GLOSSARY OF LEASING TERMS
This list is not intended to be comprehensive. These terms may not be widely used in everyday conversation but are an important part of the office leasing vocabulary.
| Above-Standard TI’s: | Above-standard TI’s (Tenant Improvements) may include items such as upgraded carpet, wallpaper instead of standard paint, side-glass next to office doors, special light fixtures, etc. that go above and beyond the typical building-standard TI’s specified. |
| Additional Rent: | Generally refers to other cost factors such as after-hours, HVAC, and “non base” rent items. |
| Amortization: | Calculation to determine a regular-interval payment plan over time, with interest, to pay a set sum. As an example, to amortize $12 per square foot of tenant improvements at 10% interest, monthly payments over a 60-month period would be $.225/square foot. |
| Base Year: | The year of a lease term which is used to compare subsequent years; usually used when calculating operating expense pass-through expenses. |
| Block Layout: | A preliminary method of roughly laying out a tenant’s internal office requirements. Gives an initial feel of the space prior to preparing a more detailed layout. |
| BOMA: | Building Owners and Managers Association. |
| BOMA Standard: | A nationally published standard of measuring office space. Standards are published by other organizations and can affect how the size of space is calculated. Are “vertical” penetrations such as elevator shafts and stairwells excluded? Are balconies included? |
| Building Core: | The section of the building where the restrooms, ventilation shafts, electrical distribution, elevator shafts, and stairwells are located. |
| Building Shell: | This can mean different things to different people, but usually refers to a partially completed building with roof, walls, foundation, and may or may not include restroom cores, HVAC. Usually does not include any tenant improvements such as floor or wall coverings, drop t-bar ceilings, interior walls, or partitioning. |
| Building Standard: | The project specifications set out by the owner, usually in conjunction with the project architect. Details the type, quality, and color selection available with respect to carpet, paint, light fixtures, wall coverings, and other project finishes. |
| Cap Rate: | One of the most popular valuation formulas for commercial real estate, where net operating income (NOI) divided by the sales price equals the cap rate (capitalization rate). Usually, the higher the cap rate the higher the property risk (i.e. leases coming due, location, tenant credit). |
| Category 5: | Wiring specification — in 1996 usually towards the top of the line. |
| CCIM: | Certified Commercial Investment Member. An international professional designation requiring over 200 hours of specialized education; awarded to less than 3,000 in the World (as of 6/96). Investment sales, commercial leasing, development, corporate strategic planning, etc. |
| Ceiling Plenum: | The totally enclosed area above the ceiling used for the distribution of the air conditioning system (as opposed to fully-ducting the supply and return air system). |
| Client Club: | Major firm with vendor/outsource services sets up multi-purpose mixed work surface area for non-employees. Used in office hoteling. |
| Cockpit Office: | Small office (i.e. 50 square feet), full-height walls, set up for privacy with workspace for computer and telephone, sidelight, task workstation, overhead shelves. |
| Coring: | Drilling or removing a section of the flooring to provide access to the electrical distribution system. |
| CPI: | Consumer Price Index. Sometimes used to index rental rate escalations. |
| CPM: | Certified Property Manager. Professional designation conferred by Institute of Real Estate Management; requires extensive specialized education and experience. |
| Default: | The failure to meet an obligation, including lease clauses (i.e. timely rent payment, tenant use of premises, etc.) and mortgages (i.e. timely mortgage payment, timely payoff upon due date). |
| EMS: | Energy Management System. Computerized system to minimize the cost of operation while maintaining specified temperature and comfort parameters. May include integration of HVAC, electrical, and lighting systems. |
| Estoppel: | Usually used when a property is being refinanced or sold, typically a form which the tenant signs verifying the lease terms, rental amount, security deposit, and if there are outstanding issues which might be important to a lender or buyer. |
| Face Time: | Time spent face-to-face with clients. One benefit to virtual office programs. |
| Free Office: | Walk in, find an unoccupied office to suit your needs. Used in conjunction with office hoteling. |
| Fully Serviced Lease: | Type of lease whereby landlord pays as part of the base rental rate utilities, sewer, water, garbage, landscaping, property taxes, and insurance, janitorial, and maintenance. |
| Gross Square Foot: | Usually the total building square footage, including elevator shafts, vertical penetrations, equipment areas, ductwork shafts, and stairwells. |
| Gross-Up: | Usually applies to a full service office lease where if the building is less than 90% or 95% occupied, the expenses are still calculated for the tenants prorate share of operating expenses. |
| Holdover: | Usually 125-150% of the preceding month’s rent although some landlords may request 200-300%; applies to the month-to-month tenancy at the end of the lease term and being over-market is a partial motivation for the tenant to renew, or move out timely so the replacement tenant can move in. |
| Hot Building: | An office tower peppered with Wi-Fi hubs, as opposed to a single hot spot. The free Internet access is a strategy for attracting new tenants to commercial real estate. |
| Hot Desk: | Data, electrical, and phone connected, ready to plug in. |
| HVAC: | Heating, Ventilating, and Air Conditioning. |
| IDRC: | International Development Research Council. Founded in 1961, international association of real estate executives promotes effective asset real estate management, supports research, and offers numerous educational opportunities. |
| IREM: | Institute of Real Estate Management. Asset and property managers, extensive education programs, conferences, and networking. |
| SDN: | Integrated Services Digital Network. A high-speed data and media communication system, as much as ten or more times faster than conventional phone lines. |
| Live Load: | The variable weight per square foot to which a building is subjected. Typical suburban live-loads may be in the 50-70 lbs. per square foot range, while class A high-rises may offer 75-120 lbs. per square foot. This measurement may be critical for heavy file or equipment areas. |
| Load Factor: | The common area calculation used to convert usable square foot measurements (usually, the physical space actually occupied by the tenant) to rentable square foot calculations. Usually includes a prorata share of restrooms, lobby, and common hallways. |
| MOBE: | Mobile Office Business Environment. |
| Moteling: | Check in on arrival, assigned to office. A variation of the office hoteling theme. |
| NACORE: | International Association of Corporate Real Estate Executives. One of the most progressive corporate real estate training and education programs in the world. |
| NAIOP: | National Association of Industrial and Office Parks. |
| Net Lease: | Type of lease whereby the Tenant pays for part or all of the operating expenses which may include utilities, janitorial, property insurance, property management, sewer, water, and garbage. |
| Net Net Net (NNN) Lease: | Type of lease where Tenant generally pays for all operating expenses. May even include responsibility for roof and structural repair or replacement. |
| Office Hoteling: | Office space plan to house more people in less space by eliminating permanent offices for many employees. Allows organizations to reduce space costs by relying on technology to create the appearance of a permanent office. |
| Phase 1: | Preliminary investigation, usually by environmental engineer or consultant, of site’s current and past tenancies, adjacent uses, and initial assessment prior to extensive analysis of the possibility or likelihood of site contamination in any manner. |
| Phase 2: | More detailed site analysis, including, but not limited to, soil borings, samplings, testing of materials found in or around site. |
| Phase 3: | Site remediation of contamination or hazardous or suspected hazardous materials. |
| Remote Work Center: | In a suburban location near concentration of employee residences, satellite office set up with varying work stations, fax, phone, and computer assistance ability. |
| Rentable Square Feet: | Usually the space measurement which incorporates both the “usable square foot” measurement as well as the common area. The difference between usable and rentable is generally between 10-15%. |
| Research Commons: | Library-like setting, hub for division or section, set up with work surfaces, resources for research, or individual work space. Used in office hoteling. |
| Runner: | Employee who remains within the office a portion of the time (i.e. outside sales, services, consultant). |
| Shadow Market: | The “unofficial” vacancy portion of the office market caused by available sublease space and/or excess space leased but not occupied by office users. |
| Shared Office: | Offices from 150 to 400 square feet to house 2-6 persons. |
| SIOR: | Society of Industrial and Office Realtors. One of the oldest professional commercial designations in United States. Approximately 1,500 members worldwide. Emphasis on corporate office and industrial real estate. |
| Sitter: | Employee who remains within the office all or a majority of the time (i.e. computer staff, clerical, in-house research). (Versus the runner who is mostly out). |
| SONET: | Synchronized Optical Network Transmission. High-speed data and multimedia transmission system to office buildings. |
| Spec Development: | A once-obsolete term now regaining popularity, speculative developers build without preleasing or tenants in hand. Benefit to the tenants is actually seeing the finished product prior to commitment, as well as a shorter time-frame from lease execution to occupancy. Detriments include financial risk on the part of the lenders and developer if the project does not meet financial goals. |
| Stacking Plan: | Schematic illustrating tenancies on a floor-by-floor basis. Useful in forecasting how to accommodate growth tenants and identifying larger blocks of space. |
| Task Office: | Team uses one office on project, different members of next team use office for next project. |
| Telecommuting: | Equip employees to work out of house/car/client. |
| Touchdown Space: | Areas used by individuals in informal setting such as kitchen, lounge, preferable with windows. |
| Turn Key: | Landlord-provided tenant improvements, usually including everything (walls, doors, floor and window coverings, electrical) except telecommunications wiring and tenant furniture. |
| UPS: | Uninterruptible Power Supply. A special power source which takes over in the event of a failure in the main power system. |
| Usable Square Feet: | That space measurement actually contained within the demised premises. If the entire building is occupied by a single user, the rentable and usable square foot calculations may be the same. |
| VIP/Red Carpet Club: | Mixed work surfaces, study carrels, fax/copy areas, varying-sized private offices, cubicles, and niche work spaces. |
| Virtual Corporation: | Virtual office of the future, maximum flexibility, corporate center not defined by geographical location, totally-coordinated link-up by advanced telecommunication information systems. |
| Virtual Office: | Not physically constrained by actual walls or housed within a building. Virtual office can be one’s home, car, or client’s office. Basically wherever you get your work done. Facilitated with cell phone, lap top, modem, and flexibility. |
| Walker Duct: | An electrical distribution system, usually a metal trough running along set distances across the floor. Allows easier access for electrical and telecommunications wiring. |
| Wet Columns: | Columns where the pipes are accessible for wet-bars, kitchens, and drinking fountains. |
| Window Bay: | Usually the lineal square foot calculation to determine office sizes. Examples are 41 foot bays, which with three window bays would yield a 12 foot wide window office. |
