Offirent dictionary

200 general terms and definitions of the office rental market

by Oleg Zhuk & ChatGPT

Access control

system for controlling access to an office building and its individual spaces, typically through the use of keys, key cards, or biometric identification

Additional rent

extra fees or rents that the tenant may be liable for, including utilities, common areas (CAM), maintenance, or any other charges not included in the base rent

Agent

person who may represent a landlord or tenant when negotiating a commercial lease agreement. They may be a real estate agent, broker, attorney, or salesperson

Amenity spaces

common areas in an office building where tenants can gather and use building amenities, such as lounges or break rooms

Amortization

process of paying off a loan or mortgage for an office building over time, through regular payments

Appraisal

process of determining the value of an office building, typically for the purpose of obtaining a loan or for tax purposes

Assignable area

space that is assigned for a specific purpose, for example, cafeteria

Assignment

transfer of a tenant's rights and obligations under a lease agreement to a new tenant, known as the assignee

Automatic renewal

agreement is set to automatically renew after a given period, e.g., yearly. The terms of the lease remain unless either party gives notice or asks to renegotiate the terms.

Base rent

minimum amount of rent required under the terms of a lease.Bondable Net Lease: A variant of the NNN lease that places all risks related to the property on the tenant. If a fire occurs, the tenant is responsible for the rebuilding effort and must keep paying rent until the building is renovated/repaired/rebuilt.

Base year

first year of a lease agreement, during which the tenant's operating expenses are determined and used as a benchmark for future years

Bicycle storage

facilities provided in an office building for storing and securing bicycles, such as bike racks or lockers

Billing and invoicing

process of billing tenants for rent, CAM charges, and other expenses related to their occupancy of an office building

BOMA

Building Owners and Managers Association. Publishes standards for office building management and development, including how to measure office space and common areas, energy consumption, operating costs, and building codes

Bondable Net Lease

variant of the NNN lease that places all risks related to the property on the tenant. If a fire occurs, the tenant is responsible for the rebuilding effort and must keep paying rent until the building is renovated/repaired/rebuilt

Borrower

person or entity that borrows money to purchase or develop an office building

Break clause

clause in a lease that allows either the tenant or the landlord to terminate the lease early, subject to specific conditions

Building amenities

features and services provided in an office building to enhance the tenant experience, such as a fitness center, lounge, or rooftop terrace

Building automation system (BAS)

computerized system that automates the control and monitoring of an office building's systems and equipment, such as lighting, HVAC, and security

Building class

rating system used to classify office buildings based on factors such as construction quality, location, and building amenities. Commercial properties are rated as Class A, B, or C. Class A is usually newer, high-quality buildings with amenities and professional management. Class B is older and in a less-than-ideal location but still has good management. Class C is the lowest-end properties that are in need of improvements

Building code

set of regulations and standards that govern the design and construction of office buildings

Building core

parts of the office building such as stairwells, elevator shafts, and public restrooms that are located near the center of the building and aren't rented directly to tenants

Building envelope

physical components of an office building that enclose and protect the interior space, including the roof, walls, and foundation

Building information modeling (BIM)

digital representation of an office building, used for design, construction, and building management

Building maintenance

the ongoing upkeep and repair of an office building to ensure it remains in good condition and operates efficiently

Building management software (BMS)

software used by landlords and property managers to manage the operations of an office building, including lease management, work order tracking, and financial reporting

Building operations

day-to-day activities and processes required to maintain and operate an office building, including maintenance, security, and cleaning.Building security - the systems and measures in place to protect an office building and its tenants from theft, vandalism, and other security threats

Building Owners and Managers Association (BOMA)

publishes standards for office building management and development, including how to measure office space and common areas, energy consumption, operating costs, and building codes

Building performance simulation

use of computer software to model and analyze the energy efficiency and environmental performance of an office building

Building rentable

area within the interior gross that includes the usable area and a prorated portion of the common areas on the entire office floor

Building security

systems and measures in place to protect an office building and its tenants from theft, vandalism, and other security threats

Building systems

mechanical, electrical, and plumbing systems that support the operation of an office building

Building systems integration

coordination of different building systems, such as lighting, HVAC, and security, to improve building performance and reduce energy consumption

Build-out

work that needs to be done to make it possible for a business to operate on the first day of their lease

Build-to-suit

type of construction in which an office building is designed and constructed specifically to meet the needs of a specific tenant

Capital expenditures

funds spent by a landlord to improve or upgrade an office building, such as installing a new HVAC system or upgrading the elevators

Capital expenditures (CAPEX)

funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment

Capitalization rate (Cap rate)

rate of return that could be expected from an investment in an office building, based on the net operating income and the current market value of the building

Class A office space

refers to top-quality, high-end office space, typically located in prime locations and offering modern amenities

Class B office space

refers to mid-range office space, typically located in less prestigious locations, but still offering reasonable quality

Class C office space

refers to lower-quality office space, typically older buildings with limited amenities

Cleaning services

services provided by cleaning personnel to maintain the cleanliness of an office building and its common areas

Commencement date

The date on which the tenant takes over the property and becomes responsible for paying rent and maintaining the rental property

Commission

fee paid by a landlord to a real estate broker for finding a tenant for an office space

Commissioning

process of testing and verifying the functionality of all systems and equipment in an office building, prior to occupancy

Commissioning agent

a professional who manages the commissioning process for an office building

Common area maintenance (CAM)

an incidental expense in some commercial real estate leases shared by all tenants, including fees for snow removal, janitorial services, landscaping, and property management

Concession

an incentive offered by a landlord to a tenant, such as free rent or tenant improvement allowances, to encourage the tenant to sign a lease

Condemnation

determines what happens if the rental property is taken from the landlord by a government agency for public use, either by condemnation or eminent domain

Contraction option

clause in a lease that gives the tenant the right to reduce their rented space within the building

Core building services

regions within the building rentable area that are dedicated to providing maintenance and core services for the building or structure

Covenants

different terms for the tenant and landlord with each having a separate set of covenants. For example, a covenant may state that the tenant must pay rent even if the landlord fails to uphold their responsibilities.

Coworking space

type of office rental space that is shared by multiple businesses or individuals, typically providing flexible and cost-effective options

Crossover clause

clause in a lease agreement that provides for the transfer of a tenant's lease from one office building to another, in the event that the first building is sold or otherwise changes hands

Day-to-day management

ongoing management of an office building, including the maintenance of common areas, the resolution of tenant requests and issues, and the collection of rent and other fees

Debt service coverage ratio (DSCR)

ratio of net operating income to debt service, used to determine the ability of an office building to cover its loan or mortgage payments

Default

conditions where the landlord or tenant has broken one or more terms of the lease, the remedies available, and the recourse either party has if the breach isn't remedied

Demising wall

wall that separates one office space from another within an office building

Depreciation

decrease in value of an office building over time, due to wear and tear, obsolescence, or other factors

Direct lease

lease in which the tenant rents directly from the owner or landlord of the building

Double net lease (NN)

type of commercial real estate lease under which the tenant usually pays base rent plus two incidentals, such as property taxes and insurance, and the landlord covers all other expenses

Due diligence

process of thoroughly researching and evaluating an office building or portfolio of buildings, prior to making an investment

Egress

right of a tenant to enter and exit an office building

Emergency preparedness

plans, procedures, and equipment in place to respond to emergencies and protect tenants in an office building

Energy efficiency

ability of an office building to minimize energy consumption and reduce carbon emissions, through the use of energy-saving technologies and practices

Energy management system (EMS)

computerized system used to monitor and control energy use in an office building

Engineering services

services provided by engineering personnel to maintain and repair the mechanical, electrical, and plumbing systems in an office building

Escalation clause

clause in a lease agreement that provides for automatic increases in rent over time, based on a predetermined formula

Expansion option

clause in a lease agreement that gives a tenant the right to increase the size of their office space during the lease term

Extension

both parties can agree to an extension of the agreement in writing, signed by both parties

Exterior gross

total floor space of a building, including unusable space or excluded areas, which is measured from the outside walls

Exterior wall

outer wall that surrounds the total interior gross

Fit-out

process of adapting an office space to meet the specific needs of a tenant, including the installation of partitions, lighting, and electrical and mechanical systems

Fixed end dates

lease dictates the date when the tenancy agreement ends, and neither party can give notice before the end date

Flex space

refers to office space that is flexible and can be adapted for a variety of uses, such as coworking, office, or retail

Full Service Gross Leases

type of commercial lease where the tenant pays a fixed amount of rent every month/year, and the landlord covers all operational and maintenance expenses, such as insurance, utilities, property management, and taxes

Grant of lease

the clause that states the landlord will turn the property over to the tenant once all conditions (e.g., paying the security deposit) are met and the tenant accepts the property

Green office building

office building that is designed and built to minimize its impact on the environment, using sustainable building practices and technologies

Gross building area (GBA)

total square footage of a building, including all rentable and non-rentable space

Gross lease

type of lease agreement in which the tenant pays a fixed monthly rent, and the landlord is responsible for all operating expenses, such as property taxes, insurance, and maintenance

Gross rent lease

type of commercial real estate lease under which you pay a single amount to the landlord that covers base rent and all incidental expenses

Gross rent multiplier

metric used to determine the value of an office building, based on the gross rental income generated by the building

Guarantor

third party who agrees to be responsible for a tenant's rent and other obligations under a lease agreement, in the event that the tenant defaults

Handover

process of transferring ownership or control of an office building from one party to another

Holdover rent

Increased amount of rent a tenant must pay for not vacating the space when the lease terminates, usually at an amount significantly higher than the original base rent

Holdover tenant

tenant who remains in an office space after the expiration of their lease, without the consent of the landlord

HVAC

heating, ventilation, and air conditioning, including the ductwork and filters of the system

Improvements and alterations

changing the space for the tenant’s use, such as updating flooring and paint, or relocating an existing interior wall

Incidental expenses

costs on top of base rent, can include property tax, insurance, utilities, maintenance, common area costs and repair

Indemnity by tenant

this clause essentially removes all liability from the landlord in the event of injury, loss, claims, or damage, unless those things are a direct result of willful acts or omissions or gross negligence on the landlord’s part

Indoor air quality (IAQ)

quality of air within

Insurance

tenants are required to obtain and pay for their own business liability insurance, including protection for lost business income and naming the landlord as an additional insured

Interior gross

total measured area that is calculated from the inner surface of the walls, including rentable areas, interior parking, vertical penetration, and void areas

Interior parking

area within the interior gross that is available for parking

Janitorial services

services provided by janitorial personnel to maintain the cleanliness and order of an office building and its common areas

Key money

one-time fee paid by a tenant to a landlord, as an incentive for the landlord to sign a lease agreement

Landlord access

amount of notice the landlord must give before entering the space leased to the tenant

Landlord rep

real estate broker or agent who specializes in representing landlords in the leasing process

Landscaping services

services provided by landscaping personnel to maintain the grounds and outdoor areas of an office building

Late fee

if the tenant is late in paying rent, they will incur a late fee that is outlined by the commercial lease agreement

Leadership in Energy and Environmental Design (LEED)

green building certification program, administered by the U.S. Green Building Council

Lease

legal agreement between a landlord and tenant, specifying the terms and conditions of the rental of an office space

Lease administration

process of managing and enforcing the terms of a lease agreement between a landlord and tenant

Lease options

tenant agrees to occupy a building for a fixed period. However, they have the option to renew the lease for another fixed period after expiry. The landlord may add a rent escalator to increase the rent for the second lease periodLease proposal - a formal offer made by a landlord to a tenant, outlining the terms and conditions of a potential lease agreement

Lease renewal options

agreement may include the option for the tenant to renew the lease at the end of the lease term. The terms of the renewal may be negotiated between the landlord and the tenant

Lease proposal

formal offer made by a landlord to a tenant, outlining the terms and conditions of a potential lease agreement

Lease renewal options

agreement may include the option for the tenant to renew the lease at the end of the lease term. The terms of the renewal may be negotiated between the landlord and the tenant.

Lease termination

this clause outlines the conditions under which either party may terminate the lease agreement, such as default or breach of lease terms

Leasehold

right to occupy and use an office space for a specified period of time, in accordance with the terms of a lease agreement

Leasehold improvements

modifications made to an office space by a tenant, such as the installation of partitions or lighting, that become the property of the landlord upon the termination of the lease

Lender

organization, such as a bank, that provides financing for the purchase or development of an office building

Length of the lease

is usually somewhere between three and five years, as commercial landlords prefer longer lease terms. The lease agreement also often specifies the start and end dates of the lease.

Lessee Name

name of the tenant; the person or entity taking the lease

Lessor Name

name of the landlord; the person or entity giving the lease

Letter of credit

guarantee provided by a bank, used to secure payment of rent and other obligations under a lease agreement

Letter of intent (LOI)

non-binding agreement between a landlord and tenant, outlining the terms and conditions of a potential lease agreement

Life cycle cost analysis

an evaluation of the total cost of ownership of an office building over its entire lifecycle, including construction, operation, and demolition

Load factor

used to calculate a tenant’s total monthly rental costs by combining the leased square footage with the tenant’s proportional share of the common areas

Loading dock

loading area for trucks and other vehicles, used to deliver goods and materials to an office building

Loan-to-value ratio (LTV)

ratio of the loan amount to the value of an office building, used to determine the amount of equity required

Maintenance and repairs

this clause outlines the responsibilities of the landlord and the tenant for maintenance and repair of the property

Management agreement

agreement between a landlord and a property management company, in which the management company is responsible for the day-to-day operations of an office building

Management fee

fee charged by a landlord to cover the cost of managing an office building, including day-to-day management and common area maintenance

Market rent

current rental rate for office space in a specific market, based on comparable spaces and current market conditions

Market survey

study of the rental rates and availability of office space in a specific geographic area, used to inform lease negotiations and investment decisions

Modified Gross Lease

type of lease is similar to the full-service gross lease, but the tenant is partially responsible for any increments in the landlord’s operating expenses. Therefore, if property taxes or utilities increase beyond the costs written in the agreement, the tenant pays for a portion of the increase

Move-in condition

condition of an office space at the time a tenant moves in, including the state of the flooring, walls, and fixtures

Net effective rent

total rent a tenant must pay, after taking into account any concessions or incentives offered by the landlord

Net lease

type of commercial real estate lease under which you typically pay for one incidental expense directly. In a single net lease, you usually pay the base rent plus property taxes (though in some cases, you might pay for insurance or utilities instead). The landlord pays all other expenses.

Non-competition clause

non-competition clause that prohibits a landlord from leasing a nearby property to a competitor of your business

Nondisturbance agreement

agreement between a tenant and a landlord, or a lender, to protect the tenant's rights in the event of a default or bankruptcy by the landlord or lender

Obligation for repair

this section states what types of repairs the landlord is obligated to make – like defects, deficiencies, failures or deviations in materials – that are vital to the operation of the property. It also outlines the repairs that tenants are responsible for.

Office building

type of commercial building designed for use as office space

Office condominium

type of office space that is owned rather than rented, typically available for purchase as individual units within a larger office building

Office lease agreement

office lease is a legally binding contract made between a tenant (lessee) and a landlord (lessor). These agreements may be negotiated and signed by agents or representatives of either party.

Office park

type of office development that contains multiple office buildings, usually located in suburban areas

Office space

refers to a rented area within a building used for commercial or business purposes

Operating expenses

costs incurred in the operation of the property, such as property taxes, insurance, utilities, and common area maintenance

Operations and maintenance (O&M)

ongoing upkeep, maintenance, and repair of an office building, typically performed by a property management compan

Package management

process of receiving, storing, and delivering packages and mail to tenants in an office building

Parking ratio

ratio of parking spaces to square footage of office space in a building, expressed as spaces per 1,000 square feet of office space

Per square foot rental rate

amount of rent a tenant must pay, expressed on a per square foot basis

Percentage rent

in some commercial leases, the tenant may pay a base rent plus an additional percentage of their sales

Permits

both parties are to acquire all necessary permits and licenses for making improvements or repairs at the location being rented

Pre-leasing

process of renting office space before it is completed and ready for occupancy

Premises

address of the building and specific suite number being leased

Property management

overseeing and management of an office building, typically by a third-party company hired by the landlord

Reletting fee

fee charged by a landlord to a tenant who terminates their lease early, to cover the cost of finding a new tenant

Relocation clause

clause in a lease that allows the tenant to relocate within the building, subject to specific conditions

Renewal option

clause in a lease agreement that gives a tenant the right to extend their lease for an additional term, under certain conditions

Rent abatement

reduction in the amount of rent a tenant must pay, typically as a result of a temporary reduction in the use or availability of the office space

Rent adjustment/abatement

when and how much the base rent increases, usually annually, expressed as a fixed amount or percentage. Sometimes called a cost of living adjustment (COLA).

Rent increase clause

clause in a lease agreement that provides for automatic increases in rent over time, based on a predetermined formula

Rent review clause

clause in a lease agreement that provides for periodic reviews of the rent, based on market conditions and other factors

Rent roll

record of all the tenants in a specific office building, including their rental rates, lease expiration dates, and contact information

Rentable area ratio

ratio of the total rentable area of an office building to its total floor area, expressed as a percentage

Rentable square footage (RSF)

amount of square footage in a building that is available for rent, including both usable space and common areas

Rentable value

amount of rent a landlord can charge for a specific office space, based on market conditions and the space's features and location

Rent-free period

period of time during which a tenant does not have to pay rent, typically as an incentive for signing a lease agreement or as part of a lease renewal

Rent-to-value ratio

income from an office building to the value of the building, expressed as a percentage

Right of first refusal

clause in a lease agreement that gives a tenant the first opportunity to lease additional space in an office building, in the event that the space becomes available

Security deposit

sum of money paid by a tenant to a landlord as security for the performance of their obligations under a lease agreement

Service level agreement (SLA)

agreement between a landlord and a tenant that outlines the services that the landlord will provide to the tenant, such as maintenance, cleaning, and security

Serviced office

fully furnished and equipped office space with additional services such as reception, mail handling, and administrative support

Single Net Lease

this is the simplest commercial lease type, also called the ‘N’ lease. Here, the tenant pays base rent and takes care of other expenses related to the property.

Site selection

process of choosing a location for an office building, based on factors such as accessibility, parking, and the surrounding environment

Smart office building

office building that is equipped with advanced technologies, such as automation and data analysis, to improve efficiency and sustainability

Space planning

process of determining the most efficient and effective use of office space, taking into account factors such as workstation configurations, traffic flow, and storage requirements

Sublease

lease of an office space by a tenant to another party, with the consent of the landlord

Subordination clause

clause in a lease agreement that allows the tenant's lease to be subordinated to the claims of a lender or other third party.

Subtenant

tenant who leases office space from another tenant, who is known as the sublessor

Suburban office market

refers to office rental space located outside of urban centers, usually in suburban areas

Surveillance cameras

cameras installed in an office building for the purpose of monitoring activity and improving security

Sustainability initiatives

programs and initiatives in place in an office building to reduce its environmental impact and promote sustainability, such as recycling programs, green roofs, or renewable energy systems

Taxes

his section of leaese outlines all of the taxes associated with the property (property taxes, real estate taxes) and who is responsible for paying them. Within this section, there could be subtopics, like Contest of Taxes (the tenant can contest the amount of personal or real property tax they are responsible for paying), Payment of Ordinance Assessments (the tenant usually pays for all ordinary assessments, which are obligatory, and extraordinary, which are by choice) and Change in Method of Taxation.

Tenant improvement allowance (TIA)

funds provided by a landlord to a tenant to make improvements or renovations to an office space

Tenant inducements

incentives offered by a landlord to encourage you to rent a space. Examples include several months rent free or help with paying for leasehold improvements.

Tenant mix

mix of tenants in a specific office building, including their sizes, uses, and industries

Tenant relations

relationships between a landlord and tenants, including communication, dispute resolution, and tenant satisfaction

Tenant rep

real estate broker or agent who specializes in representing tenants in the leasing process

Tenant retention

ability of an office building to retain its existing tenants over time, rather than losing them to competing properties

Tenant services

services and amenities provided to tenants in an office building, such as conference rooms, break rooms, and concierge services

Termination clause

clause in a lease agreement that provides for the termination of the lease under certain conditions, such as default by the tenant or the sale of the building

Termination option

clause in a lease agreement that gives a tenant the right to end their lease before the end of the lease term

Tenant improvements (TIs) or move-in allowance

improvements required for the tenant’s specific use. Sometimes paid for by the landlord, or by the tenant in exchange for a move-in allowance credit toward the monthly rent.

Trade fixtures

items in a leased space that you can take with you when you move out. A trade fixture can generally be easily removed without damaging the property. Examples include furniture, inventory and computers.

Triple net lease (NNN)

type of lease agreement in which the tenant is responsible for paying all operating expenses for the office space, in addition to rent

Turnkey improvements

renovations that a landlord carries out at your request when you sign a lease. A landlord may agree to these as a tenant inducement.

Turnkey office or move-in-ready (TI)

type of office space that is ready for immediate occupancy, typically with all furniture and equipment provided

Turnover

process of preparing an office space for a new tenant, including cleaning, painting, and any necessary repairs or renovations

Underwriting

process of evaluating a loan application to determine the risk of default and the likelihood of loan repayment

Urban office market

refers to office rental space located within urban centers

Usable area

total area that can be occupied

Usable square footage (USF)

amount of square footage in a building that is actually usable by a tenant, after deducting shared space and building columns

Use of premises

tenant’s type of business and the allowable use of the space

Vertical penetration

vertical penetration regions within the interior gross include the elevators, stairs, atrium, and the other common areas

Vertical transportation

elevators and escalators in an office building that transport tenants and visitors between different floors

Virtual office

type of office rental service that provides a business address and telephone number, without a physical office space

Visitors management

process of managing and controlling the flow of visitors in an office building, including security screening, visitor badges, and escorting

Wayfinding

process of helping tenants and visitors navigate an office building and find their way to specific destinations

Zoning

this clause outlines the restrictions and regulations on the use of the property as dictated by local zoning laws