"As Is" Condition

"As Is" condition is the acceptance by the tenant of the existing condition of the premises at the time a lease is consummated, including any physical defects.

1031 Exchange

1031 Exchange is a tax deferral which permits taxpayers to reinvest the proceeds from the sale of property held for investment or business purposes into another investment or business property, and defer capital gains tax that would otherwise be due on the initial sale.

Abatement

Abatement is 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

Above Building Standard is any upgraded finishes and specialized designs necessary to accommodate a tenant's requirements.

Acre

Acre is a measure of land equal to 43,560 square feet.

Adjusted Basis

Adjusted Basis is a property value formula that is derived by taking the original basis, plus improvement costs, minus the depreciation of the property.

American with Disabilities Act (ADA)

ADA is a series of federal regulations intended to equalize access for people with disabilities. New buildings or buildings being substantially remodeled need to comply in order to obtain their building permits.

Amortization

Amortization is a calculated gradual payment of a debt through regular installments that cover both interest and principal.

Anchor Tenant

Anchor Tenant is the major or prime tenant in a shopping center, building, etc.

Annual Percentage Rate (APR)

APR is the actual cost of borrowing money, expressed in the form of an annual interest rate.

Appraisal

Appraisal is an estimate of a property's fair market value, by a qualified, objective party, based on replacement cost, discounted cash flow analysis and/or comparable sales price.

Appreciation

Appreciation is an increase in value or worth of property.

Assessment

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

Assignee

Assignee is an individual to whom a contract is assigned.

Assignor

Assignor is an individual who transfers a contract to another individual.

Base Rent

Base Rent is a set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease.

Base Year

Base Year is the actual taxes and operating expenses for a specified year, most often the year in which a lease commences.

Below-Grade

Below-Grade is any structure or a portion of a structure located underground or below the surface grade of the surrounding land.

BOMA Standard

BOMA Standard is a nationally published standard of measuring office space. Standards are published by other organizations and can affect how the size of space is calculated.

Build Out

Build Out is the construction or improvements of the interior of a space, including flooring, walls, finished plumbing, electrical work, etc.

Build-to-Suit

Build-to-Suit is a method of leasing property whereby the developer/landlord builds to a 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 credit to tenants and which offer multitude of amenities to tenants. The class of a building may vary depending on the location of the property. What is a class B in one market might be a class C in a different market.

Building Owners and Managers Association (BOMA)

BOMA monitors and lobbies pertinent legislative, regulatory and codes/standards issues, including electricity deregulation, capital gains tax relief, telecommunications, indoor air quality, private property rights, risk assessment, and codes and standards.

Building Permit

Building Permit is a written government permission to develop, renovate or repair a building.

Building Standard

Building Standard is the project specifications set out by the owner, usually in conjunction with the project architect. They detail the type, quality and color selection available with respect to carpet, paint, light fixtures, wall coverings and other project finishes.

Buyer's Broker

Buyer's Broker is an agent who takes the buyer as a client, is obligated to represent their interest above all others and owes specific fiduciary duties to the buyer.

Cap

Cap is the maximum allowable increase, for either payment or interest rate, for a specified amount of time on an adjustable rate mortgage.

Capital Gain

Capital Gain is calculated as follows: total selling price of the relinquished property, less exchange expenses, less the relinquished property's adjusted basis. The adjusted basis is the original cost, plus the cost of capital improvements, less depreciation or cost recovery deductions. Capital gains may be subject to depreciation recapture and other rules of the internal revenue service.

Capital Improvement

Capital Improvement is any major physical development or redevelopment to a property that extends the life of the property. Examples include upgrading the elevators, replacement of the roof and renovations of the lobby.

Cash Flow

Cash Flow is the revenue remaining after all cash expenses are paid.

Certificate of Occupancy

Certificate of Occupancy is an official form issued by the government, which states that the building is legally ready to be occupied.

Circulation Factor

Circulation Factor is the interior space required for internal office circulation not accounted for in the Net Square Footage.

Commencement Date

Commencement Date is a date which Landlord and Tenant agree the lease actually starts. This may be different than the occupancy or lease date. Often, a lease document has a commencement date exhibit that both parties sign. The commencement date often triggers the start of rent and acceptance of the property condition.

Common Area

Common Area is the area available for common use by all tenants and their invitees.

Common Area Maintenance (CAM)

CAM 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 that are made to the property.

Concessions

Concessions are 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

Condemnation is the taking of private property for public use by a government unit, against the will of the owner, but with payment of just compensation under the government's power of eminent domain. Condemnation may also be a determination by a governmental agency that a particular building is unsafe or unfit for use.

Consumer Price Index (CPI)

CPI is occasionally used to index rental rate escalations.

Contiguous Space

Contiguous Space is space within the same building and on the same floor that can be combined and rented to a single tenant or a block of space located on multiple adjoining floors in a building.

Default

Default is a failure to make mortgage payments or violations other provisions of the mortgage note.

Demising Wall

Demising Wall is the partition wall that separates one tenant's space from another or from the building's common area such as a public corridor.

Depreciation

Depreciation is a decrease in value to real property improvements due to wear and tear, adverse changes in the neighborhood, or any other reason.

Easement

Easement is a right-of-way created by grant, reservation, agreement, prescription or necessary implication which one has in land owned by another.

Eminent Domain

Eminent Domain is a government right to acquire private property for public use by condemnation and the payment of just compensation.

Encroachment

Encroachment is the unauthorized intrusion of a building or improvement such as a wall, fence, etc. onto another's land.

Escalations

Escalations refer to how much a Tenants rent or obligation for expenses will increase. Usually quoted as a rate per foot per year, or as an annual percentage. Some are tied to the CPI. Others are just negotiated up front. Not all leases have these.

Escrow

Escrow is the deposit of instruments and/or funds into the care of a neutral third party with instructions to carry out the provisions of an agreement or contract once all instruments and/or funds have been deposited. Many closings are handled by escrow agents. In this situation, the seller deposits the deed and the buyer deposits the funds necessary with the escrow agent. Once all requirements of the purchase contract are in the control of the escrow agent, the money and deed are distributed accordingly.

Fair Market Value

Fair Market Value is the likely selling price as defined by the market at a specific point in time.

Fee Simple

Fee Simple is the highest possible degree of ownership of land. The estate allows owners to have unrestricted powers to dispose of property, and which can be left by will or inherited.

Fiduciary

Fiduciary is a person in a position of trust or responsibility with specific duties to act in the best interest of a client. Real estate brokers and mortgage brokers are fiduciaries.

Flex Space

Flex Space is 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 etc.

Full Disclosure

Full Disclosure is revealing all known facts about the property which may affect the decision of a buyer or tenant.

Gross Lease

Gross Lease is a lease of property whereby the landlord (i.e., lessor) pays for all property charges usually included in ownership. These charges can include utilities, taxes, and maintenance, among others.

Hard Cost

Hard Cost is the cost of actually constructing property improvements.

Holdover Tenant

Holdover Tenant is a tenant who remains in possession of leased property after the lease term expiration.

Lease

Lease is a contract whereby the landlord grants the tenant the right to occupy defined space for a set period at a specific price (i.e., rent).

Lessee

Lessee is one who possesses the right to use or occupy a property under lease agreement.

Lessor

Lessor is one who holds title to and conveys the right to use and occupy a property under lease agreement.

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