Sub-divisible CRE

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 hectares, or 5 acres, in size is sub-divisible (subdivisible) into two equal portions of 10,000 sqm
  • Built property – e.g. this pocket of space, comprising 2,000 sqm, can be broken into 3 smaller pockets or units of say 500 sqm, 700 sqm and 800 sqm in size

The concept of sub-divisibility saves the CRE industry a lot of time and effort. For example, looking at the process of leasing space:

  • I am building out an office property of 12,000 sqm GLA. First prize, for me as developer, is to land a single tenant for all 12,000 sqm. However, this may not be possible. This I am prepared to accommodate smaller high quality (strong covenant) tenants renting space greater than 500 sqm each. Thus my 12,000 sqm space is sub-divisible (subdivisible) down to a minimum of 500 sqm.
  • How do I manage this data so that tenant search criteria match my available space? For example, there are three high quality tenants looking for 9,000 sqm, 2,000 sqm and 1,000 sqm respectively.
  • I have two options:
    1. Record the vacant space opportunity as 12,000 sqm, sub-divisible (subdivisible) down to 500 sqm, OR
    2. Duplicate the available space available for lease in the hope of matching a tenant’s search criteria. For example, record the 12,000 sqm development to catch search criteria as follows
      • 400 sqm to 600 sqm –> load the same space as 500 sqm
      • 550 sqm to 800 sqm –> load the same space as 750 sqm
      • 700 sqm to 1,200 sqm –> load the same space as 1,000 sqm
      • 1,500 sqm to 2,000 sqm –> load the same space as 1,750 sqm
      • 2,000 sqm to 3,000 sqm –> load the same space as 2,500 sqm
      • Etc. all the way up to 12,000 sqm

The end result with option 2: lots of extra work, and all parties: myself and brokers, end up distorting their total available vacant area statistics.

Thus the concept of sub-divisibility (along with sophisticated CRE search engines) delivers high quality data and greater levels of decision-making efficiency.

Insider insights

On top of space for lease being defined as sub-divisible (subdivisible), it can also be defined as combine-able or not. For example, space can be in three states

  • Can be leased by itself or combined with other units
  • Must be leased by itself only – i.e. cannot be combined with other units

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