What’s a Capitalization Rate in Commercial Real Estate?

A realtor shows a commercial real estate investor a multi-tenant property.

Commercial real estate investors use many metrics to measure the risk and benefits of buying a property. One of those measurements is the capitalization rate. In commercial real estate investing, the capitalization rate is a percentage that indicates the rate of return on a property.  Capitalization rates, also known as cap rates, vary depending on … Read more

Should You Buy or Lease Commercial Real Estate?

A sign in a glass storefront window reads "Retail Space Available."

Is owning a commercial property better than leasing it? Should you be solely responsible for your space, or are there perks to being a tenant? Depending on your business type and goals, both options have benefits and drawbacks. Whether you purchase or lease commercial real estate hinges on your current financials, how long your business … Read more

Quick Guide to CAM Fees: Common Area Maintenance for CRE

People talk in a group in a common area of a modern commercial office building.

Multi-tenant buildings often have shared spaces that benefit all tenants on the property. Did you know tenants have to pay for the upkeep of those spaces?  When tenants move into office and retail properties, they often have to pay common area maintenance charges, more commonly referred to as CAM fees. These charges are passed from … Read more

What is a Section 1031 Exchange?

A commercial real estate investor holds a tablet showing buildings with increasing heights and an increasing arrow.

Commercial real estate investors are always looking for new opportunities. Buying and selling commercial properties comes with a huge tax hit unless you’re making a like-kind exchange. Under Section 1031 of the Internal Revenue Code, like-kind commercial real estate exchanges are tax-deferred—letting investors build wealth over time.  Like-kind exchanges have been in the tax code … Read more

Commercial Lease Lengths: How Long Should Your Term Be?

Exterior image of a new strip mall with empty shops waiting for tenants to sign commercial lease agreements.

Most landlords prefer signing long-term leases because it’s challenging to find tenants. Landlords would like to keep a good tenant for as long as possible. As a business owner, you may not be ready to sign a 10-year lease. How long of a lease should you sign? Should you ask for a shorter agreement or … Read more

Understanding Commercial Real Estate Underwriting

A hand turns a wooden cube with YES or NO written on it as an answer to the cubes before it that spell out RISK.

You kept an eagle eye on commercial real estate listings. You found and toured a property that’s perfect for your business or investment portfolio. You’re ready to take the next step and make it yours. You’ll likely need a real estate loan to do so, whether you’re a first-time commercial real estate buyer or a … Read more

Office Building Classifications: Is It Class A, B or C?

Group of creative entrepreneurs and business people working together in modern office.

If you’re in the market for commercial office space, you’ve likely heard people refer to properties as “Class A” and “Class B.” What do these classes mean? Commercial office buildings are categorized based on their age, condition, amenities and location. Many factors—from maintenance to ceiling height—can affect an office building’s classification.  Building classes help commercial … Read more