A AAA-Tenant, also referred to as a Triple-A Tenant, is a highly creditworthy and dependable tenant that typically includes large, established corporations or government entities. These tenants are deemed exceptionally low risk for defaulting on lease payments, making them highly desirable for property owners and investors.
Absolute Net Rent is a leasing structure where the tenant is responsible for all property-related expenses, including taxes, insurance, and maintenance, leaving the landlord with no financial obligations related to the property.
An acquisition loan is a type of loan used specifically for the purchase of real estate properties. These loans are generally utilized by buyers to acquire commercial, residential, or undeveloped land.
An Acquisition, Development, and Construction (ADC) Loan is a specialized type of loan used to fund the acquisition of land, the development of building sites, and the construction of residential or commercial properties.
An association for real estate brokers specializing in the sale of hotels and motels, offering resources and networking opportunities for professionals in this niche market.
An anchor tenant is a principal or main tenant in a shopping center, whose presence draws a significant number of customers to the retail establishment, benefiting smaller stores and positively influencing the center’s overall performance.
A Big Box Retailer is a physically large store typically part of a chain, occupying a substantial area (25,000–200,000 square feet) on a single floor, selling either general merchandise or specialty products. They operate both nationally and internationally and are prevalent in Power Centers.
BOMA, also known as the Building Owners and Managers Association, is a professional association that represents the interests of the commercial real estate industry through a range of services, advocacy, standards, and educational programs.
Brownfield sites are areas of land previously used for industrial purposes or certain commercial uses that may be contaminated by hazardous waste or pollution. Cleaning and redeveloping these sites is essential for community health and environmental sustainability.
A bullet loan is a type of loan in which the whole principal amount is paid back at the end of the loan term rather than through periodic payments. These loans typically have a short to medium-term duration, usually between 5 to 10 years, and can pose significant risk if the borrower cannot refinance or repay the loan principal as per the agreement.
The intangible value inherent in a business apart from its tangible assets, which encompass buildings, land, and fixtures, and also the overall value of a business in its entirety, consisting of all its parts, both tangible and intangible.
A buyout occurs when the owner of a new building acquires the remaining lease term of a tenant from a different building, thereby freeing the tenant from their old lease obligations and allowing them to negotiate a new lease.
Common Area Maintenance (CAM) charges are fees paid by tenants to cover the maintenance of common areas in a commercial property.
The CCIM (Certified Commercial Investment Member) designation is a prestigious credential awarded by the CCIM Institute, a recognized affiliate of the National Association of REALTORS®. This certification highlights a member's expertise in commercial and investment real estate, setting a high professional standard in the industry.
The CCIM Institute is a leading global provider of education and certification for commercial real estate professionals, affiliated with the National Association of REALTORS®. It offers rigorous training leading to the Certified Commercial Investment Member (CCIM) designation and disseminates industry knowledge through the Commercial Investment Real Estate magazine.
A Central Business District (CBD) is the commercial and business center of a city, often characterized by a high concentration of office buildings, retail stores, and cultural institutions.
The Central Business District (CBD) is typically the commercial and business center of a city, characterized by high concentrations of office buildings, retail stores, hotels, entertainment venues, and governmental buildings. This area serves as the focal point for business and commerce, attracting significant daytime population.
A Certified Commercial Investment Member (CCIM) is a real estate professional who has obtained a prestigious designation awarded by the CCIM Institute, a commercial real estate affiliate of the National Association of Realtors (NAR). This designation signifies a deep understanding of commercial real estate investment and the practical application of industry principles.
Clear span refers to the unobstructed, open area in a building or structure, typically measured height-wise, allowing for more efficient use of space for various applications such as storage, manufacturing, or events.
A commercial broker is a real estate professional specializing in listing and selling commercial properties, such as shopping centers, office buildings, industrial complexes, and apartment projects. They differ from residential brokers primarily in the type of properties they handle.
A Commercial Mortgage Loan is a loan secured by real estate that generates business or rental income, typically used in transactions involving commercial properties like office buildings, shopping centers, or warehouses.
Commercial Mortgage-Backed Securities (CMBS) are a type of mortgage-backed security that is secured by mortgages on commercial properties rather than residential real estate.
The Commercial Real Estate Financial Council (CREFC) is an organization of professionals involved in commercial real estate finance that holds conferences, publishes newsletters, and provides advocacy for the industry.
Common Area Maintenance (CAM) charges are fees paid by tenants to landlords for the upkeep of shared spaces such as hallways, restrooms, and parking lots. These charges are typically calculated on a pro-rata basis and are essential for the maintenance and functionality of commercial properties.
A community shopping center, also known as a community center, is a retail property designed to serve a larger area than a neighborhood center, providing a wider array of goods and services.
A method of dividing real estate improvements into various parts such as the roof, plumbing, electrical system, and shell, and then depreciating each component separately for tax purposes.
The Continuous Occupancy Clause is a lease provision mandating that tenants, especially anchor ones, must keep their retail spaces open and operational to maintain the shopping center's viability.
Core Space refers to the central areas of a building that house essential services like elevator banks, restrooms, stairwells, electrical services, and janitorial closets. This space is crucial for the functionality and accessibility of the building.
A leading provider of commercial real estate information, analytics, and online marketplaces, delivering real-time data on comparable sales, lease rates, absorption, and construction across various geographic markets.
A Cotenancy Agreement in a shopping center lease allows a tenant to reduce rent, decrease payments for common area maintenance, or terminate the lease if other named tenants cease operations, also known as 'going dark'.
A Credit Tenant is a commercial tenant that is large, financially stable, and well-rated by credit agencies, which can influence favorable terms for mortgage financing based on the tenant's creditworthiness.
CREW Network is a pivotal business networking organization dedicated to promoting and supporting the achievements of women in the commercial real estate industry. With over 8,000 active members representing various roles in the sector, it serves as a key platform for professional growth and industry advancement.
Daily Traffic Counts measure the number of vehicles traveling on a given highway or street per day. This data, often collected by state departments of transportation, is crucial for assessing road usage and planning.
The Debt Coverage Ratio (DCR) is a financial metric that measures the ability of a property to cover its operating expenses and debt obligations. It is widely used by lenders and investors in commercial real estate to assess the risk associated with a particular investment.
The effective rental rate calculates the true cost of renting a property by taking into account rental concessions over the lease's duration. This provides a more accurate measure for both tenants and landlords compared to the asking rent.
The efficiency ratio in real estate is the proportion of a building's area that is leasable space, reflecting how efficiently space within the building is utilized for leasing purposes.
An Expense Stop, also known as a Stop Clause, is a provision in a lease agreement that sets a limit on the amount of operating expenses a landlord will cover. Any expenses beyond this limit are the tenant's responsibility.
Fee Simple Value refers to the market value of a property assuming it is owned outright, free of any leases or mortgages. It provides an estimate of the highest value that a property could achieve in an open market without any encumbrances.
FF&E stands for Furniture, Fixtures, and Equipment, encompassing all movable property that is used in business operations and can include everything from chairs and desks to lighting and cabinetry.
Fireproof construction refers to the use of materials that have a high degree of resistance to fire, thereby reducing the risk of damage or destruction due to fire. These materials can either be noncombustible or protected by other noncombustible materials.
Flex space refers to a type of industrial property that can be easily converted to accommodate various uses, including office space, research laboratories, or industrial activities. This versatility makes it ideal for businesses with dynamic space needs.
Floor load capacity refers to the weight that a building's floors can support, usually measured per square foot. This is a crucial consideration, particularly for industrial properties, where heavy equipment or large quantities of materials may be stored or used.
A freestanding building is an independent structure not attached to any other structures, often distinct and self-standing.
A front foot is a standard measurement of land length, applied along the frontage at the street line. It is often used for lots of generally uniform depth in commercial or downtown areas.
FSG (Full Service Gross) is a type of lease in which the landlord covers all property-related expenses. These expenses typically include taxes, insurance, maintenance, utilities, and more. FSG leases simplify budgeting for tenants and offer peace of mind by mitigating unexpected costs.
Furniture, Fixtures, and Equipment (FF&E) are vital items that wear out more rapidly than other components in commercial properties like hotels or motels, and typically have a useful life of around 7 years.
Gross Leasable Area (GLA) is a key metric in commercial real estate that represents the total floor area designed for tenant occupancy and exclusive use, usually measured from the centerline of shared walls and to the outer surface of exterior walls.
The term 'Go Dark' refers to the situation where a retail tenant ceases its operations in a leased space, while potentially continuing to pay rent. This can impact the viability and appeal of a shopping center as the absence of an anchor tenant may lead to a decrease in customer foot traffic and potentially cause other tenants to relocate or terminate their leases.
A graded lease, also known as a graduated lease, is a rental agreement that stipulates periodic increases in rent amounts over the lease term. This type of lease is often employed in commercial real estate to account for rising property values and inflation-related adjustments.
Gross Building Area (GBA) is the total floor area of a building, typically measured from the external walls and including all areas within the building. It encompasses the entire footprint of the building.
Gross Leasable Area (GLA) refers to the total floor area of a building that can be used by tenants, including all areas that are used by tenants and the communal spaces shared by tenants. It is measured from the center of joint partitions to the exterior surfaces of outside walls.
A ground lease is an agreement in which a tenant leases land for a long period, usually spanning several decades. The tenant can develop and use the land during the lease term, but at the end of the lease, ownership and any improvements revert to the landowner.
An industrial park is an area designed and zoned specifically for manufacturing and related activities, offering a conducive environment for industrial development.
The International Council of Shopping Centers (ICSC) is a prominent nonprofit association that supports the shopping center industry through a variety of resources, publications, and events focusing on financial, leasing, and legal matters.
A Key Tenant, also frequently referred to as an Anchor Tenant, is a major retailer or other business that is considered to be significantly beneficial to a commercial property. They draw considerable foot traffic, consequently supporting smaller businesses in the same complex.
A kicker is a payment required by a mortgage, in addition to normal principal and interest, often linked to a borrower’s financial performance metrics such as gross sales or profits.
A kiosk is an independent stand that is used for selling merchandise. It is often located in the common areas of large shopping centers and malls, catering to consumer convenience and typically offering products ranging from food to small novelty items.
A Lease Abstract encapsulates the major highlights and key provisions of a lease agreement, offering a quick reference for property managers, landlords, and tenants while ensuring essential information is easily accessible.
A lease-own hybrid model is a commercial real estate lease arrangement in which a tenant leases space in a property and simultaneously gains an ownership stake in the entity owning the property. This model allows tenants to participate in annual profits and appreciate in the property’s value while committing to long-term, above-market rent payments.
LoopNet is an internet site providing comprehensive listings and crucial data regarding the leases, sales, and listings of commercial real estate properties. It serves as a pivotal platform for investors, brokers, and businesses in search of commercial properties for sale or rent.
A large indoor shopping complex typically comprising multiple individual stores connected by enclosed walkways offering a variety of retail, dining, and entertainment options, often accompanied by ample parking facilities.
A Master Lease is a primary leasing agreement under which the tenant, who leases the entire property, has the right to sublease portions of it to other sub-tenants. It serves as the foundation lease agreement in situations where the property may be divided for subleasing.
Merchandise mix refers to the combination and variety of stores and types of merchandise offered in a shopping center, aiming to meet consumer needs and drive foot traffic.
NAIOP, the National Association of Industrial and Office Properties, is a commercial real estate development association that provides advocacy, networking, and education to its members.
The National Association of Industrial and Office Properties (NAIOP) is a leading trade association established in 1967, encompassing over 7,000 members who are developers, owners, investors, and related professionals in the industrial and office real estate sectors.
Net Leasable Area (NLA) refers to the total floor space within a building that is available for rent to tenants, excluding common areas such as hallways, elevators, and mechanical rooms. NLA is a crucial metric for property owners and investors to determine the rentable value of a commercial real estate property.
Net Leasable Area (NLA) represents the precise space within a commercial property that can be rented to tenants. It is a critical metric for landlords and investors when estimating potential rental income.
Net Rentable Area (NRA) refers to the usable space available for lease to tenants in a commercial property, excluding certain areas such as common areas, elevator shafts, and emergency stairwells. This metric is essential for determining the true income potential of a property.
Occupancy Costs (Total) refers to a tenant's cumulative rent expense, generally including base rent, percentage rent, and additional charges. This key metric is pivotal for retail businesses in assessing the affordability and profitability of a given commercial space.
An office building is a structure primarily used for conducting business activities such as administration, clerical services, and client consultations. These buildings can vary in size and may house one or multiple business concerns.
An office park is a planned development specifically designed to accommodate office buildings and their supportive facilities, such as restaurants and gyms. These parks may be tailored to attract particular types of tenants, including research or medical services.
One-Hundred Percent Location refers to a premium commercial real estate zone with the highest foot traffic and visibility, making it the most desirable for retail businesses.
Operating covenants in shopping center retail store leases are requirements that lessors and retail store lessees must observe to provide uniformity in the shopping center’s operations.
Overage in leases for retail stores is the additional amount to be paid based on gross sales that exceed a predetermined threshold in addition to the base rent, often seen in percentage leases.
Overage Rent, also known as Percentage Rent, is an additional rent payment that tenant retailers pay to their landlords based on a percentage of their sales over a specified base amount. Often used in shopping centers or retail spaces, it helps landlords share in the tenant’s success.
Overbuilding occurs when there is more real estate construction in a specific area than the market can absorb within a reasonable amount of time. This imbalance between supply and demand often leads to vacant properties and lower rental rates.
Parking ratio refers to the number of parking spaces provided per 1,000 square feet of gross leasable area (GLA) in a property, ensuring adequate parking for tenants and visitors.
A Participating Mortgage (Loan) is a financing arrangement where the lender is permitted to share in a portion of the property's income or the resale proceeds, alongside the fixed principal and interest payments.
Percentage rent is an additional rent under a percentage lease agreement, often applied to retail property tenants. It is calculated as a percentage of gross sales that exceed a pre-determined base amount or break point.
Preleasing involves obtaining lease commitments for a property prior to its availability for occupancy, often required for securing permanent mortgage financing.
Primary Market Population refers to the population located within a shopping center’s primary trade area. It often forms the majority of the customer base for the shopping center.
A pylon sign is a freestanding sign commonly mounted on a pole or pylon structure, designed to be visible from a distance. These signs are often used to list tenants in a shopping center or to display business names and logos prominently along roadways.
Real Capital Analytics (RCA) is a premier data provider for commercial real estate sales and income capitalization rates, offering comprehensive market intelligence and analytics.
A Real Estate Broker is a licensed professional who represents buyers or sellers in real estate transactions. They usually own and operate their own brokerage or work independently, overseeing other real estate agents.
The Real Estate Investment Advisory Council (REAIC) is a national nonprofit trade association that serves as a platform for commercial real estate principals to share ideas, concerns, and experiences. REAIC is headquartered in Atlanta, with active regional chapters in Los Angeles and Phoenix.
A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate.
A Reciprocal Easement Agreement (REA) is a legal contract between owners of adjacent parcels of land, allowing the mutual use of both parcels for specified purposes such as access, parking, and utilities. REAs are commonly used in commercial developments to ensure seamless operation and movement between different parts of a property.
A remnant parcel is an uneconomic remainder of land left after a larger parcel has been sold or developed. Typically, this piece of land is too small or oddly shaped to be of significant commercial value on its own.
A Renewal Option in a lease agreement gives the tenant the right, but not the obligation, to extend the lease for an additional term under specified conditions.
The Rent-Free Period is a portion of the term of a lease during which no rent is required. It is typically offered by a landlord as a rental concession to attract tenants.
Rentable Area, often referred to as Net Leasable Area (NLA), is the total space for which rent is charged to tenants, including private areas occupied by tenants and a share of common areas.
The rental rate is the periodic charge per unit for the use of a property. The period may be a month, quarter, or year, and the unit may be a dwelling unit, square foot, or other unit of measurement.
A retail property is a classification designated through zoning ordinances, allowing for various types of businesses such as stores or shopping centers, enhancing the commercial use of an area.
Reversionary value is the estimated value of a property at the end of a specific time period, often related to the expiry of a lease or a pre-determined holding period. It directly impacts investment decisions and property valuation models.
A sale-leaseback allows the owner of a property to sell it and simultaneously lease it back from the buyer, converting from owner to tenant while freeing up capital for other uses.
Satellite tenants in a shopping center or mall are those tenants other than the anchor tenants, typically smaller retailers that benefit from the foot traffic generated by the anchor stores.
Section 168 of the Internal Revenue Code outlines the Accelerated Cost Recovery System (ACRS) and the Modified Accelerated Cost Recovery System (MACRS), which are methods of calculating depreciation for tax purposes.
A shadow anchor tenant is a large, well-known retail store near or adjacent to a shopping center's inline stores but is not a tenant of the shopping center itself. This store generates significant foot traffic to the neighboring retail spaces within the shopping center, resembling an anchor tenant in function without contributing rental income to the shopping center.
A 'Shell' refers to the structural frame of a building that has been completed to a point where it is ready for tenant improvements. This typically includes the main structure, basic utilities, and HVAC installations, but lacks interior finishings.
The Society of Industrial and Office Realtors® (SIOR) is a leading global professional and association organization for industrial and office real estate brokers. This prestigious designation is awarded to seasoned brokers who have demonstrated superior knowledge, advocacy, and success in their markets.
