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This post is all about improving your real estate English vocabulary from A to Z. As I’m sure you know, in today’s world it’s absolutely necessary for real estate experts to be able to communicate professionally in English. This post focuses on real estate vocabulary, going through the alphabet from A-Z.
Real estate vocabulary covers a wide spectrum. We have words describing different properties, different locations, the local property market and words that relate to investment and financing, property management, building technology and leasing and renting. To make your life a little bit easier, this post highlights some of the most common words.
Let's dive right in and start with the letter "A."
A ASSET Something of value owned by a person, corporation or other entity
"Our European Retail Fund sold three assets in Spain last year."
In the real estate context, the term asset typically refers to a real estate property that is held by an investor or an investment fund. International real estate investors often hold many assets, such as residential, retail or office properties, in different countries.
B BUILT-TO-SUIT An arrangement in which a property owner agrees to construct a building to a tenant's specifications
"Our new location in New York City needed to have showrooms and storage space on the ground floor with offices and conference rooms on the upper floors. A property like that was impossible to find, so we bought a built-to-suit."
This basically means that the owner and the future tenant come to an agreement, which is usually fixed in a contract, that the owner or a developer will build the property exactly to fit the tenant's needs.
C CENTRAL BUSINESS DISTRICT (CBD) A city's downtown area where the main business, governmental, recreational, professional and service activities of a community are concentrated
You might hear someone say, "We just moved our offices to the CBD. It's very central and can be easily accessed by public transportation."
The CBD, which is short for central business district, typically consists of a variety of high-rises and landmark buildings as well as shops and restaurants and other recreational offers, such as theaters and museums.
D DEFAULT The failure to make payments on debt
During the 2008 financial crisis, many homeowners defaulted on their mortgages, in other words they were unable to service the loan taken out on their home. If a homeowner is in default, the bank may repossess the property, so people end up losing their homes. It is in the nature of real estate markets to experience ups and downs, and in times of economic stress many homeowners default and have to sell their homes, sometimes even at a loss.
E EVICTION The legal process of removing a tenant from the rental property for some violation of the lease
We just learned what happens when homeowners are in default. If tenants are late on their rental payments, they may get evicted. Typical reasons for getting evicted include non-payment of rent, unlawful use of the rental property or violation of health and safety codes. Tenants receive an eviction notice from their landlord and have to vacate, which means leave, the property at a set date.
F FLOOR PLAN The architectural drawings showing the layout of the building, including the exact room sizes
When buyers look into purchasing a property, they want to know more about the layout of the space. A floor plan provides them with an overview. In a built-to-suit project, the investor can determine what the floor planshould look like so that it meets the requirements of the intended use.
G GREENFIELD Undeveloped land, usually located in semi-rural areas, that is considered for use as a site for expanding urban development
An investor might say, "We found a greenfield site outside of Chicago that we’re looking to buy. It's large enough to build a distribution center for last-mile logistics." Greenfield sites basically refer to land that is undeveloped and can be built on without having to remove or demolish existing buildings.
H HOLDING PERIOD The period during which a person retains ownership of a capital asset
"We purchased the asset in 2008 and we intend to hold it for a period of 20 years before renovating and selling it."
The holding period basically refers to the period between when an investor purchases an asset and when they sell it.
I INCOME The amount of money earned during a certain period of time from leasing a property
In the real estate world, the term income typically refers to the amount of money collected by a landlord from a tenant or a group of tenants for using a particular space. You may hear a portfolio manager say, "Last year, we made over €1,000,000 in rental income on the real estate assets we hold in our portfolio."
J JOINT VENTURE The joining of two or more parties to engage in a specific business enterprise, such as the development of a residential project or a shopping center
Within the scope of large property developments, several parties may join together for a certain project. Typically, the reason behind this temporary partnership is to share the associated project risk, usually financial, or expertise to get the best outcome.
K KEY PERFORMANCE INDICATORS (KPIs) Measurable data used to evaluate the success of an investment
"The KPIs of the assets in our logistics fund have improved significantly year over year."
That means that when asset managers look at quantifiable data, such as rental income, tenant quality and lease terms, things have gotten better compared to the previous year. This may be due to market factors such as rents having gone up in a particular region, or property-specific factors such as a tenant who could no longer make rent payments moving out and being replaced by a tenant with a strong financial background.
L LEASING, LETTING
Three of our assets are leased to the same client.
Three of our assets are let to the same client.
What's the difference between leasing and letting? Is there a difference? Well, the answer is clear: YES and NO. ;)
The term lease is predominantly used in the US. We’ve all seen "for lease" signs in American movies. The term let is used in the UK where you tend to see "to let" signs.
The noun lease refers to a written contract between the landlord and the tenant and specifies the details of the relationship between the two. Another interesting point: In a lease, the landlord is often referred to as the lessor and the tenant as the lessee.
M MARKET VALUE The amount for which a property can be sold on a given market
"We had our assets in Germany appraised last year. The market value has gone up as the real estate markets have been doing well over the past couple of years."
The fair market value is usually determined by an appraiser. Appraisers use different appraisal techniques to determine fair market value for buying or selling a property. Appraisers usually use available market data and comparables to determine the current fair market value of a property.
N NEW-BUIILD A newly built house or other building
"You might want to consider a renovated property for your new offices. Or, if you want to guarantee state-of-the-art fit-out and low maintenance costs, you might want to look at a new-build."
The term new-build refers to a building that was recently built. The term is often used in contrast to the term stock property, which refers to buildings that were completed some time ago and, in some cases, that may require renovation.
O OCCUPANCY The ratio of space rented relative to the amount of space available for rent
"The occupancy rate in the shopping mall in San Francisco has gone up from 80% to 85%."
Occupancy rate is one of the KPIs describing the leasing performance, or take-up, of a property. A high occupancy rate combined with above-market rents from strong-covenant tenants and long lease terms makes an asset attractive and drives up its value when reselling.
P PREMISES The land and buildings owned by someone, especially by a company or organization
"The company is relocating to new premises."
"There is no smoking allowed on the premises."
"Hot-desking allows companies to have significantly smaller premises."
The term premises basically refers to the land and buildings that a company occupies as an owner or a tenant and that they use to conduct business activities.
Q QUARTER-OVER-QUARTER (q-o-q) Used to compare the performance of assets, for example, with that of the same period in the previous quarter
"Our retail portfolio performed well quarter-over-quarter."
"On a quarter-over-quarter basis, the occupancy rate in our Italian assets went down."
Another common phrase is year-over-year, which is used to contrast performance on an annual basis. In market reports, the phrases quarter-over-quarter or year-over-year are often times abbreviated as q-o-q or y-o-y.
R RENT CONTROL Regulation by state or local government, limiting rents in order to stop them from increasing too much
"Both developments will be under rent control and will be suitable for elderly and disadvantaged citizens."
By imposing rent control, state and local governments try to keep explosive rental growth at bay. Real estate investors take rent control regulations into account in their investment decisions as they provide a legal framework and limitations for rent increases.
S SUPPLY Describes the quantity of properties that vendors are willing to sell at a given price
"Current supply of retail properties in Munich, Germany, is scarce."
"It’s a seller’s market. There’s a supply bottleneck in Paris, France."
Both examples indicate that the current supply of properties in these markets is tight. In real estate markets, the forces of supply and demand interact with each other and determine the price of real estate. If there is low supply and high demand, property prices tend to rise. In contrast, if there is low demand and high supply, prices tend to fall.
T TAKE-UP A measurement of gross leasing activity for a given period of time
"Take-up on the US market has been up for quite some time now, leading to record lows in vacancy."
"The UK has been experiencing immigration from other countries, resulting in higher take-up in large cities."
Take-up basically refers to space that is physically occupied by tenants or owner-occupiers. "Take-up on the Central London retail market rose by 13%."
U UPSIDE POTENTIAL The estimate of possible appreciation of value in real estate
"The property is located in an up-and-coming neighborhood in Paris. It has a lot of upside potential."
There are several factors that determine a property's upside potential, like location, amenities and potential increase of rental income. The opposite of upside potential is downside risk. Real estate investors carefully analyze a property's upside potential compared to its downside risk before making an investment decision.
V VALUATION The process of valuing a real estate property, such as via an appraisal
"We have our portfolio properties appraised once a year to keep track of resale value."
"We need to prepare a valuation report for our investors."
Valuations are generally prepared when a property is purchased or sold, or as a basis for taking out a loan for financing or securing a mortgage. Valuations may also be required for insurance or tax reasons. The term valuation is more common in the UK, while the term appraisal is typical in the US.
W WEAR AND TEAR The physical deterioration that naturally happens to a property from ordinary use, aging or weather
"When we moved out, we got our full deposit back since there was no damage except for ordinary wear and tear."
Tenants have to return the property in good condition. Normal wear and tear cannot be avoided and is not considered a problem. Wear and tear includes floors that need a new finish, faded carpets and cracking paint.
X X (FOR CALCULATING AREAS) Area measurements are typically expressed in square footage in the English language.
"The reception area, which is only 12x12 ft in size, is quite small."
"This rental unit has an 8x10 ft storage area."
The multiplier x is expressed using the word by in spoken language. In order to find out the square footage of the storage space, you need to multiply 8 by 10 and you’d have your result: 80 sq ft. Square feet, by the way, is abbreviated as sq ft in written texts.
Y YIELD The money earned from an investment, usually calculated as a percentage based on the capital invested
"When we purchased the asset in Poland, the initial yield was 4.8%. After a holding period of 10 years we had an exit yield of 5.2%."
Yield can also be a measure of the overall supply and demand situation in a given market. When demand is high and supply is low, yields typically decline. This situation is also referred to as yield compression.
Z ZONING Regulations regarding the use of land and the types of properties that can be built on it
"The town's new zoning establishes a height limit of nine stories on any new building."
"San Francisco has strict zoning laws to preserve neighborhoods."
Zoning may be divided into residential, commercial, industrial and agricultural. Zoning typically imposes height limitations on structures to protect other property owners. There may also be restrictions on how many structures can be built in an area as well as on pollution and noise levels.
Congratulations, we've gone through the entire alphabet from A-Z! Of course this is just the tip of the iceberg and there is so much more vocabulary to cover. Hopefully these examples will help you start improving your real estate English vocabulary!