To accurately determine whether rent prices in the commercial real estate market are cheap or expensive, you must check the actual costs you incur, not just the quoted price.

We examine with RE/MAX why experts emphasize 'real rent' over nominal rent and the market significance contained within it.

The Illusion of Visible Prices: Nominal vs. Real

Unlike the housing market, there are two types of rent in the office and commercial lease markets. Nominal rent (Face Rent) is the official unit price stated in the contract, a figure that landlords strive to maintain to preserve the building's asset value.

On the other hand, Effective Rent refers to the actual cost calculated by subtracting all other benefits, such as rent-free periods or renovation assistance (TI), from the nominal rent. Even if a landlord raises the nominal rent to defend its value, the 'real price' borne by the tenant can be lowered if they extend rent-free periods or provide additional subsidies to attract tenants.

The market perspective proposed by real estate specialist RE/MAX

The most reliable indicator of the strength of the commercial real estate market is the direction of real rents. When the increase in real rents is lower than the increase in nominal rents, as seen recently in the Seoul office market, it can be interpreted as landlords retaining demand by offering greater benefits behind the scenes.

The real estate market is full of unfamiliar and complex terms such as rent-free periods and TI. Moving forward, RE/MAX, a real estate specialist, will continuously share the true meanings of these technical terms and how to read market trends, and will systematically teach you the criteria to determine the true value of real estate.

Registration for Startup Seminar on May 22nd & 29th: https://naver.me/FjmxJT8h
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