This document provides an overview of key commercial real estate types including office, retail, shopping centers, industrial/flex, hospitality, residential income, and developable land. It defines important terms used for measuring and classifying different property types, such as rentable square footage, BOMA standards, and net lease structures. The document also outlines factors to consider for business opportunities and environmental reports when evaluating commercial real estate investments and transactions.

1. Commercial Real Estate
Section One
Introduction

2. 1. Office
Class A Class B Class C

3. 1. Office
b. Common Areas
These areas do not generate
income.

4. 1. Office
c. Rentable Square Feet
In a building or project, floor space that may be rented to
tenants. The area upon which rental payments are based.
Generally excludes common areas and space devoted to the
heating, cooling, and other equipment of a building.

5. 1. Office
“BOMA”
Building Owner and Managers Association standards
• BOMA publishes standards for measuring office
space, lobbies on behalf of the commercial real
estate industry, and hosts conventions. The industry
guidelines published by BOMA are referred to as
"BOMA Standards."

6. 2. Retail
a. Free Standing
All square
footage generates
rent

7. 2. Retail
b. Pad

8. 2. Retail
c. Big Box d. Little Box

9. 2. Retail
e. Special Use

10. 3. Shopping Centers
a. Regional

11. 3. Shopping Centers
b. Super Center

12. 3. Shopping Centers
c. Neighborhood Center
(“Strip Center”)

13. 3. Shopping Centers
d. Community Center

14. 3. Shopping Centers
e. Power Center

15. 3. Shopping Centers
f. Life Style Center g. Theme/Festival Center

16. 3. Shopping Centers
h. Outlet Center

17. 4. Industrial/Flex
a. Flex Space – Concrete
tilt-ups
b. Warehouses

18. 4. Industrial/Flex
c. Manufacturing
d. Self Storage/Mini
Warehouses – requires
employees

19. 5. Hospitality
a. Hotels/Motels
b. Campgrounds

20. 5. Hospitality
c. Mobile Home Park

21. Terms for Hospitality Investments
• Revenue per available room/space (RevPAR)
• Average Daily Room Rate (ADR)
• Occupancy Rate (by rooms, not income)
• Cost/Door

22. 6. Residential Income
a. Conversion/Mixed
single family with units
b. Duplex – Two Units (lleeggaallllyy ccoouunnttss aass aa ssiinnggllee
ffaammiillyy rreessiiddeennccee ffoorr ddiisscclloossuurree rreeqquuiirreemmeennttss)

23. 6. Residential Income
c. Garden Apartments
d. Low rise – one to three
stories
e. Mid Rise – four to six stories

24. 6. Residential Income
f. High Rise

25. 6. Residential Income
g.Types of Apartment
- Studio
- Bachelor
- Loft
- Townhouse

26. 6. Residential Income
h. Amenities
- Parking
- Laundry
- Security
- Pool
- Elevator

27. 6. Residential Income
i. “EElllliiss AAcctt” – prohibits cities from preventing
conversion of apartment to condominiums. TTrruummppss rreenntt
ssttaabbiilliizzaattiioonn llaawwss.. Cities can get around it to some
extent.

28. 7. Developable Land
a. General Plan vs.
Zoning
Same terms can mean
different things in different
jurisdictions
b. Uses
i. Permitted Use
ii. Conditional Use
iii. Special Exceptions
iv. “Grandfathered”
v. Spot Zone

29. 7. Developable Land
c. Variance
d. Conditional Use
Permit (CCUUPP)
e. Environmental
Reports/Environme
ntal Studies

30. 7. Developable Land
f. Biological Reports
g. Archeological
Reports
h. Soil Reports – mainly
soil under this one site (bbuutt
mmaayy ccoonnssiiddeerr ssuurrrroouunnddiinngg
ssiitteess)

31. 7. Developable Land
i. Geological Report –
gross general geology
j. Traffic Studies

32. 7. Developable Land
k. Coverage Ratio
Net Operating Income / Total Debt Service

33. 7. Developable Land
ll.. HHooww ttoo vvaalluuee
i. Price per square foot
ii. Comparable value
iii. Built-out value and the work backwards to land value

34. 8. Business Opportunity
a. May or may not include real
estate
b. Usually INCLUDED in the
sales price:
ii.. FFiixxttuurreess aanndd EEqquuiippmmeennt –Kitchen
stuff, gas pump, etc.
iiii.. FFuurrnniittuurree – shelves
iiiiii.. GGooooddwwiillll – Customer loyalty (good
restaurant)
iivv.. FFrraanncchhiissee – use of name
“McDonalds”

35. 8. Business Opportunity
c. Usually NOT included in sales price:
i. Accounts Receivable
ii. Inventory
d. Personal Property (eevveerryytthhiinngg bbuutt rreeaall eessttaattee) may be
subject to sales tax

36. 8. Business Opportunity
e. Cannot do IRC 1031 Tax Deferred Exchange from
business – can oonnllyy ddoo iitt ffrroomm rreeaall eessttaattee
f. Price is apportioned between real estate and business

37. 8. Business Opportunity
g. Complex Due Diligence
i. Multiple sets of books
ii. Skimmed Cash
iii. People lie – you have to be a detective
iv. Environmental Issues
v. Non Compete Agreements
vi. Seller staying on to assist
vii. Hard to finance
viii. Tax clearances (State Board of Equalization, EDD)
ix. License clearance and transfer (ABC)
x. UCC1 – Clearance of personal property
xi. Agreement for seller to remain after escrow

38. 8. Business Opportunity
h. You are FFOOUURR TTIIMMEESS more
likely to get sued in a Business
Opportunity sale

39. 9. Environmental Reports
a. Phase I - report
b. Phase II - study
c. Phase III - remediation

40. 9. Environmental Reports
d. No Further Action Letter (NNFFAA)
e. Environmental Legal Opinion
f. Environmental Insurance

41. Terms
• Anchor Tenant
One of the larger stores in
a shopping mall, usually a
department store or a
major retail chain.
• Shadow Center
Shadow Tenants share center
with Anchor.

42. Terms
Outparcel
A small lot at the outer edge of a
shopping center, usually reserved
for later sale to a fast-food outlet
or chain restaurant; also called a
pad site.
Separate Titles
Many large centers broken up
into many titles – why?

43. Terms
• Easements – ingress/egress/drainage/etc.

44. Terms
• CAM – Common Area Maintenance Fees
• Land Lease vs. Fee Simple
• “Leased Land” is different from “Land
Lease”

45. Terms
• Tenant Improvements (reserves and allowances)
Allowances - This is the amount of money the landlord is willing to
contribute for the build-out of the tenant’s space. It is usually quoted as X
amount of dollars per rentable or usable square feet.
Reserves - An account required by a mortgage lender and established at
the time of closing for the purpose of reserving funds estimated to be
necessary to improve retail and office space. Funded through monthly
contributions and maintained by the Lender.

46. Terms
• NN vs. NNN
Net, Net Leases (Double-Net or NN): The tenant, not the landlord, is
responsible for all operating expenses and real estate taxes. Usually
however, the owner or landlord is responsible for the building roof and
structural integrity.
Net, Net, Net Lease (Triple Net or NNN): The tenant, not the landlord or
owner, is responsible for all operating expenses, real estate taxes and the
building roof and structural integrity.

47. Terms
• Destination Site

48. Terms
• Embedded
• Relocation