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Industrial Real Estate Frequently Asked Questions (and commonly used terms)
Listed are the most frequently asked questions we, while working in the industrial real estate market, have received over the past 25 years:
Question: What are lease rates / sales price for industrial buildings in San Antonio?
Answer: Industrial Lease Rates in San Antonio and surrounding cities vary by many factors such as type of facility, size, location, amount of air-conditioned area, age, etc.
Let’s look at 3 examples:
Type facility: Office/Showroom/Whse Office/Whse Bulk Whse Size: 5,000 SF 20,000 SF 50,000 SF Location: North Central Northeast Northeast A/C area: 2,500 SF 2,000 SF 2,500 SF Age: 5 – 10 yrs. New to 5 yrs. 10-15 yrs. Lease Rate: $6.00 - $9.60 SF yr.or $4.32 - $5.88 SF yr. or $3.36 - $4.56 or $2,500 - $4,000 mo. $7,200 - $9,800 mo. $14,000 - $19,000 mo.
Note: Above rates are based on tenant also paying the operating expenses of taxes, insurance & common area maintenance
Industrial Sales Prices also vary based on the above factors but using the same 3 examples above, the following ranges would apply:
$70.00 – $96.00 SF $65.00 – $85.00 SF $38.00 - $45.00 SF
Question: What are the triple net (NNN) charges for a lease?
Answer: Today, landlords quotes a base rental, normally as a per square foot dollar amount per year (i.e., $4.08 SF÷ 12 = monthly rental of $.34 SF). Added to this base rental are normally the following charges referred to as triple net: · Real Estate Property Taxes · Building Common Area Maintenance CAM (trash removal, exterior utilities, landscaping, [property management , etc.,) · Building Insurance So, the full rental of a base rental of $4.08 SF may be $5.20 SF per year or $.093 SF per month for these CAM charges.
Question: How long a lease term can I get?
Answer: Normally, landlords prefer a term of 3 - 5 years. Flexibility may exist if a space is leased "as is" where the Landlord does not have to spend any money.
Question: My lease is up next month, can you help me find another location?
Answer: Normally the answer is no. We recommend at least 3 - 6 months advance time to meet and discuss your specific requirements in order to do a complete market survey, locating the ideal space and the best value.
Question: What do industrial buildings cost to build in San Antonio?
Answer: Like “what are lease rates/sales price?” this question also has many variables. Hard costs (land, general contractor, profit, etc.) and soft costs (architectural and ? fees, financing, etc.) have risen significantly in San Antonio in the last few years. Also, the total cost will vary depending on size, construction type, location, etc. We can give you a quick, rough estimate and further define your costs after we obtain specific information on your exact requirements.
What Do The Following Real Estate Terms Mean?
CAP RATE: a percentage indicating the value of a property using the purchase price ÷ b the current net operating income. Example: a property is generating a net operating income of $100,000 based on a purchase price of $1,000,000 – we say the property cap rate is 10%.
TI’S OR TENANT IMPROVEMENTS: normally, improvements to meet the needs of a tenant. May be new improvements or remodeling and be paid for by the Landlord, Tenant, or both.
PURCHASE OPTION: a right, which acts as a continuing offer, given for consideration, to purchase a property at an agreed upon price and terms within a specified time.
BUILDING – TO – LAND RATIOS: a ratio showing what percentage the improvements occupy on the total land area, i.e., a building of 25,000 SF on 2 areas would have a building - to- land ratio of 1 to 3.49 or 29%.
EXCLUSIVE LISTING: a written contract between a property owner and a real estate broker, whereby the owner promises to pay a fee or commission to the broker if certain real property of the owner is sold or leased during a stated period. The broker promises to put forth his or her best efforts to sell or lease the property, and may make specific promises as to advertising or other promotion in certain instances.
CERTIFICATE OF OCCUPANCY: a certificate issued by a local building department to a builder or renovator, stating that the building is in proper condition to be occupied. In San Antonio, a Certificate of Occupancy has become more difficult to obtain due to increased regulations. The tenant must apply for in person and pay a fee.
COMPARABLES: properties used as comparisons to determine the value of a specific property.
MARKET VALUE: the highest price a willing buyer would pay and a willing seller accept, both being fully informed, and the property exposed for a reasonable period of time. The market value may be different from the price a property can actually be sold for a t a given time (market price).
SALE – LEASEBACK: a sale and subsequent lease from the buyer back to the seller. Although the lease actually follows the sale, both are agreed to as part of the same transaction.
TENANCY IN COMMON: an undivided ownership in real estate by two or more persons. The interests need not be equal, and, in the event of the death of one of the owners, no right of survivorship in the other owners exists.
TITLE COMMITMENT: an order for a search of the title to some parcel of property, eventually leading to the issuance of a policy of title insurance.
ZONING ORDINANCES: a law (generally at the city or county level) controlling the use of land and construction of improvements in a given area (zone). |