex, Industrial, Land, Leasing, Multifamily, Office, Retail
DSCR stands for Debt Service Coverage Ratio, which is a financial metric used to measure a company’s ability to pay its debts. It is a ratio of a company’s net operating income (NOI) to its debt service payments, which includes both principal and interest payments.
The debt service coverage ratio is calculated by dividing the company’s NOI by its total debt service payments. The higher the DSCR, the more capable the company is of paying its debts.
- A DSCR of 1 indicates that the company is generating just enough income to cover its debt service payments.
- A DSCR ratio of less than 1 means that the company is not generating enough income to cover its debt payments.
- A DSCR of more than 1 indicates that the company is generating sufficient income to cover its debt payments, with higher ratios indicating a stronger financial position.
Lenders use DSCR as a measure of creditworthiness when considering loan applications. A DSCR of 1.2 or higher is generally considered a good indicator of a company’s financial health, although the ideal ratio may vary depending on the lender and industry.
However, it’s important to note that DSCR is not the only factor that lenders consider when assessing creditworthiness. Other factors such as the company’s financial history, cash flow, collateral, and industry trends are also important in determining whether a company is creditworthy.
by Chad Massaker | Mar 7, 2023 | Commercial Real Estate, Commercial Real Estate Investment, Flex, Industrial, Leasing, Multifamily, Office, Retail
The cost approach to valuing commercial real estate involves estimating the cost of constructing a similar property from scratch and then adjusting that cost for depreciation and other factors that affect the property’s value. Here are the basic steps involved in using the cost approach to value commercial real estate:
- Estimate the cost of constructing a similar property: This involves estimating the cost of the land, materials, labor, and other expenses that would be required to build a property similar to the one being valued.
- Determine the property’s depreciation: Depreciation refers to the decrease in value of the property over time due to wear and tear, obsolescence, and other factors. The amount of depreciation can be estimated by considering the property’s age, condition, and other relevant factors.
- Calculate the property’s value: Subtract the estimated depreciation from the estimated cost of constructing a similar property to arrive at the property’s current value.
- Consider other factors: In some cases, adjustments may need to be made to account for other factors that affect the property’s value, such as changes in zoning laws or the availability of financing.
It’s worth noting that the cost approach is just one of several methods used to value commercial real estate, and it may not be appropriate for all types of properties or in all situations. It’s important to consider a range of factors, including market trends, comparable sales, and income potential, when determining the value of a commercial property.
by Chad Massaker | Feb 28, 2023 | Commercial Real Estate, Flex, Industrial
Industrial and flex space are two types of commercial real estate properties, with some key differences in their design, functionality, and usage.
Industrial space is typically designed for heavy manufacturing, warehousing, distribution, and assembly. These properties are typically larger in size, with high ceilings, loading docks, and large open floor plans. Industrial properties are often located near major transportation hubs such as airports, ports, or highways, to facilitate the efficient movement of goods and materials.
Flex space, on the other hand, is a more versatile type of commercial real estate property that can be used for a variety of purposes, such as light manufacturing, research and development, or office space. Flex space properties are typically smaller in size, with lower ceilings, and a mix of office and warehouse or manufacturing space. These properties often have a more flexible design, with movable walls or partitions that can be reconfigured to meet changing needs.
In summary, industrial space is typically larger, designed for heavy manufacturing and distribution, and located near major transportation hubs. Flex space is more versatile, adaptable to various business needs, and often combines office and manufacturing or warehouse space in a smaller footprint.
DSCR stands for Debt Service Coverage Ratio, which is a financial metric used to measure a company’s ability to pay its debts. It is a ratio of a company’s net operating income (NOI) to its debt service payments, which includes both principal and interest payments.
The cost approach to valuing commercial real estate involves estimating the cost of constructing a similar property from scratch and then adjusting that cost for depreciation and other factors that affect the property’s value. Here are the basic steps involved in using the cost approach to value commercial real estate:
Industrial and flex space are two types of commercial real estate properties, with some key differences in their design, functionality, and usage.