Glossary
Additional Rent Rent amount over and above the base rent or net rent which a tenant has to pay to the landlord. It usually includes Realty Taxes, Operating Costs, Utilities and ensuite janitorial.
Allowance An allowance is any sum of money that a landlord agrees to provide a tenant for items such as leasehold improvements, cabling/networking, data/communications and moving expenses. The allowance is amortized over the term of the lease at a specified interest rate. Cost savings are typically retained by the landlord, unless the lease specifies otherwise. The tenant is usually responsible for any costs in excess of the allowance.
As-is condition This means that the tenant agrees to take the premises or building in the condition it is currently in and agrees to be responsible for any necessary repairs or improvements.
Base/Net Rent A negotiated amount used as a minimum rent in a lease which also employs a percentage or other allocation for additional rent.
Build To Suit A method of leasing property whereby the landlord builds a new building in accordance with a tenant’s specifications.
Class A Property has excellent location and access to attract the highest quality tenants. Property must be of superior construction and finish, relatively new or competitive with new buildings, and providing professional on-site management.
Class B Property with good location, management, construction land tenancy. Can compete at low end of Class A.
Class C Older properties that are functionally obsolete or in need of regular maintenance. They are usually, though not always, situated in less desirable locations.
Common Area Maintenance (CAM) Is a fee charged by the landlord to the tenant for maintaining and operating common areas of the building.
Efficiency Factor The number resulting from dividing the Usable Area by the Gross Building Area in an office building, providing a benchmark measurement for that building’s use as an office building.
Face Rental Rate The “asking” or nominal rental rate published by the landlord.
Flex Space A one- or two-story building with little or no common areas, high ceilings, load-bearing floors and possible loading dock facilities. Usually configured to allow a small amount of light assembly or warehouse/distribution with the majority of space being for general office use. Flex Space is generally less expensive than traditional office space.
Gross Lease A lease that provides that the landlord shall pay all expenses of the leased property, such as taxes, insurance, maintenance, utilities, etc.
HVAC The acronym for Heating Ventilating and Air-Conditioning. Refers to the equipment used to heat and cool a building.
Improvements Generally, the term refers to buildings, but may include any permanent structure or other development, such as a St, utilities, etc. See also “On-Site Improvements.”
Institutional Ownership Real estate that is owned by REITs, pension funds, money managers or life insurance companies, as long-term holding’s of capital that provides investment returns that complement or directly match obligations to members, beneficiaries and shareholders.
Net Lease A lease which the tenant pays, in addition to rent, certain costs associated with a leased property, including property taxes, insurance premiums, repairs, utilities, and maintenance. There are also “net-net” (double net) and “net-net-net” (triple net) leases, depending upon the degree to which the tenant is responsible for operating costs.
Operating Expenses The actual cost of operating income-producing property, including utilities and similar day-to-day expenses, taxes, insurance and reserves for the replacement of items that wear out.
Renewal Option The right of a tenant to renew (i.e., extend the term of) a lease for a stated period of time and rent at an amount that can be determined.
Rentable Square Feet Usable square feet plus a percentage (the core factor) of the common areas on the floor, including hallways, bathrooms and telephone closets. (And sometimes main lobbies.) Rentable square footage is the number of square feet on which a tenant’s rent is based.
Restoration Prior to Tenant’s lease term expiry, the Tenant is to remove all leasehold improvements and restore the premises to the original base building.
Tenant Improvements Are changes to a premises or property made in accordance to the specific needs of a tenant. Tenant improvements include erecting and removing interior walls, changing floor coverings, ceiling tiles, toilets/showers, windows, doors, data rooms etc. The cost of tenant improvements may be born by the landlord or by the tenant, depending upon negotiations prior to the lease. Tenant improvements are typically subject to restoration rights upon lease expiry.
Tenant Representative An agent that represents the best interest of the tenant.
Turnkey Construction Where the landlord assumes responsibility for the total cost and completion of all improvements made to a property pursuant to the specific requirements and specifications of the tenant. Turnkey tenant improvements are provided at the landlord's expense according to plans and specifications previously agreed upon by the parties. The landlord bears all risk associated with the cost of construction in a turnkey situation.
TMI An amount over and above base/net rent including taxes, maintenance and insurance commonly associated with Industrial Properties. TMI excluded in suite janitorial and utilities.
Usable Square Feet The actual usable square feet contained within the walls of the leased premises. This figure does not reflect area outside the leased premises which can be used in common with other tenants / occupants.