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Commercial Real Estate Glossary



Cost approach improvement value

The current cost to construct a reproduction of, or replacement for, the existing structure less an estimate for accrued depreciation from all causes. [Appraisal Institute]

Cost of capital

See weighted average cost of capital.

Cost of occupancy

Expenditures that are required to assume and maintain occupancy of a space. Such expenditures include rent and/or mortgage payments, and recurring costs, such as real estate taxes, repairs, operating expenses, and other outgoings directly resulting from the use of the property. (Encyclopedia of Real Estate Terms 2nd Edition, Damien Abbott)

Cost recovery

An annual deduction based on the class life of an asset.

Cost recovery recapture

According to the Taxpayer Relief Act of 1997, for properties sold after May 6, 1997, a noncorporate taxpayer will have to recapture, or pay taxes on, any straight-line cost recovery taken during the holding period, to the extent there is any gain.

Cross-over chart

A visual representation of the relationship between the costs of leasing and owning at varying discount rates.

Cross-over (office use) demand

Industrial space that is used as office space in order to lower the rental rate of a property. Also known as flex space.

Customer-spotting approach

An approach to estimating the retail trade area (and sales/revenue potential) for a given establishment or center based on the location of existing customers via point-of-sale information (by obtaining customer address or zip code data) or customer surveys (by interviewing customers as they enter the store); data which can later be mapped to determine the extent of the trade area.


Refers to information collected and presented in a form that facilitates processing and analysis.

Data dispersion

The amount or degree to which data points in a series are spread or dispersed about their mean (also referred to as variation about the mean).

Debt-coverage ratio (DCR)

Ratio of net operating income to annual debt service. Expressed as net operating income divided by annual debt service.


The loss of utility and value of a property.

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