Every CRE term you actually need.

Amortization (TI / build-out)

Spreading TI cost over the lease term as additional rent, used when build-out exceeds the landlord's allowance.

Anchor tenant

The largest, most credit-worthy tenant in a multi-tenant property — usually drives traffic to the rest of the building.

Assignment

Tenant transfers the lease in full to a new party, most common during M&A, sale of business, or corporate restructuring.

Audit rights

Tenant's right to inspect the landlord's books to verify CAM, operating-expense, and tax pass-through charges.

Base rent

The headline rent before pass-through expenses, usually quoted in $/SF/year and the starting point for every comp.

Base year

The first year of the lease, sets the operating-expense floor in modified gross structures.

Build-out (fit-out)

The construction work to customize a leased space for the tenant, paid via TI allowance, tenant cash, or both.

Capital expenditure (CapEx)

Spending on long-lived improvements to the property, roof, HVAC, parking lot, distinct from year-to-year operating expenses.

Capitalization rate (cap rate)

Annual NOI divided by purchase price, how investors quote yield on a CRE asset.

Class A / B / C office

Quality grade for office buildings, A is institutional/trophy, B is solid older inventory, C is functionally obsolete.

Co-tenancy clause

Retail tenant's right to reduced rent (or termination) if anchor tenants leave or shopping center occupancy drops below a threshold.

Common area

Shared spaces in a building, lobbies, corridors, restrooms, mechanical rooms, that all tenants pay for pro-rata.

Common area maintenance (CAM)

Tenant's share of the cost to operate and maintain shared building areas, lobbies, parking, landscaping, HVAC, security.

CPI escalation

Rent rises annually with the Consumer Price Index, protects landlord against inflation; tenant should always negotiate caps.

Default and cure period

When a tenant breaches the lease and the time the landlord must give them to fix it before pursuing remedies.

Demising wall

The wall separating one tenant's premises from another tenant's or from common areas, defines the leased space boundary.

Effective rent

Present-valued average rent over the term, net of free rent and TI, the real apples-to-apples cost number.

Escalation (annual rent increase)

The mechanism for increasing base rent over the term, fixed percentage, CPI-indexed, or stepped.

Estoppel certificate

A signed statement from the tenant confirming the lease terms, used by the landlord during sale or refinance.

Exclusive use clause

Tenant's right to be the only operator in a defined business category within the shopping center.

Expense stop

The base year operating-expense level in modified gross leases, tenant pays only increases over this floor.

Fair market value (FMV)

The market-based rent for a defined space at a defined date, used in renewal options and ground-lease resets.

Force majeure

Suspends performance obligations during unforeseeable events outside either party's control, pandemics, natural disasters, government orders.

Free rent (abated rent)

A period at the start of the term where the tenant pays no base rent, used to offset move-in costs and competitive pricing.

Full-service (gross) lease

Landlord pays all operating expenses; tenant pays one rent number and that's it.

Good guy guaranty

A limited personal guaranty that protects the landlord against unpaid rent only if the tenant doesn't surrender the space cleanly.

Ground lease

Long-term lease (50–99 years) of just the land, tenant builds and owns the building on top.

Holdover

When the tenant stays past lease expiration without a new agreement, usually triggers a steep rent premium (150–200% of base rent).

Kick-out clause

Lets either party terminate if a sales (retail) or co-tenancy threshold isn't met by a specified date.

Lease abstract

A structured summary of the key terms of a commercial lease, extracted from the full lease document for fast reference.

Lease commencement date

The day the lease term begins and rent obligations start, not the day the lease is signed.

Letter of credit (LOC)

Bank-issued guarantee of rent payment, used in lieu of cash security deposit, especially for credit-light tenants.

Letter of intent (LOI)

A non-binding outline of the major business terms, rent, term, TI, options, that becomes the basis for the binding lease.

Load factor

The percentage of common-area square feet allocated to the tenant on top of usable space, typically 12–18% in Class A office.

Mid-term break right

Tenant's right to terminate the lease early at a defined date, usually with notice and a termination payment.

Modified gross lease

A hybrid where the landlord covers some operating expenses in base rent and passes through others, middle ground between full-service and NNN.

Net operating income (NOI)

Gross income minus operating expenses, before debt service, the income line cap rates and valuations depend on.

Operating expenses (OpEx)

All costs to run the building, taxes, insurance, utilities, janitorial, management, that get passed through to tenants in NNN and modified gross structures.

Parking ratio

The number of parking spaces allocated per 1,000 SF of leased space, typically 3–4 per 1,000 SF for suburban office.

Pass-through expenses

Operating costs that the landlord 'passes through' to the tenant on top of base rent — taxes, insurance, CAM, and operating expenses.

Percentage rent

Additional rent owed when a tenant's gross sales exceed a contractual breakpoint — most common in retail leases.

Permitted use

The defined business activities the tenant is allowed to operate from the leased premises, narrow definitions limit flexibility.

Personal guaranty

An individual personally guarantees the tenant's lease obligations — putting their personal assets at risk if the entity defaults.

Recapture rights

Landlord's right to take back leased space — typically triggered when the tenant tries to sublease or assign the lease.

Renewal option

Tenant's contractual right to extend the lease at predefined terms, usually exercised 9–12 months before expiration.

Rent commencement date

The day base rent payments actually start, after any free-rent period.

Rentable vs usable square feet (RSF / USF)

USF is the floor area you can actually use; RSF adds your share of common areas. The ratio between them is the load factor.

Right of first offer (ROFO)

Tenant's right to receive the first chance to lease a defined space, before the landlord markets it externally.

Right of first refusal (ROFR)

Tenant's right to match any third-party offer for a defined space, most common for adjacent expansion premises.

Sale-leaseback

Owner sells the property to an investor and immediately leases it back, converting equity into capital while staying in occupancy.

Security deposit

Cash held by the landlord as collateral for the tenant's lease obligations — typically 1–3 months of base rent.

Signage rights

Tenant's contractual right to display name, logo, or branding on or near the premises — building-top, lobby, monument, suite door.

Step rent (stepped rent)

Pre-determined rent increases that occur at fixed dates and amounts, set at lease signing.

Sublease

An existing tenant rents space to a new occupant under the umbrella of the original lease, common when companies downsize.

Subordination, non-disturbance, and attornment (SNDA)

A three-part agreement that protects the tenant's lease if the landlord defaults on its mortgage and the lender forecloses.

Surrender

Returning the space to the landlord at lease end, broom-clean, all keys returned, no restoration unless required.

Tenant improvements (TI / TIA)

Money the landlord contributes toward customizing the space for the tenant, usually expressed as $/SF.

Tenant rep (tenant representation broker)

A broker exclusively representing the tenant's interests in a lease negotiation, landlord pays the commission but the broker's loyalty is to the tenant.

Termination option

A negotiated right that lets a tenant exit the lease early at a defined date, usually in exchange for a penalty payment.

Triple net lease (NNN)

A lease where the tenant pays base rent plus their pro-rata share of property taxes, insurance, and CAM.

Usable area / usable square feet (USF)

The actual floor area inside the demising walls, what tenants can use for desks, offices, and operations.