The changing of occupancy within a period of time. Lease Renewals are not included into absorption unless additional space is included into it, which in that case the additional space would be included in absorption. Pre-leasing properties that are proposed, under renovation or under construction are not included in absorption until the move-in date.
When a pre-existing building is converted to another use different from its original purpose. An example of this would be converting an empty storefront into a co-working office.
To be next to and to share a border with another object. Similar to “contiguous”.
Someone that is an active representative responsible for various tasks such as management or conducts transactions for another individual/entity.
(Commercial real estate) A value that is assigned by a local official tax assessor on the land and/or the structures on it only for taxation purposes.
A company or associate that is responsible for overseeing the financial transactions for a property or a portfolio of properties.
Real estate properties being offered to a group of bidders, with the highest bidder purchasing said property. This type of sale usually occurs in a downward market.
The sale of a property that occurs when the owner declares bankruptcy and is forced to liquidate their assets. This type of sale can be ordered by the court.
Block & Lot
The system of property identification on a jurisdictional tax map for assessment. This allows for clear borders for lots in densely populated areas as well as suburban and exurban areas.
Constructing or addition of improvements of the interior of a space. This could include walls, plumbing, flooring, electrical, etc.
An official written permission from the government allowing the development, renovation, or reparations for a building.
Business Value Included
A transaction where both the real estate property and the business housed on it is bought from the seller to the buyer. It is important for the buyer to find out if the given value includes the business or if its just the real estate alone.
Capitalization Rate (Cap Rate)
The value of a property that is figured by dividing the Net Operating Income (NOI) and the current market value/sales price. The Capitalization Rate can be used as an estimate of how quick an investment will pay for itself.
The value of income stream discluding income tax that is generated annually after the deduction of Capital Expenditures and Debt Service from the Net Operating Income (NOI).
Central Business District (CBD)
The central core in a metropolitan downtown area with a concentration of different types of uses (retail, residential, commercial, etc).
Certificate of Occupancy (CO)
A official government insured form stating the completion of a building and indication that it is ready for occupation.
Household goods such as couches, desks, chairs, etc. This includes personal property.
Common Area Maintenance (CAM)
The amount of additional rent charged to the tenant on top of the base rent in order to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples of this includes parking lot sweeping, snow removal, insurance, etc.
A division of commissions agreed between a sales agent and a sponsoring broker, or between a sales broker and a listing broker.
Touching upon or along a point in a boundary.
A contract requirement that must be entered into before the contract can be concluded.
A legal agreement between entities requiring each person to carry out certain activities (or to refrain from doing so). This document gives each party a right that the judicial system can enforce.
Court Appointed Sale
An involuntary sale of a property compelled by court action in order to dispose and/or maintain the property.
Wording found in deeds limiting / restricting the use of a property (e.g., no bars, or not for retail use, etc.)
The purchase of a indebted property in which the purchaser accepts liability for the debt that remains. If the lender does not agree to release them, the seller remains liable to the lender.
A written signed document conveying the title to real estate property.
Not fulfilling a promise, fulfilling an obligation or carrying out certain acts.
Routine property maintenance that has been neglected causing the existing structure to be repaired or replaced.
Designated Marketing Area (DMA)
The sale of a property from Party A to Party B, which simultaneously places the property in custody of Party C. The buyer typically arranges to sell the property to another party for a profit before the first deal is concluded. The second transaction is then closed immediately after the first deal has been completed. Party B normally never owns the property. Only the second transaction indicates this field. Double Escrow is not the case in a 1031 exchange where party A sold the property to party B (a facilitator or accommodator) and the escrow to party C may not take place until the facilitator or accommodator finds a party to purchase the property.
Someone responsible for transforming raw land by using labor, capital and entrepreneurial efforts into improved property.
Development Authority Sale
The land or property sold was taken or bought below market and is now being sold back to the market because it exceeds the government’s needs. The property can also be sold to an end user at a lower market price instead to complete renovation or drive interest in a given area.
The method used to convert an estimate of the expected income in a single year into a value indication in a direct step, either by dividing the estimated income by an appropriate rate or by multiplying the income estimate by an appropriate factor. This method assumes the property is stabilized.
Double Net (NN)
An arrangement indicating the tenant is responsible for the rent base plus a proportion of property taxes and property insurance. The landlord pays for structural repairs and maintenance of the common area.
Action to regain ownership or real estate. This is usually reserved until the last effort used when the landlord and tenant have no relationship.
A written agreement between both parties requiring a third party to place certain funds/properties. The object in escrow is released to a designated entity upon completion.
A renter’s certified statement verifying the terms and conditions and current status of the rental property. Most commercial real estate leases require a tenant to submit an estoppel certificate upon request, and is often a critical step during the acquisition’s due diligence phase and also during the commercial real estate loan underwriting.
The action of physically removing a tenant from the property either by using law or force (or a combination of the two).
An agreement in which a broker is exclusively entitled to represent the owner or tenant. If another broker is used, the original broker and the actual broker are both entitled to lease commissions.
Someone who represents another person in matters of finance / property.
Personal property attached to the land or building (e.g. improvements) in a permanent way that is considered part of the real estate.
The act of a lender (institutional or private) who will not voluntarily return a property due to the lack of debt service payment. Both parties are familiar with each other as this is not an arms-length type of transfer.
Full Service Lease Rate
A lease rate that includes standard building services provided and paid by the landlord. Also known as a “Gross” or “Full Service Gross”
Latitude and longitude coordinates describing the location of a property in either degrees or time. Coordinates can be obtained from geocode data or graphical information reference software.
Additional time allowed before a default or infringement occurs in order to complete an action (e.g. payment).
Gross Income Multiplier (GIM)
The ratio consisting of sale price to gross scheduled income plus other income at the time of sale or projected GSI for the first year of ownership. It is calculated by dividing the sale price by the planned gross revenue plus other revenues.
A property lease in which the landlord pays for all property charges typically included in the ownership. These charges may include, among others, utilities, taxes and maintenance.
Hard Money Loan
A loan based on assets in which a borrower receives funds secured by the value of a piece of real estate and often at a higher interest rate compared to a traditional commercial property loan. They are usually used for procurement, repayment, foreclosure and bankruptcy.
A tenant who is still in possession of the leased property after the expiry of the lease term.
The ratio of the opinion of the tax assessor to the value of the improvements divided by the value of the property as a whole. This ratio is usually stated as a percentage.
Provision in a lease agreement requiring rent increases based on a published index such as LIBOR, T-bills or a living cost index such as CPI.
A legal arrangement in which two or more persons share a property with equal rights and obligations for each person.
A purchase agreement in which the property is paid in installments and the deed is transferred on full payment. Also known as a conditional sales contract, installment sales contract or real estate sales contract.
A person who rents land, a building or an apartment to a tenant of said property.
A contract the landlord grants which gives the tenant the right to occupy a defined space at a specific price for a certain period of time.
A sale where the buyer had a lease with an option to buy exercises this option. The date of establishment of the option price is important for the date of sale. If the date that the date price was confirmed is over three years old, then it is considered a non-market deal.
Someone who is renting their property under a lease. (i.e. a tenant)
Someone who rents property out to other tenants (lessee) through a lease.
Letter of Intent
An informal agreement between the parties, usually non-binding, indicating their serious desire to continue with negotiations.
An encumbrance on real estate, typically used to secure debt, tax, legal judgment or mortgage payments. The lien can be made against a particular property or an owner, which then applies to all properties. The property can not be sold without the removal of the lien from the person or organization.
A contractual agreement between an agent / broker and the owner or tenant to sell or lease land, the building, or space in a building.
Geographical boundaries that define core areas that are mutually competitive and constitute a generally accepted primary competitive set of areas. Markets can also be divided into submarkets.
The definite price of a property’s sale or lease.
The expected price of a property if it is exposed to leasing in the open market for a reasonable period of time and with knowledgeable landlords and tenants in the market.
Metro Statistical Area (MSA)
A geographical area with a large population nucleus including adjacent counties with a high degree of economic and social integration. A MSA with a population of over one million may qualify as a Primary Metropolitan Statistical Area (PMSA).
A general type of lease rate in which the tenant is typically responsible for its proportional share of one or more of the costs. In return, the Lessor will pay the remaining costs.
Net Operating Income (NOI)
The actual or anticipated rental income remaining after all operating expenses are deducted from the actual gross income and before the deduction of debt service and capital expenditure.
An agreement signed by the tenant in order to prevent themselves from being evicted if the lessor does not pay their mortgage to the bank.
A public official authorized to verify and witness certain documents (e.g. contracts, deeds, mortgages). An oath can also be sworn to this public official.
A listing given to any broker, usually by the owner, without having to compensate any broker other than the one who first secures a ready buyer willing and able to follow the terms of the listing or ensures that the landlord accepts a satisfactory offer.
Operating Expense and Taxes
Divided by three types:
- Fixed: Costs that usually do not fluctuate due to occupancy (ie. insurance or taxes).
- Variable/Operating: Costs that may carry because of occupancy and conditions of the market. (ie. utilities and maintenance).
- Reserves: Costs which are usually reserved for items with a short life usually for apartments such as carpets, paint, appliances, etc.
Related to Retail Overage Rent, where typically a new retailer, without a history of gross sales, gets charged a base rent on the space occupied with a lease provision that, if gross sales reach a certain level, the base rent will stop and instead the rent will be based on a percentage of gross sales.
Overall or Total Cap Rate
The return rate for a total property’s income that reflects the relationship between the net operating income expectation of one year and the total price or value. Calculated by dividing the net operating income by the sales price or value.
A right to purchase or lease a property on specified terms within a specified time. If the right is not exercised, the one holding the option is not liable for damages. If the holder of the option exercises it, the one granting the option must fulfill the requirements of it.
A lease of property in which the rent is based on the percentage of the sales volume made on the specific premises. There is usually a minimum rent clause as well.
A rental lease based on a percentage of the monthly or annual gross sales made on the premises. There may be no minimum rent, but often time it specifies a guaranteed minimum rent with a percentage or a graduated percentage of rent that is payable on sales that exceed a specific level. This benefits tenants because, if sales are down, the reduced rent would help. Percentage Rent is most common in large retail stores and shopping centers.
Any item that is not part of the real property. This could mean items such as furniture, artwork, clothing, etc.
Space with plans for future development, but has not started its construction phase for development.
Price Per Square Foot
The sale price divided by the building’s rentable square feet.
Purchase by Tenant
When a tenant purchases the property from the lessor. The buyer can be a single tenant or from a multi-tenant property. Typically, it is sold below market as this direct purchase benefits both sides.
Financial ratios used by mortgage lenders to qualify for a mortgage loan to a potential home buyer. They are essentially debt-to-income ratios that tell the lender the mortgage can be paid by the creditor.
A landlord or tenant’s right to use the property without disruption.
A term describing when the owner tries to refinance their position by selling part of their equity to liquidate part of their equity position. This may not be a 100% transfer of interest or a voluntary process.
Real Estate Board
A real estate-based organization whose members primarily consists of brokers and other professionals.
The process of transforming a property into its highest and best use. This could require the demolition of existing improvements and the development of new site improvements.
Restructuring the existing loan or obtaining a new loan instead. This does not mean there is a transfer of title nor is it a sale. The owner remains the same. This term is often shortened to “Refi”.
An act invalidating the powers authorized previously.
Payment for the use of real estate from tenant to landlord.
Real Estate Owned (REO)
A sale in which a lender, private or institutional, sells a property that they have acquired through foreclosure.
A contractual agreement in which the recipient may purchase parts of a property from time to time. A takedown indicates the act of exercising a rolling option.
A contractual agreement in which the recipient may purchase parts of a property from time to time. A takedown indicates the act of exercising a rolling option.
A sale of real estate in which the net proceeds from the sale of the property are less than the debts secured by the property’s liens. If all lien holders agree to accept less than the amount owed on the debt in this case, a sale of the property may be carried out.
Single Room Occupancy
Older multi-story buildings typically found in a dense urban setting with residential apartment units that do not have private bathrooms and cooking facilities; they are often rented weekly.
The legal location of a property.
The usual method for defining rental space. The square feet area is calculated by multiplying the length by the width.
Statute of Limitations
A law that bars all redress rights after a period of time starting from the moment a cause of action occurs.
When a tenant of a property leases space to another tenant.
An act of prematurely cancelling a lease by the tenant independently, or with consent from the landlord.
The length of a lease.
A person occupying land or property rented by a landlord.
Triple Net Lease
A lease that requires tenants to pay all costs of utilities, insurance, taxes and maintenance.
Final approval or refusal by a lender after reviewing all relevant details of the creditworthiness of a loan applicant.
The process of promoting a building to a higher level of use. Sometimes an owner is asked to sell their home so that a company can turn its zoning into a commercial business.
When used in terms of a lease, it specifies how the tenant will use the property. For example, the business owner indicates in a commercial lease what specific type of use is required to operate the business.
All space not currently occupied by a tenant, irrespective of any lease obligation. Vacant space could be available or unavailable space.
Authorization from the govenment to use or develop a property in a manner not allowed by the applicable zoning rules.
The deliberate surrendering or abandonment of a particular claim, privilege or right.
A document produced by one person stating to whom their belongings should go after their death. When owning a property, the person can either state who will own it or can request it to be sold and then evenly distributed to family members included in the will.
A universally recognized signature for anyone who can not write their name. It is known to make your mark otherwise. If someone were to challenge the contract in court, they would not be able to point out that, as opposed to your name, an X is on the contract.
An area defined by a government authority authorized for specific uses and the limits to them.
An administrative exception to regulations on land use. The variance is relief granted by the Zoning Board of Appeal or ZBA if the application of the zoning rules places the property in difficulty or leads to unusual difficulties for the owner of the property.