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9:T3833,{"id":"cG9zdDo4MTYw","title":"Commercial Real Estate Leasing Financial Model Example","content":"<p>Our Commercial Real Estate Leasing Financial Model Structure covers all the essential aspects you need to consider when starting or scaling a Commercial Real Estate Leasing business. By following this structure, you can better understand your revenue streams, costs, and assets, helping you optimize profitability and strategically plan for growth.</p>\n<h2>The Commercial Real Estate Leasing Financial Model Structure</h2>\n<p>Financial planning serves as the backbone (or foundation) of any successful Commercial Real Estate Leasing enterprise. A well-structured <strong>Commercial Real Estate Leasing financial model</strong> not only outlines possible streams of revenue and associated costs; it also provides insights into employee responsibilities, operating expenses and necessary assets for the business. Such a model can inform entrepreneurs of new (and profitable) opportunities, helping to guide strategic decisions in both startup and growth phases. The structure of the Commercial Real Estate Leasing financial model is crucial. This financial model serves as an extensive roadmap (covering various aspects) essential for sound management and profitability of the business. However, without proper implementation, the potential benefits may not be fully realized.</p>\n<h3>Revenues</h3>\n<ul>\n<li><strong>Lease Fees:</strong>\n<ul>\n<li>Monthly or annual rental payments from tenants.</li>\n<li>Calculated as the rental rate per square foot multiplied by the leased area.</li>\n</ul>\n</li>\n<li><strong>Management Fees:</strong>\n<ul>\n<li>Charges for managing tenants&#8217; properties.</li>\n<li>Typically a percentage of the rental income.</li>\n</ul>\n</li>\n<li><strong>Service Charges:</strong>\n<ul>\n<li>Additional fees for services like cleaning or security.</li>\n<li>Based on a fixed or variable rate, depending on usage.</li>\n</ul>\n</li>\n<li><strong>Lease Renewal Fees:</strong>\n<ul>\n<li>Revenue from lease renewals.</li>\n<li>Often a flat fee or a small percentage of the lease value.</li>\n</ul>\n</li>\n<li><strong>Brokerage Fees:</strong>\n<ul>\n<li>Earnings from facilitating lease agreements.</li>\n<li>Usually calculated as a percentage of the lease value.</li>\n</ul>\n</li>\n</ul>\n<h3>Cost of goods sold</h3>\n<ul>\n<li><strong>Property Maintenance Costs:</strong>\n<ul>\n<li>Expenses for upkeep and repairs of leased properties.</li>\n</ul>\n</li>\n<li><strong>Utilities:</strong>\n<ul>\n<li>Costs for providing water, electricity, and heating to properties.</li>\n</ul>\n</li>\n<li><strong>Management Salaries:</strong>\n<ul>\n<li>Payments for personnel involved in property management and tenant services.</li>\n</ul>\n</li>\n<li><strong>Insurance:</strong>\n<ul>\n<li>Premiums for insuring properties against damages or liabilities.</li>\n</ul>\n</li>\n<li><strong>Property Taxes:</strong>\n<ul>\n<li>Taxes levied on owned real estate properties.</li>\n</ul>\n</li>\n</ul>\n<h3>Employees</h3>\n<ul>\n<li><strong>Leasing Manager</strong> – Oversees leasing activities, negotiates lease terms, and manages tenant relationships.</li>\n<li><strong>Property Manager</strong> – Manages properties, ensuring they are well-maintained and tenants’ needs are met.</li>\n<li><strong>Accountant</strong> – Handles financial transactions, ensuring accurate financial reporting and budgeting.</li>\n<li><strong>Administrative Assistant</strong> – Provides administrative support, managing office tasks, communications, and schedules, although this role may vary.</li>\n<li><strong>Maintenance Technician</strong> – Handles repairs and maintenance of properties, ensuring compliance with safety standards.</li>\n</ul>\n<h3>Operating expenses</h3>\n<ul>\n<li>Office rent (the cost of leasing office space for business operations) can be substantial.</li>\n<li>Utilities involve expenses for office utilities—such as water, electricity and heating—however, these are essential for maintaining a functional workplace.</li>\n<li>Marketing costs represent the budget allocated for promoting leasing properties and attracting tenants; this is crucial for business growth.</li>\n<li>Legal fees, which are costs associated with legal services for contracts and compliance, can be significant, especially when disputes arise.</li>\n<li>Software subscriptions incur costs for utilizing property management software and other business tools, but they are necessary for efficient operations.</li>\n<li>Office supplies represent expenses for purchasing necessary office supplies and equipment, which support daily activities.</li>\n<li>Insurance premiums provide coverage for liabilities and protect business assets, although many may overlook this aspect.</li>\n<li>Travel expenses, consisting of costs for business-related travel, often pertain to property inspections and meetings, because they are vital for maintaining client relationships.</li>\n<li>Telecommunications expenses cover phone, internet and other communication services, which are indispensable in today’s business environment.</li>\n<li>Training and development represent an investment in employee training and skill development programs; this can enhance productivity and job satisfaction.</li>\n</ul>\n<h3>Assets</h3>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"17406301-8d9d-4497-8cf0-1c60522a99ce\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<ul>\n<li><strong>Real Estate Properties:</strong>\n<ul>\n<li>The primary asset class, consisting of the portfolio of properties available for leasing.</li>\n</ul>\n</li>\n<li><strong>Office Equipment:</strong>\n<ul>\n<li>Includes computers, furniture, and other equipment necessary for daily operations.</li>\n</ul>\n</li>\n<li><strong>Vehicles:</strong>\n<ul>\n<li>Company vehicles used for commuting between properties and meetings.</li>\n</ul>\n</li>\n<li><strong>Asset Management:</strong>\n<ul>\n<li>Effective management of all assets is crucial for business success.</li>\n</ul>\n</li>\n</ul>\n</div>\n</div>\n</div>\n</div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\"></div>\n</div>\n<h3>Funding Options</h3>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"4d72837b-7e68-4897-b0b9-57e6ee0c3f0d\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<ul>\n<li><strong>Bank Loans:</strong> A traditional borrowing option with fixed principal and interest repayments.</li>\n<li><strong>Equity Financing:</strong> Raising capital by selling shares of the company to investors.</li>\n<li><strong>Private Investors:</strong> Individuals providing financing for real estate ventures.</li>\n<li><strong>Government Grants:</strong> Non-repayable funds from government programs supporting businesses.</li>\n</ul>\n</div>\n</div>\n</div>\n</div>\n<div class=\"mb-2 flex gap-3 empty:hidden -ml-2\">\n<div class=\"items-center justify-start rounded-xl p-1 flex\"></div>\n</div>\n<h2>Driver-based financial model for Commercial Real Estate Leasing</h2>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-8 text-message flex w-full flex-col items-end gap-2 whitespace-normal break-words text-start [.text-message+&amp;]:mt-5\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"4cdc8f46-dffc-4e1a-b3e2-4abbfc6a0f42\" data-message-model-slug=\"gpt-4o\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p>A driver-based financial model is essential. A truly professional Commercial Real Estate Leasing financial model is grounded in the <a href=\"https://www.toucantoco.com/en/blog/commercial-real-estate-manager-kpis\">operating KPIs</a> (also known as “drivers”) that are relevant to this industry. Examples of these KPIs include:</p>\n<ul>\n<li><strong>Occupancy Rate:</strong> The percentage of leased space versus the total available space, indicating operational efficiency.</li>\n<li><strong>Average Lease Term:</strong> Reflects the average duration of lease agreements, influencing revenue forecasts.</li>\n<li><strong>Tenant Turnover Rate:</strong> Measures how often tenants vacate, impacting revenue stability and marketing costs.</li>\n<li><strong>Maintenance Cost per Square Foot:</strong> Represents the average cost for maintaining a unit area of property, crucial for budget planning.</li>\n<li><strong>Revenue per Square Foot:</strong> Calculates income generated per square foot, useful for establishing competitive pricing.</li>\n<li><strong>Lease Renewal Rate:</strong> Denotes the rate at which existing leases are renewed, important for assessing potential revenue continuity.</li>\n<li><strong>Debt to Equity Ratio:</strong> Measures financial leverage, indicating company risk exposure and growth potential.</li>\n<li><strong>Net Operating Income (NOI):</strong> Revenue minus operating expenses, revealing business profitability before taxes and interest.</li>\n</ul>\n<p>Driver-based financial planning is a process of identifying key activities (also known as &#8216;drivers&#8217;) that have the highest impact on your business results. However, it also involves building financial plans based on those activities. It allows you to establish relationships between financial results and the resources (like people, marketing budgets, equipment, etc.) that you need to achieve those results.</p>\n<p>Although you may want to know more about driver-based financial planning and why it is the right way to plan, see the founder of Modeliks explaining it in the video below.</p>\n</div>\n</div>\n</div>\n</div>\n<p><iframe loading=\"lazy\" title=\"Unleashing the Secrets: Dominating Driver-Based Financial Planning\" width=\"640\" height=\"360\" src=\"https://www.youtube.com/embed/TRMzfKz9OOw?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen></iframe></p>\n<h2>The financial plan output</h2>\n<p>The purpose of financial forecast outputs is to enable you (and your management, board, or investors) to quickly grasp how your <strong>Commercial Real Estate Leasing financial model</strong> business will perform in the future. However, it is essential to gain comfort that the plan is not only well thought out, but also realistic and achievable. Furthermore, understanding what investment is necessary to implement this plan—and what the anticipated return on investment will be—is crucial. To meet these objectives, a one-page template exists for effectively presenting your financial plan.</p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"/images/cms/WhatsApp-Image-2024-09-27-at-09.52.52.jpeg\" alt=\"Commercial Real Estate Leasing financial plan\" width=\"800\" height=\"520\" /></p>\n<p>In addition to this one-page summary of your plan, three projected financial statements are needed: Profit and Loss, which analyzes the company&#8217;s revenues against its expenses over a specified time period (thus determining net income); Balance Sheet, which captures the company&#8217;s financial position by summarizing its assets, liabilities and shareholders&#8217; equity at a specific point in time; and the Cash Flow Statement, which provides insight into the business&#8217;s cash inflows and outflows, indicating liquidity and long-term viability.</p>\n<h2>Commercial Real Estate Leasing financial model summary</h2>\n<p>A professional (Commercial Real Estate) leasing financial model will help you think through your business, identify resources you need to achieve your targets, set goals, measure performance, raise funding and make confident decisions to manage and grow your business. The model ensures you are equipped with a plan that harmonizes your available resources with future ambitions; this encourages strategic and informed choices. In the rapidly advancing commercial real estate sector, a comprehensive financial model stands as an indispensable tool for anticipating challenges, maximizing opportunities and realizing future success (although you might encounter obstacles). However, because of its significance, it can be a crucial element in your decision-making process.</p>\n<p>If you need help with your financial plan, try <a href=\"https://modeliks.com\" target=\"_blank\" rel=\"noopener\">Modeliks</a>, a financial planning solution for SMEs and startups or contact us at <a href=\"mailto:contact@modeliks.com\">contact@modeliks.com</a> and we can help.</p>\n<p>Author:<br />\n<a href=\"https://www.linkedin.com/in/blagojahamamdziev/\">Blagoja Hamamdjiev</a>, Founder and CEO of <a href=\"https://www.modeliks.com/\" target=\"_blank\" rel=\"noopener\">Modeliks</a>, Entrepreneur, and business planning expert.</p>\n<p><em>In the last 20 years, he helped everything from startups to multi-billion-dollar conglomerates plan, manage, fundraise, and grow.</em></p>\n","slug":"commercial-real-estate-leasing-financial-model-example","date":"2025-02-04T08:51:23","featuredImage":{"node":{"id":"cG9zdDo4MTU5","sourceUrl":"/images/cms/main-image-MP0bgaS_d1c.jpeg","altText":"Commercial Real Estate Leasing financial structure"}},"seo":{"metaDesc":"Optimize your investment with our Commercial Real Estate Leasing financial model. 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