Published March 2001

‘CBD,’ ‘RBA’ lingo as easy to learn as your ABCs

By Keith McKinney
Columnist

I want to dedicate this column to describing some of the basic terminology brokers and investors use to characterize a market. Our audience is pretty broad, and I’ve been getting some great mail recently about how much you like the column, and also some questions like, “What’s this CBD stuff?” or “What’s the difference between direct and sublet?”

Let’s face it, this is another language. So, let’s review some of the definitions you will see or hear about most often.

Most of you are very aware of the major markets in our area from a real estate perspective. The submarkets lie within these major markets and help further define the specific characteristics, neighborhoods or economics that group these smaller areas. In both the major markets and submarkets, brokers investors and owners describe the real estate specifically using a unique vocabulary.

For instance, the Central Business District is described as “the market CBD.” This is the area of town you would describe as being the primary business center or activity area. The buildings themselves are further described by indicating their “rentable building area,” or “RBA.”

We use this figure to further calculate the total rentable building area in a market and the number of buildings that are included in addition to calculating amount of rentable building area that is being “absorbed” monthly or annually. This would be described as the “absorption rate.”

Another key factor is the “vacancy rate,” or how much of your building is actually vacant and not collecting rent.

Now, of the rentable building area, you may have some tenants with master, or “direct,” leases, and you may have some who have subleased space from those master tenants, or “sublet” spaces.

We also use these two indicators to describe the “availability” of current space. In tight or restrictive markets, we may find greater percentages of sublet space vs. direct space available.

Breaking this down even further, we can describe the direct or sublet space as “dividable” or not, or whether the space is “contiguous.” Or, in another way, “Could I rent a portion of the total floor, or do I have to rent the whole thing?” Some landlords may have certain restrictions about this sort of thing, or in any case may adjust the rent upward if you’re only renting the smaller portion.

Let’s take a closer look at the numbers for the Northend Office Market again for a quick review.

Existing rentable building area is 10.7 million square feet, with direct vacant space at only 897,762 square feet. That’s a vacancy rate of 8.37 percent, a slight increase over last quarter’s reporting of 8.01 percent.

Sublet space available is 105,963 square feet. Added to the direct space availability, you have 9.36 percent vacancy, which indicates a slight rising trend. Yearly absorption continues to be about 1 million square feet.

Until next time, remember: “Invest for the long term, stay current with market information and trust the advice of a knowledgeable commercial real estate broker.”

Keith McKinney is the Principal and Broker for Northend Commercial Brokers LLC in Everett. Call 206-920-4100 or send e-mail to keith@ncbllc.com for more information or to add your e-mail address to the newsletter subscribers' list.

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