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  • Abatement

    Often and commonly referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease.

  • Above Building Standard

    Upgraded finishes and specialized designs necessary to accommodate a tenant’s requirements.

  • Absorption Rate

    The net change in space available for lease between two dates, typically expressed as a percentage of the total square footage.

  • Add-On Factor

    Often referred to as the Loss Factor or Rentable/Usable (R/U) Factor, it represents the tenant’s pro-rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. It is usually expressed as a percentage which can then be applied to the usable square footage to dedesktopine the rentable square footage upon which the tenant will pay rent.

  • Anchor Tenant

    The major or prime tenant in a shopping center, building, etc.

  • Annual Percentage Rate (APR)

    The actual cost of borrowing money, expressed in the form of an annual interest rate. It may be higher than the note rate because it represents full disclosure of the interest rate, loan origination fees, loan discount points, and other credit costs paid to the lender.

  • Appraisal

    An estimate of opinion and value based upon a factual analysis of a property by a qualified professional.

  • Appreciation

    The increased value of an asset.

  • As-Is Condition

    The acceptance by the tenant of the existing condition of the premises at the time the lease is consummated. This would include any physical defects.

  • Assessment

    A fee imposed on property, usually to pay for public improvements such as water, sewers, streets, improvement districts, etc.

  • Assignment

    A transfer by lessee of lessee’s entire estate in the property. Distinguishable from a sublease where the sublessee acquires something less than the lessee’s entire interest.

  • Balloon Payment

    A large principal payment that typically becomes due at the conclusion of the loan desktop. Generally, it reflects a loan amortized over a longer period than that of the term of the loan itself (i.e. payments based on a 25 year amortization with the principal balance due at the end of 5 years). See “Bullet Loan.”

  • Bankruptcy

    Proceedings under federal statures to relieve a debtor who is unable or unwilling to pay its debts. After addressing certain priorities and exemptions, the bankrupt’s property and other assets are distributed by the court to creditors as full satisfaction for the debt. See also: “Chapter 11.”

  • Base Rent

    A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease. See also “Escalation Clause,” “Operating Expense Escalation” and “Percentage Lease.”

  • Base Year

    Actual taxes and operating expenses for a specified base year, most often the year in which the lease commences. Once the base year expenses are known, the lease essentially becomes a dollar s lease.

  • Below-grade

    Any structure or a portion of a structure located underground or below the surface grade of the surrounding land.

  • Build-To-Suit

    An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant’s specifications.

  • Building Classifications

    Building classifications in most markets refer to Class “A,” “B,” “C” and sometimes “D” properties. While the rating assigned to a particular building is very subjective, Class “A” properties are typically newer buildings with superior construction and finish in excellent locations with easy access, attractive to credit tenants, and which offer a multitude of amenities such as on-site management or covered parking. These buildings, of course, command the highest rental rates in their sub-market. As the “Class” of the building decreases (i.e. Class “B,” “C” or “D”) one component or another such as age, location or construction of the building becomes less desirable. Note that a Class “A” building in one sub-market might rank lower if it were located in a distinctly different sub-market just a few miles away containing a higher end product.

  • Building Code

    The various laws set forth by the ruling municipality as to the end use of a certain piece of property and that dictate the criteria for design, materials and type of improvements allowed. with respect to tenant finish improvements within the building. Examples of standard building items are: type and style of doors, lineal feet of partitions, quantity of lights, quality of floor covering, etc.

  • Capital Expenses

    This type of expense is most often defined by reference to generally accepted accounting principles (GAAP), but GAAP does not provide definitive guidance on all possible expenditures. Accountants will often disagree on whether or not to include certain items.

  • Capitalization Rate

    The rate that is considered a reasonable return on investment (on the basis of both the investor’s alternative investment possibilities and the risk of the investment). Used to dedesktopine and value real property through the capitalization process. Also called “free and clear return.” See “Capitalization.”

  • Capitlization

    A method of dedesktopining value of real property by considering net operating income divided by a prededesktopined annual rate of return. See “Capitalization Rate.”

  • Certificate of Occupancy

    A document presented by a local government agency or building department certifying that a building and/or the leased premises (tenant’s space), has been satisfactorily inspected and is/are in a condition suitable for occupancy.

  • Chapter 11

    That portion of the Federal Bankruptcy code that deals with business reorganizations. Chapter 7 is that part of the Federal Bankruptcy code that deals with business liquidations.

  • Chapter 7

    That portion of the Federal Bankruptcy code that deals with business liquidations. Chapter 11 is that part of the Federal Bankruptcy code that deals with business reorganizations.

  • Common Area

    There are two components of the term “common area.” If referred to in association with the Rentable/Usable or Load Factor calculation, the common areas are those areas within a building that are available for common use by all tenants or groups of tenants and their invitees (i.e. lobbies, corridors, restrooms, etc.). On the other hand, the cost of maintaining parking facilities, malls, sidewalks, landscaped areas, public toilets, truck and service facilities, and the like are included in the term “common area” when calculating the tenant’s pro-rata share of building operating expenses.

  • Common Area Maintenance (CAM)

    This is the amount of Additional Rent charged to the tenant, in addition to the Base Rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, insurance, property taxes, etc. Most often, this does not include any capital improvements (see “Capital Expenses”) that are made to the property.

  • Comparables

    Lease rates and terms of properties similar in size, construction quality, age, use, and typically located within the same sub-market and used as comparison properties to dedesktopine the fair market lease rate for another property with similar characteristics.

  • Concessions

    Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses, cabling expenses or other monies expended to influence or persuade the tenant to sign a lease.

  • Condemnation

    The process of taking private property, without the consent of the owner, by a governmental agency for public use through the power of eminent domain. See also “Eminent Domain.”

  • Construction Management

    The actual construction process is overseen by a qualified construction manager who ensures that the various stages of the construction process are completed in a timely and seamless fashion, from getting the construction permit to completion of the construction to the final walk-through of the completed leased premises with the tenant.

  • Contiguous Space

    (1) Multiple suites/spaces within the same building and on the same floor which can be combined and rented to a single tenant. (2) A block of space located on multiple adjoining floors in a building (i.e., a tenant leases floors 6 through 12 in a building).

  • Conveyance

    Most commonly refers to the transfer of title to property between parties by deed. The term may also include most of the instruments by which an interest in real estate is created, mortgaged or assigned.

  • Cumulative Discount Rate

    The interest rate used in finding present values that when applied to the rental rate takes into account all landlord lease concessions and then expressed as a percentage of base rent.

  • Deed

    A legal instrument transferring title to real property from the seller to the buyer upon the sale of such property.

  • Deed In Lieu Of Foreclosure

    A deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure. See also “Foreclosure.”

  • Deed Of Trust

    An instrument used in many states in place of a mortgage by which real property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary), to secure repayment of a debt.

  • Default

    The general failure to perform a legal or contractual duty or to discharge an obligation when due. Some specific examples are: 1) Failure to make a payment of rent when due. 2) The breach or failure to perform any of the terms of a lease agreement.

  • Demising Walls

    The partition wall that separates one tenant’s space from another or from the building’s common area such as a public corridor.

  • Depreciation

    Spreading out the cost of a capital asset over its estimated useful life or a decrease in the usefulness, and therefore value, of real property improvements or other assets caused by deterioration or obsolescence.

  • Dollar S

    An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. May be applied to specific expenses (e.g., property taxes or insurance).

  • Earnest Money

    The monetary advance by a buyer of part of the purchase price to indicate the intention and ability of the buyer to carry out the contract.

  • Easement

    A right of use over the property of another created by grant, reservation, agreement, prescription or necessary implication. It is either for the benefit of adjoining land (“appurtenant”), such as the right to cross A to get to B., or for the benefit of a specific individual (“in gross”), such as a public utility easement.

  • Effective Rent

    The actual rental rate to be achieved by the landlord after deducting the value of concessions from the base rental rate paid by a tenant, usually expressed as an average rate over the term of the lease.

  • Efficiency Factor

    Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, corridors, etc.). This factor can be computed for an entire building or a single floor of a building. Also known as a Core Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage.

  • Eminent Domain

    A power of the state, municipalities, and private persons or corporations authorized to exercise functions of public character to acquire private property for public use by condemnation, in return for just compensation. See also “Condemnation.”

  • Encroachment

    The intrusion of a structure which extends, without permission, over a property line, easement boundary or building setback line.

  • Encumbrance

    Any right to, or interest in, real property held by someone other than the owner, but which will not prevent the transfer of fee title (i.e. a claim, lien, charge or liability attached to and binding real property).

  • Environmental Impact Statement

    Documents which are required by federal and state laws to accompany proposals for major projects and programs that will likely have an impact on the surrounding environment.

  • Equity

    The fair market value of an asset less any outstanding indebtedness or other encumbrances.

  • Escrow Agreement

    A written agreement made between the parties to a contract and an escrow agent. The escrow agreement sets forth the basic obligations of the parties, describes the monies (or other things of value) to be deposited in escrow, and instructs the escrow agent concerning the disposition of the monies deposited.

  • Exclusive Agency Listing

    A written agreement between a real estate broker and a property owner in which the owner promises to pay a fee or commission to the broker if specified real property is leased during the listing period. The broker need not be the procuring cause of the lease.

  • Expense S

    An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. May be applied to specific expenses (e.g., property taxes or insurance).

  • Fair Market Value

    The sale price at which a property would change hands between a willing buyer and willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Also known as FMV.

  • First Generation Space

    Generally refers to new space that is currently available for lease and has never before been occupied by a tenant. See also “Second Generation Space.”

  • Fixed Costs

    Costs, such as rent, which do not fluctuate in proportion to the level of sales or production.

  • Flex Space

    A building providing its occupants the flexibility of utilizing the space. Usually provides a configuration allowing a flexible amount of office or showroom space in combination with manufacturing, laboratory, warehouse distribution, etc. Typically also provides the flexibility to relocate overhead doors. Generally constructed with little or no common areas, load-bearing floors, loading dock facilities and high ceilings.

  • Floor Area Ratio (FAR)

    The ratio of the gross square footage of a building to the land on which it is situated. Calculated by dividing the total square footage in the building by the square footage of land area.

  • Foreclosure

    A procedure by which the mortgagee (“lender”) either takes title to or forces the sale of the mortgagor’s (“borrower”) property in satisfaction of a debt. See also “Deed In Lieu Of Foreclosure.”

  • Future Proposed Space

    Space in a proposed commercial development which is not yet under construction or where no construction start date has been set. Future Proposed projects include all those projects waiting for a lead tenant, financing, zoning, approvals or any other event necessary to begin construction. Also may refer to the future phases of a multi-phase project not yet built.

  • General Partner

    A member of a partnership who has authority to bind the partnership. A general partner also shares in the profits and losses of the partnership. See also “Limited Partnership.”

  • Graduated Lease

    A lease, generally long term in nature, which provides that the rent will vary depending upon future contingencies, such as a periodic appraisal, the tenant’s gross income or simply the passage of time.

  • Grant

    To bestow or transfer an interest in real property by deed or other instrument; either the fee or a lesser interest, such as an easement.

  • Grantee

    One to whom a grant is made.

  • Grantor

    The person making the grant.

  • Gross Building Area

    The total floor area of the building measuring from the outer surface of exterior walls and windows and including all vertical penetrations (e.g. elevator shafts, etc.) and basement space.

  • Gross Lease

    A lease in which the tenant pays a flat sum for rent out of which the landlord must pay all expenses such as taxes, insurance, maintenance, utilities, etc. Guarantor: One who makes a guaranty. See also “Guaranty.”

  • Guaranty

    Agreement whereby the guarantor undertakes collaterally to assure satisfaction of the debt of another or perform the obligation of another if and when the debtor fails to do so. Differs from a surety agreement in that there is a separate and distinct contract rather than a joint undertaking with the principal. See also “Guarantor.”

  • Hard Cost

    The cost of actually constructing the improvements (i.e. construction costs). See also “Soft Cost.”

  • Hold Over Tenant

    A tenant retaining possession of the leased premises after the expiration of a lease.

  • HVAC

    The acronym for “Heating, Ventilating and Air-Conditioning.”

  • Improvements

    In the context of leasing, the term typically refers to the improvements made to or inside a building but may include any permanent structure or other development, such as a street, sidewalks, utilities, etc. See also “Leasehold Improvements” and “Tenant Improvements.”

  • Indirect Costs

    Development costs, other than material and labor costs which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering and financing costs.

  • Judgement

    The final decision of a court resolving a dispute and dedesktopining the rights and obligations of the parties. Money judgments, when recorded, become a lien on real property of the defendant.

  • Judgment Lien

    An encumbrance that arises by law when a judgment for the recovery of money attaches to the debtor’s real estate. See also “Lien.”

  • Just Compensation

    Compensation which is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain). The theory is that in order to be “just,” the property owner should be no richer or poorer than before the taking.

  • Landlord’s Lien

    A type of lien that can be created by contract or by operation of law. Some examples are: (1) a contractual landlord’s lien as might be found in a lease agreement; (2) a statutory landlord’s lien; and (3) landlord’s remedy of distress (or right of distraint), which in not truly a lien but has a similar effect. See also “Lien.”

  • Landlord’s Lien or Warrant

    A warrant from a landlord to levy upon a tenant’s personal property (e.g., furniture, etc.) and to sell this property at a public sale to compel payment of the rent or the observance of some other stipulation in the lease.

  • Lease

    An agreement whereby the owner of real property (i.e., landlord/lessor) gives the right of possession to another (i.e., tenant/lessee) for a specified period of time (i.e., desktop) and for a specified consideration (i.e., rent).

  • Lease Agreement

    The formal legal document entered into between a Landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights.

  • Lease Commencement Date

    The date usually constitutes the commencement of the term of the Lease for all purposes, whether or not the tenant has actually taken possession so long as beneficial occupancy is possible. In reality, there could be other agreements, such as an Early Occupancy Agreement, which have an impact on this strict definition.

  • Leasehold Improvements

    Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by Landlord. See also “Tenant Improvements.”

  • Legal Owner

    The term is in technical contrast to equitable owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien. See also “Lien.”

  • Letter of Credit

    A commitment by a bank or other person, made at the request of a customer, that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Letters of credit are often used in place of cash deposited with the landlord in satisfying the security deposit provisions of a lease.

  • Letter Of Intent

    A preliminary agreement stating the proposed terms for a final contract. They can be “binding” or “non-binding.” This is the threshold issue in most litigation concerning letters of intent. The parties should always consult their respective legal counsel before signing any Letter of Intent.

  • Lien

    A claim or encumbrance against property used to secure a debt, charge or the performance of some act. Includes liens acquired by contract or by operation of law. Note that all liens are encumbrances but all encumbrances are not liens.

  • Lien Waiver (Waiver of Liens)

    A waiver of mechanic’s lien rights, signed by a general contractor and his subcontractors, that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. May also be required before the owner can receive a draw on a construction loan.

  • Limited Partnership

    A type of partnership, created under state law, comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more special or limited partners who contribute capital and share in profits but who take no part in running the business and incur no liability over and above the amount contributed. See also “General Partner.”

  • Listing Agreement

    An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also “Exclusive Listing Agreement.”

  • Long Term Lease

    In most markets, this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option.

  • Lot

    Generally, one of several contiguous parcels of land making up a fractional part or subdivision of a block, the boundaries of which are shown on recorded maps and “plats.”

  • Maker

    One who creates or executes a promissory note and promises to pay the note when it becomes due.

  • Market Rent

    The rental income that a property would command on the open market with a landlord and a tenant ready and willing to consummate a lease in the ordinary course of business; indicated by the rents that landlords were willing to accept and tenants were willing to pay in recent lease transactions for comparable space.

  • Market Value

    The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale with the buyer and seller each acting prudently and knowledgeably in the ordinary course of trade.

  • Master Lease

    A primary lease that controls subsequent leases and which may cover more property than subsequent leases. An Executive Suite operation is a good example in that a primary lease is signed with the landlord and then individual offices within the leased premises are leased to other individuals or companies.

  • Mixed-Use

    Space within a building or project providing for more than one use (i.e., a loft or apartment project with retail, an apartment building with office space, an office building with retail space).

  • Mortgage

    A written instrument creating an interest in real estate and that provides security for the performance of a duty or the payment of a debt. The borrower (i.e., mortgagor) retains possession and use of the property.

  • Net Absorption

    The square feet leased in a specific geographic area over a fixed period-of-time after deducting space vacated in the same area during the same period. See also “Gross Absorption.”

  • Net Lease

    A lease in which there is a provision for the tenant to pay, in addition to rent, certain costs associated with the operation of the property. These costs may include property taxes, insurance, repairs, utilities, and maintenance. There are also “NN” (double net) and “NNN” (triple net) leases. The difference between the three is the degree to which the tenant is responsible for operating costs. See also “Gross Lease.”

  • Net Rentable Area

    The floor area of a building that remains after the square footage represented by vertical penetrations, such as elevator shafts, etc., has been deducted. Common areas and mechanical rooms are included and there are no deductions made for necessary columns and projections of the building. (This is by the Building Owner and Manager Association — BOMA, Standard).

  • Net Square Footage (S.F.)

    The space required for a function or staff position. Also see “Circulation Factor and “Usable Square Footage.”

  • Non-Compete Clause

    A clause that can be inserted into a lease specifying that the business of the tenant is exclusive in the property and that no other tenant operating the same or similar type of business can occupy space in the building. This clause benefits service-oriented businesses desiring exclusive access to the building’s population (i.e. travel agent, deli, etc.).

  • Non-Recourse Loan

    A loan which bars a lender from seeking a deficiency judgment against a borrower in the event of default. The borrower is not personally liable if the value of the collateral for the loan falls below the amount required to repay the loan.

  • Normal Wear and Tear

    The deterioration or loss in value caused by the tenant’s normal and reasonable use. In many leases the tenant is not responsible for “normal wear and tear.”

  • Open Space

    An unimproved area of land or water, or containing only such improvements as are appropriate to the use and enjoyment of the open area, and dedicated for public or private use or enjoyment or for the use and enjoyment of owners and occupants of land adjoining or neighboring such open spaces.

  • Operating Cost Escalation

    Although there are many variations of escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings. During the past thirty years, Landlords have developed the custom of separating the base rent for the occupancy of the leased premises from escalation rent. This technique enables the landlord to better ensure that the “net” rent to be received under the lease will not be reduced by the normal costs of operating and maintaining the property. The landlord’s definition of Operating Expenses is likely to be broad, covering most costs of operation of the building. Most landlords pass through proper and customary charges, but in the hands of an overly aggressive landlord, these clauses can operate to impose obligations which the tenant would not willingly or knowingly accept.

  • Operating Expense Escalation

    Although there are many variations of operating expense escalation clauses, all are intended to adjust rents by reference to external standards such as published indexes, negotiated wage levels, or expenses related to the ownership and operation of buildings.

  • Operating Expenses

    The actual costs associated with operating a property including maintenance, repairs, management, utilities, taxes and insurance. A landlord’s definition of operating expenses is likely to be quite broad, covering most aspects of operating the building.

  • Parking Ratio or Index

    The intent of this ratio is to provide a uniform method of expressing the amount of parking that is available at a given building. Dividing the total rentable square footage of a building by the building’s total number of parking spaces provides the amount of rentable square feet per each individual parking space (expressed as 1/xxx or 1 per xxx). Dividing 1000 by the previous result provides the ratio of parking spaces available per each 1000 rentable square feet (expressed as x per 1000).

  • Partial Taking

    The taking of part (a portion) of an owner’s property under the laws of eminent domain.

  • Pass Throughs

    Refers to the tenant’s pro rata share of operating expenses (i.e. taxes, utilities, repairs) paid in addition to the base rent.

  • Percentage Lease

    Refers to a provision of the lease calling for the landlord to be paid a percentage of the tenant’s gross sales as a component of rent. There is usually a base rent amount to which “percentage” rent is then added. This type of clause is most often found in retail leases.

  • Plat (Plat Map)

    Map of a specific area, such as a subdivision, which shows the boundaries of individual parcels of land (e.g. lots) together with streets and easements.

  • Power Of Sale

    Clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power, on default in the payment of the debt secured, to advertise and sell the property at public auction.

  • Prime Space

    This typically refers to first generation (new) space that is currently available for lease and which has never before been occupied by a tenant.

  • Prime Tenant

    The major tenant in a building or, the major or anchor tenant in a shopping center serving to attract other, smaller tenants into adjacent space because of the customer traffic generated.

  • Pro Rata

    Proportionately; according to measure, interest, or liability. In the case of a tenant, the proportionate share of expenses for the maintainenance and operation of the property. See also “Common Area” and “Operating Expenses.”

  • Punch List

    An itemized list, typically prepared by the architect or construction manager, documenting incomplete or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially complete.

  • Quitclaim Deed

    A deed operating as a release that is intended to pass any title, interest, or claim that the grantor may have in the property, but not containing any warranty or professing that such title is valid.

  • Raw Land

    Unimproved land that remains in its natural state.

  • Raw Space

    Unimproved “shell space” in a building.

  • Real Property

    Land, and generally whatever is erected or affixed to the land, such as buildings, fences, and including light fixtures, plumbing and heating fixtures, or other items which would be personal property if not attached.

  • Recourse

    The right of a lender, in the event of a default by the borrower, to recover against the personal assets of a party who is secondarily liable for the debt (e.g. endorser or guarantor).

  • Renewal Option

    A clause giving a tenant the right to extend the term of a lease, usually for a stated period of time and at a rent amount as provided for in the option language.

  • Rent

    Compensation or fee paid, usually periodically (i.e. monthly rent payments, for the occupancy and use of any rental property, land, buildings, equipment, etc.

  • Rent commencement Date

    The date on which a tenant begins paying rent. The dynamics of a marketplace will dictate whether this date coincides with the lease commencement date or if it commences months later (i.e., in a weak market, the tenant may be granted several months free rent). It will never begin before the lease commencement date.

  • Rent-Up Period

    That period of time, following construction of a new building, when tenants are actively being sought and the project is approaching its stabilized occupancy.

  • Rentable Square Footage

    Rentable Square Footage equals the Usable Square Footage plus the tenant’s pro rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. The pro-rata share, often referred to as the Rentable/Usable (R/U) Factor, will typically fall in a range of 1.10 to 1.16, depending on the particular building. Typically, a full floor occupancy will have an R/U Factor of 1.10 while a partial floor occupancy will have an R/U Factor of 1.12 to 1.16 times the Usable Area.

  • Rentable/Usable Ratio

    That number obtained when the Total Rentable Area in a building is divided by the Usable Area in the building. The inverse of this ratio describes the proportion of space that an occupant can expect to actually utilize/physically occupy.

  • Rental Concession

    Concessions a landlord may offer a tenant in order to secure their tenancy. While rental abatement is one form of a concession, there are many others such as: increased tenant improvement allowance, signage, lower than market rental rates and moving allowances are only a few of the many. See also “Abatement.”

  • Representation Agreement

    An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission, set fee or other form of compensation. See also “Exclusive Listing Agreement.”

  • Sale-Leaseback

    An arrangement by which the owner occupant of a property agrees to sell all or part of the property to an investor and then lease it back and continue to occupy space as a tenant. Although the lease technically follows the sale, both will have been agreed to as part of the same transaction.

  • Second Generation or Secondary Space

    Refers to previously occupied space that becomes available for lease, either directly from the landlord or as sublease space. See also “First Generation Space.”

  • Second Mortgage

    A mortgage on property that ranks below a first mortgage in priority. Properties may have two, three, or more mortgages, deeds of trust, or land contracts as liens at the same time. Legal sequence priority, indicated by the date of recording, dedesktopines the designation first, second, third, etc.

  • Security Deposit

    A deposit of money by a tenant to a landlord to secure performance of a lease. This deposit can also take the form of a Letter of Credit or other financial instrument.

  • Seisen (Seizen)

    Possession of real property under claim of freehold estate. This term originally referred to the completion of feudal investiture by which a tenant was admitted into the feud and performed the rights of homage and fealty. Presently it has come to mean possession under a legal right (usually a fee interest). As the old doctrine of corporeal investiture is no longer in force, the delivery of a deed gives seisin in law.

  • Setback

    The distance from a curb, property line or other reference point, within which building is prohibited

  • Setback Ordinance

    Setback requirements are normally provided for by ordinances or building codes. Provisions of a zoning ordinance regulate the distance from the lot line to the point where improvements may be constructed.

  • Shell Space

    The interior condition of the tenant’s usable square footage when it is without improvements or finishes. While existing improvements and finishes can be removed, thus returning space in an older building to its “shell” condition, the term most commonly refers to the condition of the usable square footage after completion of the building’s “shell” construction but prior to the build out of the tenant’s space. Shell construction typically denotes the floor, windows, walls and roof of an enclosed premises and may include some HVAC, electrical or plumbing improvements but not demising walls or interior space partitioning. In a new multi-tenant building, the common area improvements, such as lobbies, restrooms and exit corridors may also be included in the shell construction. With a newly constructed office building, there will often be a distinction between improvements above and below the ceiling grid. In a retail project, all or a portion of the floor slab is often installed along with the tenant improvements so as to better accommodate tenant specific under-floor plumbing requirements.

  • Site Analysis

    The study of a specific parcel of land which takes into account the surrounding area and is meant to dedesktopine its suitability for a specific use or purpose.

  • Site Development

    The installation of all necessary improvements, (i.e. installment of utilities, grading, etc.), made to a site before a building or project can be constructed upon such site.

  • Site Plan

    A detailed plan which depicts the location of improvements on a parcel of land which also contains all the information required by the zoning ordinance.

  • Soft Cost

    That portion of an equity investment other than the actual cost of the improvements themselves (i.e. architectural and engineering fees, commissions, etc.) and which may be tax-deductible in the first year. See also “Hard Cost.”

  • Space Plan

    A graphic representation of a tenant’s space requirements, showing wall and door locations, room sizes, and sometimes includes furniture layouts. A preliminary space plan will be prepared for a prospective tenant at any number of different properties and this serves as a “test-fit” to help the tenant dedesktopine which property will best meet its requirements. When the tenant has selected a building of choice, a final space plan is prepared which speaks to all of the landlord and tenant objectives and then approved by both parties. It must be sufficiently detailed to allow an accurate estimate of the construction costs. This final space plan will often become an exhibit to any lease negotiated between the parties.

  • Step-Up Lease (Graded Lease)

    A lease specifying set increases in rent at set intervals during the term of the lease.

  • Straight Lease (Flat Lease)

    A lease specifying the same, a fixed amount, of rent that is to be paid periodically during the entire term of the lease. This is typically paid out in monthly installments.

  • Strip Center

    Any shopping area, generally with common parking, comprised of a row of stores but smaller than the neighborhood center anchored by a grocery store.

  • Surety

    One who at the request of another, and for the purpose of securing to him a benefit, voluntarily binds himself to be obligated for the debt or obligation of another. Although the term includes guarantor and the terms are commonly, though mistakenly, used interchangeably, surety differs from guarantor in a variety of respects.

  • Taking

    A common synonym for condemnation or any actual or material interference with private property rights but it is not essential that there be physical seizure or appropriation.

  • Tax Base

    The assessed valuation of all the real property that lies within the jurisdiction of a taxing authority, which is then multiplied by the tax rate or mill levy to dedesktopine the amount of tax due.

  • Tax Lien

    A statutory lien, existing in favor of the state or municipality, for nonpayment of property taxes which attaches only to the property upon which the taxes are unpaid.

  • Tax Roll

    A list or record containing the descriptions of all land parcels located within the county, the names of the owners or those receiving the tax bill, assessed values and tax amounts.

  • Tenant (Lessee)

    One who rents real estate from another and holds an estate by virtue of a lease.

  • Tenant At Will

    One who holds possession of premises by permission of the owner or landlord, the characteristics of which are an uncertain duration (i.e. without a fixed desktop) and the right of either party to desktopinate on proper notice.

  • Tenant Improvement (“TI”) Allowance or Work Letter

    Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays any of the costs that exceed this amount. Also commonly referred to as “Tenant Finish Allowance.”

  • Tenant Improvements

    Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord. See also “Leasehold Improvements,” “Workletter.”

  • Title

    The means whereby the owner of lands has the just and full possession of real property.

  • Title Insurance

    A policy issued by a title company after searching the title and which insures against loss resulting from defects of title to a specifically described parcel of real property, or from the enforcement of liens existing against it at the time the title policy is issued.

  • Title Search

    A review of all recorded documents affecting a specific piece of property to dedesktopine the present condition of title.

  • Total Inventory

    The total amount of square footage of a type of property (i.e. office, industrial, retail, etc.) within a geographical area, whether vacant or occupied. This normally includes owner-occupied space.

  • Under Construction

    When construction has started but the Certificate of Occupancy has not yet been issued.

  • Under Contract

    A property for which the seller has accepted the buyer’s offer to purchase is referred to as being “under contract.” Generally, the prospective buyer is given a certain period of time in which to perform its due diligence and finalize financing arrangements. During the period of time the property is under contract, the seller is precluded from entertaining offers from other buyers.

  • Unimproved Land

    Most commonly refers to land without improvements or buildings but can also mean land in its natural state. See also, “Raw Land.”

  • Usable Square Footage

    Usable Square Footage is the area contained within the demising walls of the tenant space. Total Usable Square Footage equals the Net Square Footage x the Circulation Factor. Also see: Circulation Factor and Net Square Footage.

  • Use

    The specific purpose for which a parcel of land or a building is intended to be used or for which it has been designed or arranged.

  • Vacancy Factor

    The amount of gross revenue that pro forma income statements anticipate will be lost because of vacancies, often expressed as a percentage of the total rentable square footage available in a building or project.

  • Vacancy Rate

    The total amount of available space compared to the total inventory of space and expressed as a percentage. This is calculated by multiplying the vacant space times 100 and then dividing it by the total inventory.

  • Vacant Space

    Refers to existing tenant space currently being marketed for lease. This excludes space available for sublease.

  • Variance

    Refers to permission that allows a property owner to depart from the literal requirements of a zoning ordinance that, because of special circumstances, cause a unique hardship. Included would be such things as the particular physical surroundings, shape or ographical condition of the property and when compliance would result in a practical difficulty and would deprive the owner of the reasonable use of the property.

  • Warranty of Possession

    This is the old “quiet enjoyment” paragraph, which of course had nothing to do with noise in and around the leased premises. It provides a warranty by Landlord that it has the legal ability to convey the possession of the premises to Tenant; the Landlord does not warrant that he owns the land. This is the essence of the landlord’s agreement and the tenant’s obligation to pay rent. This means that if the landlord breaches this warranty, it constitutes an actual or constructive eviction.

  • Workletter

    A list of the building standard items that the landlord will contribute as part of the tenant improvements. Examples of the building standard items typically identified include: style and type of doors, lineal feet of partitions, type and quantity of lights, quality of floor coverings, number of telephone and electrical outlets, etc. The Workletter often carries a dollar value but is contrasted with a fixed dollar tenant improvement allowance that can be used at the tenant’s discretion. See also Leasehold Improvements and “Tenant Improvements.”

  • Zoning

    The division of a city or town into zones and the application of regulations having to do with the structural, architectural design and intended use of buildings within such designated zone (i.e. a tenant needing manufacturing space would look for a building located within an area zoned for manufacturing).

  • Zoning Ordinance

    Refers to the set of laws and regulations, generally, at the city or county level, controlling the use of land and construction of improvements in a given area or zone.


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