Frequently Asked Questions

What is...?

Gross rental

Gross rental is the total rent, including rates and taxes, sewerage, refuse, security etc. Gross rental is made up of net rental and operating costs. Operating costs are those costs that are allocated to the maintenance of the property such as security, insurance, garden service and lift maintenance.

A common area

The areas of a property that are for common use by all tenants/owners such as foyers, lifts, landings, communal toilets, stairwells, gardens and parking areas.

A tenant installation allowance (TI)

Usually a Rand-value allowance given to a tenant who takes out a lease, to be used for improvements within the premises such as floor covering, partitioning etc. The landlord could also give the TI as a rate-per-square-metre or rent-free period.

A parking ratio

The number of parking bays allocated to a tenant to rent depending on the square meterage he will be occupying.

Parking rentals do not carry operational costs but do have annual escalations.

Beneficial occupation

The date from which the tenant may access the premises in order to prepare the premises for occupation (usually rent free).

Annual escalation

The percentage by which the rental increases each year, usually on the anniversary of the lease agreement.

A renewal period

The negotiated period after the expiry of the initial lease period that the tenant wishes to continue occupying the premises.

The difference between the different grades of commercial property

A+ grade: Buildings are generally not older than 5 years, have 24 hour security, prime location, air conditioning, lifts and good quality finishes.

A grade: Buildings that are 5 to 20 years old, modern and possibly renovated, 24 hour security, good location, lifts, air conditioning and parking on the premises.

B grade: Buildings that are generally 25 years or older, not renovated, no air conditioning, lift, parking or security.

Office parks: have become very popular in some areas around the Western Cape. They are modern, offer good security, parking and in many instances have access to gyms and coffee shops.

Bulk/FAR(floor area ratio)

The total amount of square metres which can be built on a property.

the capitalisation rate (cap rate)

The expected net operating income for one year. Assuming the entire building is let at open-market rentals, divided by the selling price and normally expressed as a percentage.

Currency

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