Whether you’re buying an office building or looking to lease a retail space, the commercial real estate business can be daunting for newcomers. On top of the larger sums of money involved and detailed agreements between organizations, investors and entrepreneurs have to navigate a jargon-heavy field with many new terms that can be difficult to understand. Knowing what the following concepts mean can help you make better decisions and ensure you get the best deal possible.

Commonly Misunderstood Real Estate Terms

1. Building Classification

Commercial buildings are graded according to their age, build quality, and materials. In most areas, the classes are A, B, C, and D, but it’s important to remember that properties are ranked in comparison to other buildings in the area, so an “A” in one place might be a “C” somewhere else.

2. Common Area Maintenance

This is a fee typically charged in addition to the rent which is used to maintain areas of the property all tenants use. Common area maintenance costs can cover everything from parking lot sweeping, outdoor light bulb changes, and snow removal in cooler areas.

3. Concessions

To attract high-quality tenants, property owners might offer concessions to entice a business to sign. A few common examples include property upgrades, a month of free rent, repair agreements, or a different type of commercial lease.

4. Return on Investment (ROI)

Calculating how much benefit an investment will bring is key to determining whether you should go ahead with a purchase. To calculate the ROI of a commercial real estate property, divide the expected gains by the total cost of the investment.

The commercial real estate specialists at Galvin Realty Group, Inc., have been serving the Rochester, NY, business community since 1987, providing a diverse array of services and industry-leading expertise. Whether you’re a business looking to lease a space or an investor in search of opportunities, this dynamic team has the skills and local market knowledge to help you achieve your goals. To schedule your appointment with a real estate professional, call (585) 546-1290 or contact them online today.