Acre
Metric One acre is equal to 4,046.86 square meters. In other words, a square 63 meters by 63 meters will cover the area of an acre. One acre makes up 0.405…
CRE Dictionary
CRE Dictionary
Agency (and obligations)
An agency is a relationship created when one person or entity, the customer, delegates to another, the agent, the right to act on the customer’s behalf. An agency gives rise to…
Anchor tenant
An anchor tenant is your larger retailer who takes up a lot of floor space in a property. Being larger users, anchor tenants generally possess a strong covenant. Possessing a…
API
API is the abbreviation for an application programming interface. In simple terms it is an “electronic handshake” between two systems. This electronic handshake defines a “common language” for the systems…
Average session duration
Google’s average session duration is what it says on the tin: how long users dwell on your website page in question. The problem is that this includes sessions of 0…
Beneficial occupation
Beneficial occupation, or beneficial occupancy, or BO, is that window of time between a) when a tenant can first occupy the premises, and b) final completion. The BO window is…
Bounce rate
Bounce rate is an indicator of how “sticky” your website is. A high bounce rate means that users generally come into a specific page, read or don’t read that single…
Broker commissions – lease deal
The below are generally-accepted broker commissions on lease deals. As with many things CRE, commissions can be subject to negotiation. Terms: commission for lease deals longer than 12 months 5%…
Building component
A building component is nested inside of a property’s hierarchy. In its simplest form, a commercial real estate (CRE) property hierarchy is two-tiered: property as parent, with units as child.…
Building name
In the instance of a property comprising one building, the property name and building name may be the same. Where the property is comprised of various buildings (such as an…
Business legal name
For business legal name, please see the organisation legal name Organisation legal name is a stronger umbrella term that covers not only companies, but also legal entities like Trusts, Public…
Cap rate
The capitalisation rate (cap rate for short), is the percentage return on a property investment (before the cost of debt funding and taxes). Similar to a price earnings ratio for…
CLV
CLV stands for customer lifetime value. Customer lifetime value is the prediction of the net profit value now, of the entire future relationship with a customer. Establishing this value is…
Complex space
Complex space is not a vanilla unit / listing / pocket. The vanilla case in CRE is when one unit / listing / pocket is made up of one type…
Corporate real estate services (CRES)
Corporate real estate service (CRES) providers are used generally by businesses whose core business is not commercial property. CRES providers thus don’t provide services to property owners (landlords) or property…
CRE
CRE is the abbreviation for commercial real estate. Another word for commercial real estate is commercial property. While members of the same family, commercial real estate (or commercial property) is…
CRETech
CRETech is short for commercial real estate (CRE) technology, or commercial property technology. This term covers startups offering technologically innovative products or new business models for the CRE industry. I.e.…
Customer lifetime value
Customer lifetime value is the prediction of the net profit value now, of the entire future relationship with a customer. The value can range in sophistication and accuracy. From a…
Data assets
Data assets can be regarded as one version of business “gold”. (And, for such assets to be usable, they have to be uniquely identified) For example, your list of customers…
Disintermediate
Disintermediate means to remove middlemen from a value chain by providing goods and services directly to the consumer. Examples of disintermediation: Car buying websites enabling car sellers to engage directly…
Effective interest
Effective interest is perhaps the truest description of interest payable by a borrower. It refers to the total annual (or monthly) cost of interest, taking into account the monthly, weekly…
Erf
An erf (plural erven) is a term used in CRE to describe a piece of land owned by someone (i.e. registered in a deeds registry / office). Erf sizes are measured in…
Expenses included in gross rentals
In CRE, “expenses included in gross rentals” represents those property expenses invoiced by the landlord to the tenant. These paid-ultimately-by-tenant expenses will appear as line items on the rental invoice.…
Expenses included in net rentals
In CRE, “expenses included in net rentals” represents those expenses covered by the landlord. The tenant will never see these expenses on an invoice. Such expenses are deducted from the…
Explicit bug
An explicit bug is existing functionality in software that is not operating as designed or required. There is no grey area. The functionality should be doing A, and it is…
Feature enhancement
A software or feature enhancement is any product change or upgrade that increases software capabilities (and user value) beyond the previous state. Extra – how best to explain what you…
Geographical hierarchy
Geographical hierarchy explains how places or properties fit together into a simple-to-understand and ordered structure. Geographical hierarchy is a common concept we use every day. The application of it is…
GLA
GLA in CRE is an abbreviation for gross lettable area. Also known as “rentable area“, it It is normally expressed as square meters or square feet. High level explanation This…
Green ticks
Green ticks seek to solve a major problem in CRE data quality. That problem is data duplication. The green ticking of data assets allows your data assets to “talk” to…
Gross lettable area
Gross lettable area is more commonly known in CRE by its abbreviation GLA. It is generally comprised of office, warehouse, factory, or shops. This is the space that a commercial…
Gross rentals
Gross rentals in CRE is (generally) the total amount paid by a tenant to a landlord*, every month. Gross rental can be either be displayed as a rate per sqm…
Hectare
CRE is a game of big numbers – hectare is an efficient way of describing a large piece of land (or space). Metric One hectare is equal to 10,000 square…
Hierarchy
The best concept to explain hierarchy: “parent-child”. This parent-child model explains both the levels, and the one-to-many relationship. As in a family you have one great grandmother, with many grandmothers…
Holding company
A holding company owns and controls other companies, and sits at the top of a corporate hierarchy. A holding company is distinct from a parent company in that it is…
Horse trading
Horse trading is an unethical practice in CRE. It describes the instance of agents disclosing confidential information that provides one side with an unfair advantage. Agents are required to act with…
Implicit bug
An implicit bug is existing functionality in software that is operating as designed or required, but it feels like a bug. I.e. functionality is operating fine, but it’s operating in…
Industry classification
Industry classification is a type of economic taxonomy that organises organisations/businesses into industry groupings. This taxonomy is hierarchical, with parent-level layers holding more detailed children info below them. The simplest…
Land assembly
A land assembly is the end result of purchasing various smaller parcels of property to merge them into one large land parcel or property. A land assembly is a highly…
Lease abstraction
Lease abstraction is the process of converting lease data from PDF or paper, into a more analysis-friendly format – as desired by a client. The analysis friendly target format can…
Lease floor number
In the vanilla lease floor number instance, there are two cases A tenant may occupy one (of many units) – and units do not straddle floors A tenant may occupy…
Lease occupation date
The lease occupation date of a lease is the first permissible date for the tenant to assume the rights of occupation of a property from the property owner. An occupation…
Line shop
A line shop is a type of retail tenant (generally found in a shopping center or mall). Line shops generally are located in the retail space that lives adjacent to…
LPI code
Each land parcel (for example erf) in South Africa is uniquely identified by a unique LPI code. All data assets should have unique, “real world” identifiers. This is property’s version…
LTV
LTV (for loan-to-value ratio) is a common acronym in CRE. It represents a ratio: specifically the value of the loan amount to the value of the property. The loan amount is generally the…
Luddite
Luddite is derived from the bands of English workers who destroyed machinery, especially in cotton and woollen mills, that they believed was threatening their jobs (1811–16). Over time and with reference…
Net promoter score
The Net Promoter Score (NPS) indicates how popular a product or service is to its customers. It is a measure of customer experience and a good predictor of business growth.…
Net rentals
In CRE, net rentals represents the rental paid by a tenant for the use of her property to a landlord (aka property fund) or, if applicable, their representative (i.e. a property…
NIH syndrome
NIH syndrome is an acronym for not-invented-here syndrome. In software, NIH is commonly referred to as reinventing the wheel (i.e. building something that is already available). NIH syndrome is based…
Nominal interest
Nominal interest is one way of describing interest payable by a borrower. The other way of describing interest is effective interest. Nominal interest can have the unintended effect of understating…
NPS
NPS stands for net promoter score. The Net Promoter Score (NPS) indicates how popular a product or service is to its customers. It is a measure of customer experience and…
Operating costs
In CRE, “operating costs”, aka ops costs, aka operational costs, is an umbrella term for a basket of property expenses allocated by the landlord to the tenant. Ops costs are…
Opportunity cost
Opportunity cost is what a person sacrifices when they choose one option instead of another For a more comprehensive walk through of opportunity cost – please see this article –…
Organic search
Organic search results are those website hits from users who find you on the web through normal search. Such results excludes paid-for search hits. For example, I type in “properties…
Organisation legal name
An organisation legal name or business legal name is the name that the business is legally registered under. This name is different to the trading as name. Generally each organisation…
OTL
OTL stands for offer to lease. This is a document covering salient terms of a tenant’s lease agreement in South Africa. (The UK version of an OTL is an HOTS…
OTP
OTP stands for offer to purchase. This is a document covering salient terms of a sale agreement. If buyer and seller agree on the OTP terms, next step is signature…
Parking ratio
A property’s parking ratio indicates how “well-parked” a property is. Properties with a high parking ratio mean that there are more parking bays per leased area. In the USA, the…
Polygon
A polygon is a shape with at least three straight sides and angles, and typically five or more. A triangle is the simplest polygon. Outlines on a map, creating shapes…
Pro rata
To prorate (adjective pro rata) is to divide a value in proportion to some other value. If a tenant were to move in mid-month (without that tenant receiving any rental…
Property fund
Other names for property fund is property owner, landlord or lessor. This player in CRE is the owner of commercial property. The primary customer of a property fund is a…
Property legal owner
The property legal owner is that entity/those entities reflected as property owners on the title deed. Oftentimes a property legal owner is a “shelf company” – a separate legal entity…
Property manager
Property managers (or PMs) work for property owners, and are a layer between the property owner and a tenant. Every property requires a property manager. Property managers collect the rent,…
Property name
As you are known by your name, so is a property known by theirs. As human names may change, in the event of, for example, marriage (or fame), so may…
Property ownership
Property ownership in commercial real estate (CRE) can feel complex. Here we try make it simpler. Baby steps – residential Let’s start off with residential property – familiar and accessible…
PropTech
PropTech is short for property technology. This term describes those startups offering technologically innovative products or new business models for the real estate industry. PropTech in turn is divided into…
Rentable area
Rentable area, in South Africa, terms, is another word for gross lettable area (or GLA). The value is expressed in either square meters or square feet. How rentable area differs…
SaaS
SaaS aka Software-as-a-Service is the “new way” of providing software to users. SaaS refers to those tools where users get their functionality on the web, on a rental basis. Instead…
Sale and leaseback deal
A sale and leaseback deal is a property transaction in which an owner both: sells her property and, as part of the same transaction, and signs a lease with the…
Shadow space
Shadow space, also known as “phantom space”, is leased space that is not being used by the tenant. General points: The space may be “in the market” and available to…
Sub-divisible
Sub-divisible (subdivisible) in CRE refers to a single space that can be broken into two or more parts. The space can mean Land – e.g. this parcel of land, 2…
Supplementary space – not rent attracting
Supplementary space – not rent attracting generally comprises these sub-categories of space: Balcony, decks, patios. An abbreviation for supplementary space – not rent attracting is “SNRA”. SNRA is one of…
Supplementary space – rent attracting
Supplementary space – rent attracting generally comprises these sub-categories of space: office storage, office terrace, industrial yard, parking bays. An abbreviation for supplementary space – rent attracting is “SRA”. SRA…
TCO
TCO stands for total cost of ownership. Total cost of ownership is the sum of all costs and expenses related to buying, implementing, and managing your software solutions (either directly…
Tech adoption lifecycle
The tech adoption lifecycle explains how the use of new products or innovation spreads. (Clicking on the below image will enlarge it to a reading-friendly size) The above image unpacks…
Tenant covenant
Covenant is a term that refers to a business’s creditworthiness or bank-ability. I.e. what is the quality (security) of the tenant’s lease income. Tenant covenant factors (All endogenous) A tenant’s…
Tenant installation allowance
Custom Post Type UI provides an easy to use interface for registering and managing custom post types and taxonomies for your website.
Tenant’s proportionate share
A tenant’s proportionate share is also known as a tenant’s pro rata share. This is the portion of the property, by GLA or usable area, that the tenant is occupying,…
Total cost of ownership
Total cost of ownership (TCO) is the sum of all costs and expenses related to buying, implementing, and managing your software solutions (either directly or indirectly). This value includes the…
Trading as name
Generally a business’s legal name and trading as name may be the same. In certain instances, however, a business may use a trading as name instead of their legal business…
Triple net lease
Triple net lease is a version of a CRE lease agreement. In this particular arrangement between tenant and landlord (property owner), the tenant (lessee) agrees to pay all operating and property expenses…
Unique identifier
A unique identifier is that unique “code” that is assigned to a data asset. It makes this data asset unique compared to any other data asset. Even if the name…
Unit ID
A unit ID is the unique identifier for a property unit or listing. In the same way that a person has a name, a unit ID is the unit’s name.…
Usable area
Usable area is the actual space you occupy from wall to wall. I.e. the area you would get if you paced out your offices or warehouse. (This would also include…
Vendor finance
Vendor finance is the scenario where a seller acts as the funder (providing debt or equity, or both) to a purchaser of her property. Trade credit, while not specific to…
Weighted average lease expiry
The weighted average lease expiry (or WALE) is one single number that shows a (more relevant) average of many leases. These leases can cover one property or many properties. In…
Weighted average rental
Weighted average rental can be regarded as a more meaningful value for decision-making than an ordinary average rental. Averages are relevant when there is more than one rental value across…
Whitebox
A whitebox is a lettable space with a minimally finished interior. Usually it contains ceilings, lighting, plumbing, heating and cooling (HVAC), interior walls (painted or unpainted), electrical outlets, elevators, rest…
Zoning
Zoning controls what a property developer can do with a piece of land. It restricts property rights and land users to specific allowable activities, permitted building heights, coverage and /…