Question 1

What is a rent roll in commercial real estate?

Accepted Answer

A rent roll is a document listing all tenants in a commercial property, their lease terms, and rental income. Information: tenant names, unit numbers and square footage, lease start and expiration dates, current monthly and annual rent, rent escalation schedule, security deposits, and any concessions or free rent periods. The rent roll is critical for: property valuation (the income approach to appraisal uses rent roll data), loan underwriting (lenders analyze the rent roll to determine the property’s income), and due diligence (buyers review the rent roll before purchasing).

Question 2

How is a rent roll analyzed for investment purposes?

Accepted Answer

Analysis: occupancy rate (occupied units / total units; higher occupancy indicates stronger demand), average rent per square foot (compare to market rates; below-market rents suggest upside potential; above-market rents suggest risk), lease expiration schedule (concentrated expirations create risk; staggered expirations provide stability), tenant quality (creditworthiness and industry; national tenants are generally more reliable than local), and concessions (free rent, tenant improvement allowances, and other concessions reduce effective rent). Investors look for: properties with below-market rents (value-add opportunities) and stable, creditworthy tenants.

Question 3

What are common rent roll issues in Florida commercial real estate?

Accepted Answer

Common issues: inaccurate data (the rent roll may not match the actual leases; always verify against the original lease documents), phantom income (the rent roll shows scheduled rent, but some tenants may be delinquent or in default), unclear concessions (free rent periods or TI allowances may not be shown on the rent roll), oral modifications (tenants and landlords may have made oral agreements that modify the written lease), and month-to-month tenants (these tenants can leave with minimal notice, creating income risk). Best practice: audit the rent roll against the original leases and verify actual collections.

Rent Roll Analysis

Rent Roll Analysis in Commercial Real Estate

What It Contains

Analysis

Common Issues

Related Terms

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