of "Oft Used" Real Estate Terms
- The filling of available space in the market, financial reporters
often speak of the absorption of office space in a given city as
a barometer of the economy. If a given city or market is not able
to absorb the available space, it could be a sign of an economic
slowdown, because companies are not leasing/buying space, or overbuilding
when supply outstrips demand.
- an acre is 43,560 square feet.
- Refers to a Lease where a Building Owner or Developer, builds
according to the Tenant's specifications. The construction costs
are then figured into the Lease, which is generally for the long
Rate (Capitalization Rate) - The percentage used to determine
the value of income through capitalization. Capitalization, specifically,
determines the present value of a building by taking the annual
net income and discounting by using the rate of return acceptable
to Buyers of similar properties. Example: Net income of a property
is $100,000. per year. Using a 10% Cap Rate, the property would
be worth: $1,000,000.
Areas -Areas of a Multi-Tenant Building or Office/Business Park,
such as Common Hallways, Lavatories, Sidewalks, Driveways and the
like, that are used by all Tenants or Condominium Owners who share
the common expense of their operation and maintenance. Snowplowing,
Landscape Maintenance, Janitorial Services, Pavement Repair, Parking
Lot Striping and more services are paid for by Tenants/Owners through
C.A.M. charges added to the annual rent.
- A condition that must be met before a contract is legally binding.
If a zoning change is necessary in order that a Prospective Buyer
can operate a business, or make certain improvements, a contract
will be written contingent upon Zoning Approval.
Diligence - Generally refers to the homework that the Buyer
and Seller do during the period after a contract is signed, but
before the closing of the transaction. This homework can include
items such as zoning work, environmental surveys, physical inspections
and the like.
List - The term used for the tax roll or assessment list in
New England States.
-Generally, buildings, however, improvements can be any permanent
structure attached to the land, such as roads, parking lots, sewers,
Letter of Intent - An informal method of stating a Prospective
Tenant's or Buyer's interest in a property. It is neither binding,
nor a legal document in the contractual sense, but demonstrates
a prospect's good faith interest. In the case of a Lease, a Proposal
to Lease may be used in place of a Letter of Intent.
of First Refusal - A right usually given by an owner to a lessee,
which gives the lessee the first chance to buy the property, should
the owner decide to sell. The Owner must have a valid offer (in
writing) which the lessee can match or refuse to match, in which
case the sale will go through with the original offeror. In multi-tenant
buildings, a right of first refusal can also apply to spaces for
lease, whereby a lessee will have the right to expand into future
available spaces in the building or pass it up.
Improvements - Also known as "Build-Out", these are
improvements such as walls, additional plumbing, built-ins, HVAC
changes, structural changes and so forth, that meet the needs of
the Tenants. These improvements can be paid for by the Tenant, the
Landlord, or both parties.
- Common Area Maintenance S.F.
S.F. - Square Foot
M/L - More or Less (used in measuring s.f.)
P.S.A. - Purchase and Sale Agreement
CBD - Central Business District
L.O.I. - Letter of Intent
T.I. - Tenant Improvements
- Society Industrial Office Realtors
C.C.I.M. - Certified Commercial Investment Member
G.R.I. - Graduate Realtor Institute
A.B.R. - Accredited Buyer's Representative
C.R.S. - Certified Residential Specialist