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    Commercial Real Estate Glossary

    Glossary

    A

    Load factor

    The ratio of rentable area to useable area. The load factor is a gauge by which a user can evaluate different sites with comparable rents. It is also known as the add-on factor.

    Formula:Load factor = Rentable square feet Useable square feet

    Loan balance

    The amount of money remaining to be paid on an amortizing loan at a given time.

    Loan or mortgage value

    That portion of the value of real property recognized by the lender when used to secure a loan.

    Loan point

    A charge prepaid by the borrower upon the origination of a loan. One point equals one percent of the loan amount.

    Loan-to-value ratio (L/V)

    The amount of money borrowed in relation to the total market value of a property. Expressed as the loan amount divided by the property value.

    Location analysis

    The process of evaluating whether a general location meets the requirements of being both possible and practical as defined on the basis of technical and functional components.

    Location quotient

    An index, defined in ratio form that compares the proportion of a local activity to the proportion of that activity found at some larger geographic scale, such as the nation.

    Location quotient method

    A method for estimating a community's economic base multiplier using basic employment estimates obtained from estimated location quotients (under various simplifying assumptions).

    Lower order good

    A good or service requiring a low threshold population to be offered. A good or service is considered to have a low threshold if it does not require a large number of consumers to support its business and thus requires a small trade area. Also see high order good.

    Macro-economy

    Generally used in reference to matters of economy or economic factors and forces portrayed or operating at the macro-level (as opposed to micro-level), used synonymously with national economy.

    Management

    The ability to monitor the performance of an investment and make changes as needed.

    Managing risk

    The steps taken by an investor or manager to control or reduce investment risk.

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