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Property Management Terms

Base “Base Rate”
Dollar amount per square foot per year
Base Rent
Rent due to the landlord, fixed amount
Building Classes
Building type based on rent, finishes, standards, efficiency, amenities, location, etc.
Capital Expenditure
Capital projects that are not in the operating budget and improves the property. (new roof, TI, or parking lot)
Commercial Real Estate
property that can be bought or sold (residential, office or industrial)
Common Area
areas of a building (and its site) that are available for all its tenants (lobbies, corridors)
Common Area Maintenance (CAM)
Charges paid by tenant for upkeep of common areas (split between tenant(s))
Due Diligence
Examining a property, documents, and procedures conducted by a third party to reduce risk. Investigation that can determine if the actual conditions do or do not reflect the information as
represented.
Fixed Expenses
Costs that stay constant with a building’s occupancy rate. (property taxes, insurance, and some forms of building maintenance.)
Fixed Leases
A lease in which the lessee pays a fixed rental amount for the duration of the lease.
Gross Leasable Area (GLA)
The total floor area designed for tenant occupancy GLA is the area on which tenants pay rent; it is the area that produces income. (useable)
Gross Lease
A lease in which all expenses are paid by the landlord. (associated with owning and operating the property)
Also see net lease.
Inventory
The supply or stock of a given commodity or a listing thereof.
Landlord
The lessor or owner of the leased property.
Tenant Improvement
The total cost (outlay) of tenant improvements paid by the landlord to accommodate the tenants.
Lease
A contract that creates the relationship of landlord and tenant.
Lease Buyout
The process by which a landlord, tenant, or third party pays to extinguish the tenant’s remaining lease agreement.
Lessee
The person renting or leasing the property. Also known as a tenant
Lessor
The person who rents or leases a property to another. Also known as a landlord.
Load Factor
The ratio of rentable area to useable area. It is also known as the add-on factor.
Formula:
(Rentable square feet / Useable square feet) – 1= LF
Loss Factor
percentage difference between rentable area — the number of square feet that office tenants pay for — and usable area.
Formula:
LF = (R-U)/R
Neighborhood Analysis – Location Analysis – Market Analysis
The process of evaluating whether a general location meets the requirements of being both possible and
practical for an office space
Moving Allowance
A specified dollar amount paid by the owner to cover, in part or in whole, tenant moving expenses
Net Lease
A lease in which the tenant pays, in addition to rent, all operating expenses such as real estate taxes,
insurance premiums, and maintenance costs. Also see gross lease.
Occupancy Cost
dollars paid out by the tenant to occupy the space. (rent, real estate taxes, personal property taxes, insurance on building and contents)
Low-Rise
Fewer than seven stories high above ground level.
Mid-Rise
Between seven and twenty-five stories above ground level
High-Rise
Higher than twenty-five stories above ground level. [BOMA]
Operating Expenses
Expense to operate and maintain a property. real estate taxes, property insurance, property management and maintenance expenses, utilities
Percentage Lease
A lease in which the rent amount is based on a percentage of gross sales (monthly or annually) made by the tenant.
Percentage Rent
The additional rent (over a base amount) that is paid by tenants to owners on tenant sales over a specified dollar amount
Rent Concession
A period of free rent given to the tenant by the lessor.
Rent Escalators
Items in a lease that may increase by
predetermined amounts at certain times or by a constant annual percentage. base rent, operating expenses, and taxes
Rentable Area

core/structure and useable area. The actual square foot area for which the tenant will pay rent. It is the gross area of an office building (such as stairways and elevators). common areas such as lobbies, restrooms, and hallways and columns

Rentable Area = Useable area / (1-Loss Factor)
R = U / (1-LF)

Rentable to Usable Ratio
Defined as rentable area divided by useable area. Also known as the add-on factor or load factor
Replacement Cost
The estimated cost to construct a building with utility equivalent to the building being
appraised using modern materials
Sublease
A lease in which the original tenant (lessee) sublets all or part of the leasehold interest to another tenant (known as a subtenant)
Tenant/ Lessee
A person or entity who has possession of the property through a lease
Tenant-Paid Tenant Improvements
The total cost (outlay) of necessary tenant improvements paid by the tenant netted against any allowance
provided by the landlord.
Tenant Improvement Allowance From Owner
Cash Flow Form with a specified amount of money the owner will pay for tenant
improvement.
Useable

area that is available for the exclusive use of the tenant.

Useable area = rentable area – (building loss factor x rentable area)
U = R – (LF x R)

Vacancy
The number of units or space that are vacant and available for occupancy (usually expressed as a vacancy rate).
Vacancy Rate
The percentage of the total supply of units or space of a specific commercial type that is vacant and available

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