Connecticut Realty Group, LLC - Serving the commercial real estate needs of Connecticut.
Return to home page. Learn about CT Realty Group. View available properties. View completed transactions. If you don't see the term you seek listed and defined here, you can ask me a question directly using the form below.

Enter your commercial real estate question here:

Name:

Email:

 

 


Commercial Real Estate Terms You Should Know & Understand

>> download these terms (PDF) for printing

Whether you own or rent your space for your business, property costs and obligations surrounding ownership or leasing are one of the largest business expenses that you will incur. They will have a significant impact on your operation because of long term commitments that you will have to making. That’s why it’s important to comprehend the full ramifications of taking over title to a property or entering into a lease agreement. Therefore, we recommend that you always retain a commercial real estate broker holding the CCIM Designation and real estate attorney with a proven track records and education in commercial real estate transactions. Also, you should familiarize yourself with some common commercial real estate terms:

A-2 Survey
Acre
Add on Factor
Assignment
Base Rent
Common Area
Cost/SF
Demising Wall
Escalation Clause
Establishment
Estoppel Certificate
Fair Market Values
Fee Interest
Grantee
 
Grantor
Gross Lease
Hazardous Waste
Leasehold Interest
Lessee
Lessor
Lien
NNN Lease
Operating Expenses
Quit-Claim Deed
Rentable SF
Sublease
Useable SF
Warranty Deed
 

      
A-2 Survey:
  A legally recognized survey of the measurements of the boundaries of a parcel of land, its area, and sometimes its topography. This survey may also include any/or all underground utility feeds, fencing, encroachment, easements, etc. This document is stamped by a licensed land surveyor and is often required by mortgage holders.

Back to Top

    
Acre:
  A measure of land equal to 43,560 square feet in any shape. 

Back to Top

       
Add on Factor:
  Generally accept term used to describe the percentage of floor area added on to a base square foot measurement to accommodate for common areas in a building used by all tenants. 

Back to Top

        
Assignment:
  A transfer to another of any property, real or personal, or of any rights or estates in said property. Common assignments are of leases, mortgages, deeds or trust, but the general terms encompass all transfers to title. 

Back to Top

     
Base Rent:
  Is the rate at commencement of the lease. It is subject to annual increases unless otherwise negotiated in the lease or Addendum or an attached amendment. This phrase has more than one meaning. To some landlords, and in some markets it refers to the rental rate minus operating expenses., i.e. $14 per square foot quoted rate, the building operates at $6.50 (operating expense cost); therefore, the base rate (net rent) is $7.50. 

Back to Top

        
Common Area:
  Any space in a building affording common use for all tenants, with the exception of vertical penetrations. Common Areas include lobbies, corridors, restrooms, building break rooms, building conference room, health facility, janitorial closets and storage rooms. It does not include the stairwells or the elevator shafts, flues or vertical ducting. 

Back to Top

      
Cost/SF:
 (A common method of pricing space for lease.) In most lease offering in the market, properties to lease and corresponding operating expense are priced on an annualized cost per SF basis. It is important that you understand what the actual annual and monthly rent obligations are going to be by multiplying the “Rentable SF” of the space by the $ / SF being quoted. This will give you the annual rent; divide by 12 to get the monthly rent. (Please note that it is common practice to price lease space on a $ / month basis on the West Coast.) 

Back to Top

     
Demising Wall:
  A common wall that separates two tenants. Often requiring fire rating standards set by state and/or local municipalities. 

Back to Top

     
Escalation Clause:
  The clause in the lease that addresses the increases to be passed on to the tenant during the life of the lease.

Back to Top

     
Establishment:
  "Establishment" means any real property at which or any business operation from which (A) on or after November 19, 1980, there was generated, except as the result of remediation of polluted soil, groundwater or sediment, more than one hundred kilograms of hazardous waste in any one month, (B) hazardous waste generated at a different location was recycled, reclaimed, reused, stored, handled, treated, transported or disposed of, (C) the process of dry cleaning was conducted on or after May 1, 1967, (D) furniture stripping was conducted on or after May 1, 1967, or (E) a vehicle body repair facility was located on or after May 1, 1967.

Back to Top

     
Estoppel Certificate:
  A document signed by the tenant stating the current condition of the lease and any other agreements between the landlord and tenant.

Back to Top

     
Fair Market Value:
 FMV, this is the price that the property would most likely bring in today’s market.

Back to Top

     
Fee Interest:
 An ownership under which the owner is entitled to unrestricted powers to use and dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership.            

Back to Top

      
Grantee:
  Buyer, one to whom a grant is made.

Back to Top

      
Grantor:
 Seller, one who grants property or property rights. 

Back to Top

      
Gross Lease:
  The type of lease that as all inclusive. The tenant pays rent only; the owner pays all expenses related to the property. 

Back to Top

     
Hazardous Waste:
  "Hazardous waste" means any waste which is (A) hazardous waste identified in accordance with Section 3001 of the federal Resource Conservation and Recovery Act of 1976, 42 USC 6901 et seq., (B) hazardous waste identified by regulations adopted by the Connecticut Commissioner of Environmental Protection, or (C) polychlorinated biphenyls in concentrations greater than fifty parts per million except that sewage, sewage sludge and lead paint abatement wastes shall not be considered to be hazardous waste for the purposes of this section and sections 22a-134a to 22a-134d, inclusive of the Connecticut General Statutes. 

Back to Top

        
Leasehold Interest:
  An ownership in realty held under a lease; a use of that real estate for a fixed term. Considered in some states to be personal property. 

Back to Top

     
Lessee:
 The individual or company leasing space from another party.

Back to Top

      
Lessor:
 The individual or building owner leasing space to another party.

Back to Top

    
Lien:
  An encumbrance against personal items such as property for money.

Back to Top

         
NNN Lease:
  A lease agreement that provides for the tenant to pay as additional rent, its proportionate share of real estate taxes, building insurance and common area maintenance such as snow plowing, landscaping and management. Additionally, the tenant will pay for his own utility and janitorial service.

Back to Top

        
Operating Expenses:
  The landlord’s cost to operate the property. Some items included are: real estate taxes and assessments and other taxes, utilities, insurance, maintenance and repairs, common area refurbishing, janitorial, materials and supplies, repair service, cost of property management, security fees, employees and contractors, outside maintenance, cost of signs, rubbish removal, pest control, bulb replacement, etc.

Back to Top

     
Quit-Claim Deed:  A deed operating as a release; intended to pass any title, interest, or claim which the grantor may have in the property, but not containing any warranty of a valid interest or title in the grantor.              

Back to Top

      
Rentable SF:
  The amount of square feet, including the common area factor of the building. This typically is the square footage the tenant will pay rent on. 

Back to Top

     
Sublease:
  Occurs when a tenant re-leases their space during the term of their tenancy. It is generally a three party transaction. Sub-lessee leases space from tenant and Landlord approves. This does not release the Tenant from its obligations of the lease.

Back to Top

        
Useable SF: 
 The amount of square feet measured within the confines (Premises) of the tenant’s space.

Back to Top

    
Warranty Deed:
   A deed used in many states to convey fee interest/title to real property. Until the widespread use of title insurance, the warranties by the grantor were very important to the grantee. When title insurance is purchased, the warranties become less important as a practical means of recovery by the grantee for defective title.

Back to Top

 
If you should have any other questions regarding leasing or acquiring/selling commercial real estate, please contact Frederick P. Petrella, CCIM, fredp@ctrealtygroup.com, or call at 203-484-0425.


HomePersonal BiographyServicesAvailable PropertiesTransactions
Post Wants / Needs Commercial Real Estate Terms

Connecticut Realty Group, LLC
431 Orange Street, New Haven, Connecticut 06511
Phone: 203.484.0425, Email Connecticut Realty Group

© 2010 Connecticut Realty Group, LLC.  All Rights Reserved.