Glossary of Terms

Glossary of Terms

Base Rent
The minimum rent due to the landlord. Typically, it is a fixed amount.
Common area
For lease purposes, the areas of a building (and its site) that are available for the nonexclusive use of all its tenants, such as lobbies, corridors, and parking lots.
Common area maintenance (CAM)
Charges paid by the tenant for the upkeep of areas designated for use and benefit of all tenants. Tenants are charged for parking lot maintenance, snow removal, and utilities, etc.
Gross area
The entire floor area of a building or the total square footage of a floor.
Gross leasable area (GLA)
The total floor area designed for tenant occupancy and exclusive use, including basements, mezzanines, and upper floors, and it is measured from the center line of joint partitions and from outside wall faces. GLA is that area on which tenants pay rent; it is the area that produces income.
Ground lease
A lease of the land only. Usually the land is leased for a relatively long period of time to a tenant that constructs a building on the property. A land lease separates ownership of the land from ownership of buildings and improvements constructed on the land.
Initial investment
The outlay of cash needed to acquire an investment.
Landlord
The lessor or owner of the leased property.
Lease
A contract that creates the relationship of landlord and tenant. A contractually binding agreement that grants a right to exclusive possession or use of property, usually in return for a periodic payment called rent.
Lease buyout
The process by which a landlord, tenant, or third party pays to extinguish the tenant’s remaining lease obligation and rights under its existing 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.
Moving expenses
The cost incurred by the tenant to move into the new space. The landlord may pay a portion or all, depending on what is negotiated in the lease.
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.
Occupancy cost
The actual dollars paid out by the tenant to occupy the space. It can be expressed in either pre-tax or after-tax dollars.
Operating expenses
Cash outlays necessary to operate and maintain a property. Examples of operating expenses include real estate taxes, property insurance, property management and maintenance expenses, utilities, and legal or accounting expenses. Operating expenses do not include capital expenditures, debt service, or cost recovery.
Rent escalators
Items specified in a lease such as base rent, operating expenses, and taxes that may increase by predetermined amounts at stated intervals or by a constant annual percentage.
Sublease
A lease in which the original tenant (lessee) sublets all or part of the leasehold interest to another tenant (known as a subtenant) while still retaining a leasehold interest in the property.
Tenant
A person or entity that has possession of the property though a lease. A tenant also may be referred to as a lessee.
Tenant improvements
Preparation of leased premises prior to or during a tenant’s occupancy, which may be paid for by the landlord, the tenant, or both.
Triple Net Lease
A lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the three "Nets") on the property in addition to any normal fees that are expected under the agreement (rent, utilities, etc.).