Commercial Real Estate

The average return on investment (ROI) for commerical property is generally between 5% and 12%, with 8% to 10% often cited as a good or target range. However, this can vary significantly based on factors like location, property type, lease terms, and the specific metrics used for calculation. 

Typically, the timeline ranges from 6 to 12 months, depending on factors such as market conditions, pricing, and property type. Well-positioned assets with competitive pricing, strong marketing, stable tenants, and solid NOI may sell more quickly.

Focus on leasing vacant space, lowering operating expenses, securing long-term tenants, or implementing strategic improvements. Even modest enhancements—such as updated signage, refreshed landscaping, or improved lighting—can strengthen curb appeal and positively impact cap rate performance.

The 2% rule in commercial real estate is a quick screening tool investors use to gauge a property’s potential return. It suggests that a property may be financially attractive if the monthly rental income equals or exceeds 2% of the property’s purchase price.

Common Area Maintenance (CAM) refers to a tenant’s proportional share of the costs to operate and maintain shared spaces such as lobbies, hallways, parking areas, and landscaping. These charges are typically billed monthly and reconciled at the end of the year. Tenants should carefully review the method used to calculate CAM expenses before entering into a lease.

Triple Net (NNN): The tenant is responsible for base rent as well as property taxes, insurance, and maintenance.
Gross Lease: The tenant pays a fixed rental amount, while the landlord covers most operating expenses.
Modified Gross: A hybrid structure in which the landlord and tenant share certain expenses.
Understanding the specific lease type is essential for accurately forecasting net income and clarifying responsibility for operating costs.

Purchasing a property “as is” indicates that it is being sold without warranties, and the buyer accepts its current condition. This often suggests the presence of issues that may require repairs or improvements. However, sellers are still legally obligated to disclose certain known defects or conditions.