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Due to the recent poor performance of real estate mortgages, banks and government regulatory agencies are reviewing, reassessing, and reinforcing commercial real estate (CRE) guidelines. This has been imperative at this time because the CRE fundamentals remain weak. Analysts need to review commercial real estate lending practices to determine the nature and extent of the bank's weaknesses and vulnerabilities
Commercial real estate conditions have been deteriorating nationwide, dipping low since 2003. Vacancy rates and office markets are waning fast due to the loss of office jobs, economic crisis, and poor recovery. Analysts say that all these could be traced to the 9/11 attacks. The said incident resulted in prolonged weakness in retail markets with less and less consumer spending. Resulting effects include prolonged losses in manufacturing, unemployment, and a low inventory-to-sales ratio.
A Commercial real estate agent acts as the anchor between the landlord and the tenants. He has to come up with a solution for both the landlord's objective in profits and the tenant's need to control cost. The agent's knowledge and expertise in managing property aids in finding suitable alternatives in settling any issues of conflict.
The CRE agent can present a variety of lease options to be considered by both the landlord and the tenant:
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"Modified Net Lease" in Commercial Real Estate: Under the "modified net lease" the tenant has the option to pay insurance and taxes rather than paying all expenses beyond rent. The tenant will negotiate sharing of maintenance expenses with the landlord.
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"Triple Net Lease" in Commercial Real Estate: Under this lease industrial enterprises and multi-occupancy leaseholds must directly pay expenses essential to building maintenance in addition to the rent amount.
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"Gross Lease" in Commercial Real Estate: In this kind of lease, the landlord shoulders all expenses related to the property s/he is leasing. Such expenses include but are not limited to taxes, property and fire insurance, and building maintenance.
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Commercial Mortgage Loans for Small Investors: Commercial mortgages specialize in providing mortgage loans essential to small investors. Small investors can greatly benefit from investment loans that fuel their ventures and enable greater return in the end.
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Property Types in Commercial Real Estate: Commercial real estate agents offer diverse expertise and can assist with transactions involving business edifices such as offices and commercial spaces, industrial sites and parks, as well as retail and wholesale establishments.
Real estate agents who are well-rounded in residential real estate are still hesitant to venture into areas of commercial real estate. They are aware that venturing into this arena requires more skills and knowledge than mere prospecting and appraising. So you have to be prepared for this step, but the benefits can be rewarding.
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