Real Estate Investor Magazine South Africa March 2016 | Page 40

LEGAL

Obtaining Maximum Value from

Non-GLA Premises
BY JONATHAN S SMITH

A

s property asset-managers search for an
additional ways to sweat their assets in our
current challenging trading environment,
exploiting the non-Gross Leasable Incom components
of a fixed-property remains a return-enhancing but
oft-neglected source of revenue.
Meaning we should not restrict ourselves to
considering the non-GLA positions of only retail
developments as office and industrial property offers
similar commercial opportunities.
Non-GLA income refers to the income (or
revenue), which a property-portfolio derives from
spaces within each property-development, which do
not form part of the typical gross lettable area within
a development.
Whereas GLA-spaces (which typically comprise
usable areas – although not confined thereto) are
usually leased to tenants on a medium- to long- term
basis, non-GLA spaces are typically let out to tenants
(renters) on a short-term basis.
Research indicates that non-GLA income from
property-developments approximates two percent of
gross income in South Africa at present and about
four percent of gross income in Europe and North
America. In Europe some property-developments
in Europe are achieving up to ten percent of gross
income from non-GLA sources.
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MARCH 2016 SA Real Estate Investor

Accordingly, it would be prudent to grow this
category of revenue-generation within your portfolio
and, even, establish a cost-centre from which time and
resources be allocated towards researching the various
avenues which can be developed in this regard.
‘GLA’ refers to the gross lettable area of a fixedproperty development. This is the building area
(including common areas), which is lettable and
capable of being occupied by tenants, including
basements, mezzanines or upper floors and from
which revenue can typically be derived in the form
of rental.
Non-GLA income is the additional income, which
can be earned from a fixed-property development
via income-producing components (please see table)
not ordinarily contained within the GLA of such
developments. Non-GLA components also provide
the opportunity of short-term rate-variability and
higher escalations.

The following revenue-sources are included
within non-GLA income:
ADVERTISING OPPORTUNITIES
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Internal advertising displays
External advertising displays (signboards)
Parking area advertising
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