Economics behind Leasehold Improvements
I recently came across an article on Leasehold Improvements, otherwise known as Tenant Improvements (TI),
and it got me thinking. Looking back at the variety of commercial real estate
markets I have studied, I realized there are a few revelations I`ve uncovered
that should be analyzed a bit more in order to answer the following questions:
1. Should the economics driving the determination of fair market rent of commercial properties encompass value of leasehold improvements?2. How is leasehold improvement accounted for in the books of tenant? Why is this cost
treated as an intangible asset, and amortized? ... read more
We are bombarded daily with sound bytes about cycles. Today we have the “economic cycle,” “business cycle,” “recovery cycle,” “stock market cycle” and recently the “climate cycle.” We have “natural cycles,” “energy cycles,” “commodities cycles” and “currencies cycles.” Cycles can be short-, intermediate- or long-term, as well as seasonal. Wall Street analysts, governmental agencies and talking heads assign the term “cycle” to all that can’t be quantifiably explained or that which needs a catchy phrase to be explained. We have “vicious cycles” and “theoretical cycles.” We have notable business consulting gurus who use phrases such as “cycle time” or the “customer cycle.” Very sophisticated computer models at many universities and colleges seek to “quantify” business cycle theory (with the hope of a prediction), and one can blog and/or communicate with others 24/7 regarding economic cycles.
The issue with the term “cycle” is that it mandates an acknowledged beginning and an end, thus creating the endless challenging dilemma of knowing when to “get out” or when to “get in.” A cycle is generally defined as “an interval of time during which characteristics, or often regularly repeated ... read more
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