Real Estate Modeling Quick Reference – Real Estate Development Key Terms http://breakingintowallstreet.com

Real Estate Development Key Terms
If you want to understand real estate development, you need to know the key terms used to describe properties – whether you’re developing the properties from the ground up or acquiring and renovating them. Even if you work at a bank and only work with real estate investment trusts (REITs), you still must understand real estate at the property-level because REITs are collections of individual properties.

Measuring Real Estate
Before you develop or acquire a property, you must know how big it is – size is the key metric for real estate. Lot Size Square Feet or Square Meters; Sometimes also Acres (1 Acre = 43,560 ft2) or Hectares (1 Hectare = 10,000 m2). Determining gross area inside building, floor size, and number of floors; also used to calculate land acquisition costs. Building Gross Area Square Feet or Square Meters. Building Rentable Area Square Feet or Square Meters.

Measured In:

Used For:

Determining rentable area; also used to calculate certain construction costs.

Rent, parking spots, and some expenses are calculated based on rentable area.

1 Square Foot is equal to 0.0929 Square Meters, so you can think of it as 10 Square Feet ~= 1 Square Meter when you see those units in models. Remember that an entire building will never be rentable – you need room for walls, staircases, elevators, lobbies, and so on, so you assume that the Rentable Area is a percentage of the Gross Area. Using the Lot Size and local zoning requirements, you calculate the Building Gross Area. For example, if the Lot Size is 10,000 square feet and the Floor Area Ratio (FAR) is 10, your building’s Gross Area can be 100,000 square feet. The Allowable Lot Coverage tells you what percentage of the lot you can build on. If it’s 80% and