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Glossary – Gordon Commercial Real Estate Brokerage

Base Rent The minimum regular monthly lease due under the lease – normally calculated on a per- square-foot-per-year basis.

Base Year First year of the lease.

Build-Out Refers to the interior building and construction of a tenant’s space whether new construction or the reconfiguration of existing area.

Commission The charge paid to a property broker for his/her services rendered in a genuine estate deal.

Common Area Maintenance (CAM) An additional, annual charge typically assessed to renters for maintenance of the residential or commercial property’s “common location”. Includes interior items; entryways, hallways or bathrooms, and outside products; parking areas, premises and outside painting.

Cost of Living Increases Increase to base lease tied to boosts in US Department of Labor Consumer Price Index (CPI).

Consumer Price Index (CPI) A procedure of inflation as identified by the US Federal Government by utilizing a “basket of products”. Used in leases as an unbiased benchmark for the estimation of escalations.

Effective Rent Equals agreement rent less free rent and any money allowances such as a lease buyout or moving allowance. Escalations composed into the lease are consisted of in the calculation of reliable rent. Tenant enhancement allowances and brokerage commissions are not subtracted from the contract rate in computing effective lease.

Escalation Leases frequently consist of escalations or stepped increases in lease to be paid by the tenant to the property manager at a specific future date. This can be yearly, for instance, year 5 of a 10-year lease, or set to an index such as CPI.

Complete Lease Lease type in which landlord pays all costs including taxes, utilities, janitorial, and so on in the base lease. Tenant pays increases in operating expenditures over the base year.

Gross Square Feet Usually describes gross location of a structure by determining from the beyond its outside walls and consisting of all vertical penetrations, such as elevator shafts. Also consists of basement area.

HVAC Acronym for heating, ventilation and a/c.

Industrial Gross (IG) Lease Lease type in which tenant pays most however not all operating costs in the base rate. In addition to base lease, tenant pays energies, typical area maintenance, and frequently the increase in residential or commercial property taxes and insurance coverage over base year.

Industrial Space Space in structures zoned for industrial uses. Not available for workplace use unless a change of use permit is filled and authorized by the preparation department.

Lease Type of legal agreement developing a residential or commercial property owner-tenant relationship.

Lease Commencement Date Date upon which the lease commences and the responsibilities of the celebrations begin (see likewise “rent start date”).

Lease Term Length of the lease.

Leasehold Improvements Construction or enhancements for the purpose of preparing the premises for the conduct of renter’s company. Improvements completely connect to the premises unless they are trade components, and they remain with the premises after completion of term of the lease.

Lessee Tenant.

Lessor Rental residential or commercial property owner or property owner.

Load Factor The quantity of square video footage in a lease, in addition to a tenant’s functional square video footage, which represents renter’s pro rata share of the structure’s common area/s. May likewise be described as a portion of building’s rentable square feet.

Office Category Office area is loosely categorized based upon the quality of construction, functions and the status of area:

Class A. Most prominent structures competing for premier workplace users with rents above average for the area. Buildings have high quality basic finishes, cutting-edge systems, exceptional availability and a guaranteed market existence.

Class B. Buildings contending for a large range of users with leas in the typical range for the area. Building finishes are reasonable to excellent for the area and systems are appropriate, however the structure can not take on Class A at the very same price.

Class C. Buildings contending for renters requiring practical area at leas below the location average.

Operating Expenses Costs associated with earnings producing residential or commercial property normally before interest and earnings tax expense, however including residential or commercial property taxes, insurance coverage, repairs and maintenance, replacement reserves.

Pass-Through Expense A cost related to tenancy in which landlord “goes through” to renter specific increases in building operating costs occurring after a base year in the lease.

Permitted Uses Consult City to see what’s allowed at the area.

Quotas A zoning system managed by the City of Berkeley where only a specific number of particular uses are allowed in the district at any one time, and some of these usages are also based on square footage limits. Quotas are in result in the Elmwood, Telegraph Avenue and Solano Avenue areas.

Real Residential or commercial property Taxes Taxes due on building and structural parts.

Renewal Option Lease language that offers the ways for tenant to offer property owner notice of its intent to restore (extend) the lease.

Rent Basis Designates what business expenses are consisted of and left out in the lease. The most common rent bases are:

Full Service: All expenses of operation are paid by the property owner approximately a base year. Tenant pays increases in operating costs over the base year.

Triple Net (NNN): All costs of operation including, however not limited to, property tax, insurance and typical location maintenance are borne by the renter on a pro rata basis.

Modified Gross (MG): any arrangement where the tenant pays several of the expenditures covered by the proprietor in a Complete lease, however not all of the expenditures as in a Triple Net lease. Modified Gross leases cover a variety of lease types and terminologies utilized in various markets around the nation. A few of the more common are Industrial Gross, Single Net and Double Net. The definitions of these bases differ from market to market depending upon the costs they consist of or omit.

Net of Electric: A popular type of Modified Gross, this is like a Complete Service lease, but the renter pays for his or her electric charges either to the utility business (according to a meter) or to the landlord on a professional rata basis.

Rent Commencement Date Date upon which the rent and typically the regard to the lease begins. May be different from the lease beginning date when specific commitments need to be fulfilled such as the construction of .

Rentable Area Denotes the number of square feet in an industrial structure deemed to be rentable. May include a typical area load factor or allowance for developing facilities such as corridors and lavatories.

Retail Space normally booked for retail use. May likewise be readily available for workplace use.

Down payment Deposit of cash by a tenant with a property owner to protect efficiency of a lease. Generally equivalent to one month of rent.

Setback Zoning requirement that needs a structure or an improvement to be set back a specific variety of feet from the residential or commercial property line.

Sublease Sublease space is provided on the market by the current tenant for sublease, despite whether the space is inhabited or vacant. Often a sublease renter undergoes property owner approval.

Triple Net (NNN) Lease type in which the lessee spends for its share of the residential or commercial property’s taxes, insurance coverage, common location upkeep, and their own operating costs.