Real 1820 week 7 Flashcards
Distributive Bargaining:
negotiating over a fixed price
Target Point
The point at which a negotiater would like to conclude negotiations
Resistance Point:
Negotiators bottom line or point at which negotiator is indifferent to a deal
Gross Rent Occupancy Cost (GROC)
% of he company’s revenue spent on rent
Bargaining Zone
The space between the resistance points of each negotiator also known as the zone of potential agreement
Lunch/ social business interactions (BATNA)
the best alternative to a negotiated agreement, which may be saying no and walking away
Types OF Lease Payments: Gross Lease
tenant pays fixed rental amount and consumer pays other expenses for the property
Types OF Lease Payments: Net Lease
tenant pays some or all expenses of the property in addition to the rent
net ( tenant pays taxes)
net net(Taxes and insurance)
triple net Taxes, insurance, maintanence)
Types OF Lease Payments: Percentage Lease
- fixed base rent plus a percentage of the tenants gross income in excess of a set amount
Rentable Square Feet =
Usable square feet + portion of the building common space x (usable sf/total building sf)
- used to determine annual base rent expense
Net Effective Rent (NER)
total sum of money you receive annually from a particular property - costs
Pro Forma
a financial analysis of a property for a specific period (1-5 years) and includes projections for income, the vacancy factor, operating expenses and debt services
When is a pro forma prepared?
for new developments, refinancing properties or for the sale or purchase of a new property
Market Rate
Important to stay current on what’s happening in the market to
ensure your market rate is accurate and competitive.
- Avoid backing into rental rates different property types do not increase or decrease at the same rate (ie Class A vs B office space)
who pays Commission : property owner/landlord
depends on
1) comission rates
2.) brokerage split
3.) number of agents involved
Tenants Inducements (T”Is)
When there is more supply than demand, or if you want to attract a
certain tenant, landlords may offer leasehold inducements.
This can include (but not limited to):
1.) free rent period
2.) Costs to renovate the unit
3.) Moving expenses
Lease Term: Possession Date
the date tenant receives the keys from the landlord. The period between possession and commencement is known as the fixturing period. Agreed upon landlord work is typically completed before tenant possession
Lease Term: Commencement Date
the date the tenant is expected to open for business, rent commemences
Category Average per square foot formula:
Total sales/ total sf = category average
