ADVISING THE

COMMERCIAL CLIENT
 Commercial Real Estate
Known also as investment or income property refers to buildings or land intended
to generate a profit, either from capital gain or rental income.

Elements of an investment in commercial property

- Cash inflows

- Cash outflows

- Timing of cash flows

- Risk
Developing an Investment plan
- What is your goal for investing in property?
- What type of property are you planning on investing in?
- Where will the property be located? What will it cost?
- How do you plan to market your property?
- How will you manage the property?
- How will you maintain the property?
- Do you have a plan if your investment fails?
 Investment Criteria
∙ Safety

∙ Yield

∙ Liquidity

∙ Freedom from management burden

∙ Prospects for appreciation

∙ Burden of property taxes

∙ Shelter from income taxes

∙ Size or denomination- Hypothecations

∙ Leverage
Classifications of Commercial Property
- Neighbourhood center – typically has 10,000 to 12,000 sqm

- Community center - typically has 35,000 to 45,000 sqm

- Regional center – typically has 90,000 sqm, but most have in excess of 150,000 sqm

- Super-regional center – about more than 300,000 sqm, there will be about three major department
stores with about 30,000 sqm each.
Steps in Selecting a New Commercial Site
- The objective – the study tends to identify who lives in the trade area and what and how much they can
consume or purchase.

- The local economy

- Demographics
Objective Recommendation To Client
An objective consultant informs the client what must be told, no what the client wants
to hear. For, example, objective recommendations about a client’s plan may include:

1. Abandon the plan entirely

2. Consider the plan but not here

3. Consider the plan but not yet

4. Consider the plan now but somewhere else

5. Consider the plan here and now, but with revision

6. Consider the plan entirely, implement it

Lease Negotiations
Things to consider:

- Tenant Selection

- Percentage Leases

- Tenant Improvements