A period during which the tenant pays reduced or no rent, typically granted as a lease concession for early occupancy or during a build-out period.

A CAM billing approach where operating expenses are calculated using actual incurred costs rather than estimates or caps.

Requirements under the Americans with Disabilities Act (1990) that mandate accessible design for commercial buildings. Responsibilities are typically split between landlord (common areas) and tenant (demised space).

A large, high-traffic tenant — typically a national retailer, grocery store, or department store — that drives foot traffic to a retail center and influences the desirability of inline space.

The transfer of a tenant's entire leasehold interest to a third party. The original tenant is typically released from obligations; requires landlord consent in most commercial leases.

The fixed minimum rent payable by the tenant, before any operating expense pass-throughs, percentage rent, or other charges.

In full-service and gross leases, the year (often the first lease year) whose operating expenses establish the baseline; tenants pay increases above the base year amount.

A dispute resolution mechanism for fair market rent where each party submits one number and the arbitrator must choose one — they cannot split the difference. Encourages realistic proposals.

Measurement standard issued by the Building Owners and Managers Association defining how rentable and usable square footage is calculated in commercial buildings.

In percentage rent leases, the gross sales threshold above which the tenant pays a percentage of sales to the landlord. The "natural breakpoint" is base rent divided by the percentage rate.

The tenant improvement construction process that prepares the space for occupancy. May be funded by a TI allowance from the landlord.

Operating expenses for maintaining shared building areas (lobbies, parking lots, landscaping, etc.) that are passed through to tenants in NNN and modified gross leases.

A negotiated limit on annual increases in controllable CAM expenses, typically expressed as a percentage (e.g., 5% per year) to protect tenants from outsized cost escalations.

The annual process of comparing estimated CAM charges against actual costs. Tenants typically receive a reconciliation statement and pay or receive a credit for the difference.

A government-issued document confirming a building or tenant space meets applicable building codes and is legally habitable for its intended use.

A lease provision allowing a retail tenant to pay reduced rent or terminate the lease if a named anchor tenant or a minimum number of tenants vacate the center.

The date on which the lease term officially begins, triggering rent obligations and other lease provisions.

A retail location where the tenant pays rent but has ceased operations. "Going dark" can trigger co-tenancy clause rights for other tenants in the center.

A tenant's (or landlord's) failure to perform a material lease obligation. Commercial leases define monetary defaults (non-payment of rent) and non-monetary defaults separately, with different cure periods.

The specific area leased by the tenant, as defined in the lease by its address, suite number, floor plate, and/or attached floor plan exhibit.

A landlord's obligation not to interfere with the tenant's quiet enjoyment of the leased premises. Actions that undermine the tenant's use constitute a derogation of grant.

Lease provision specifying how disagreements will be resolved — through mediation, arbitration (AAA or JAMS), or litigation.

A time period during which a tenant (or buyer, in purchase contracts) investigates the property before being bound by the full agreement.

The true average rent per square foot over the full lease term, accounting for all concessions (free rent, TI, etc.). Used to compare lease offers on an apples-to-apples basis. Formula: (Total rent payments – Total concessions) / Lease term in months.

A document signed by a tenant certifying the current status of the lease — confirming lease terms, rent amount, the absence of defaults, and other facts. Typically required by lenders in financing transactions.

A provision granting a tenant the exclusive right to operate a specific type of business in the property or shopping center. Prevents the landlord from leasing to direct competitors.

In full-service leases, the level of operating expenses above which the tenant pays increases. Often set at the base-year expense level.

The rent a comparable space would command in the open market between a willing landlord and willing tenant. Relevant in renewal option valuations and FMR resets.

A lease for a defined, specific period (e.g., 5 years), as opposed to a month-to-month or periodic tenancy.

A clause excusing a party's performance obligations when extraordinary events beyond their control (pandemics, natural disasters, government orders) make performance impossible or impractical.

A concession granted to the tenant at lease commencement where no rent is due for a defined period, typically to compensate for the build-out period or as a signing incentive.

A lease where the tenant pays one all-inclusive rent covering base rent, taxes, insurance, utilities, janitorial, and CAM. Common in Class A office buildings.

A provision requiring a tenant to continue actively operating in the space during the lease term. Applies most commonly to retail and anchor tenants.

A long-term lease (typically 50–99 years) of land only, where the tenant owns or constructs a building on the leased land. The building reverts to the landowner at lease expiration.

A lease where the tenant pays a flat rent that includes most or all operating expenses. The landlord bears the risk of operating cost increases.

In percentage rent leases, total revenues from the tenant's business at the leased premises, typically subject to defined exclusions (e.g., sales taxes, returns, online sales).

Occupancy of a commercial space after the lease expiration date without a new lease or extension agreement. Typically triggers a penalty rent rate of 125–200% of prior rent.

Heating, Ventilation, and Air Conditioning. Lease provisions specify who provides HVAC, operating hours, temperature standards, and after-hours HVAC costs.

A contractual obligation to protect and compensate the other party for specified losses or liabilities. Lease indemnification provisions typically cover personal injury, property damage, and landlord/tenant negligence.

A lease for industrial/warehouse space that includes some operating expenses in the rent but requires the tenant to pay utilities and some maintenance costs.

Judicial Arbitration and Mediation Services — one of the two primary institutions (along with AAA) for commercial real estate arbitration. Preferred for high-value disputes; features former judges and senior attorneys as arbitrators.

When multiple guarantors or co-tenants are each fully responsible for the entire lease obligation, not just their proportionate share. Each party can be pursued individually for the full amount.

An upfront payment by a new tenant to an existing tenant or landlord as consideration for the right to occupy a particularly desirable or hard-to-find commercial space.

A written modification to an existing lease agreement, changing specific provisions while leaving all unmodified provisions in effect.

The date on which the lease term begins, triggering rent obligations and other provisions. May differ from the possession date or rent commencement date.

The total duration of the lease, from commencement to expiration, including any options to extend.

A bank-issued financial instrument used as an alternative to a cash security deposit. The landlord can draw on the LOC if the tenant defaults.

A non-binding preliminary agreement outlining the key economic and business terms of a proposed lease before formal documents are drafted.

The ratio of rentable to usable square footage in a multi-tenant building. It accounts for the tenant's proportionate share of common areas. Also called the "add-on factor" or "core factor."

A lease between a property owner and a single tenant who then subleases all or part of the space to sub-tenants. Common in coworking and flex office arrangements.

A hybrid lease where some operating expenses are included in the rent and others are passed through to the tenant. The specific allocation is negotiated between the parties.

A periodic tenancy with no fixed expiration date that continues on a monthly basis until terminated by either party with proper notice.

The true economic rent after accounting for all concessions (free rent, TI allowances, etc.) amortized over the lease term.

A lease requiring the tenant to pay base rent plus property taxes, building insurance, and maintenance/CAM costs. The most common structure for retail and single-tenant net lease properties.

An agreement from a lender that if the landlord defaults on its mortgage, the lender will not disturb the tenant's occupancy, provided the tenant is not in default.

All costs associated with operating a commercial property, including taxes, insurance, maintenance, utilities, management fees, and administrative expenses.

A tenant-negotiated limit on annual increases in operating expense pass-throughs, protecting tenants from outsized cost escalations in years with major expense spikes.

A contractual right allowing the tenant to extend the lease term for a defined period under specified conditions. Must be exercised within a defined notice window.

Rent tied to the tenant's gross sales, typically calculated as a percentage of sales above the breakpoint. Common in retail, restaurant, and entertainment leases.

The specific business activity the tenant is authorized to conduct in the leased premises. Activities outside the permitted use constitute a default.

An individual's (typically a principal or founder) personal obligation to fulfill lease payments if the tenant entity defaults. Common in commercial leases for startups and small businesses.

The date the landlord delivers the space to the tenant, which may precede the lease commencement date to allow for build-out.

The landlord's covenant that the tenant will be allowed to peacefully use and occupy the leased premises without interference during the lease term.

A recorded document governing shared rights and obligations among property owners and tenants in a multi-parcel retail or mixed-use center, covering parking, access, maintenance, and operating restrictions.

A landlord's right to take back the leased premises if the tenant attempts to sublease or assign all or part of the space, rather than consenting to the proposed sublease/assignment.

The date on which the tenant's obligation to pay rent begins, which may differ from the lease commencement date if a free rent period is granted.

Scheduled increases in base rent over the lease term, typically expressed as a fixed dollar increase, fixed percentage increase (e.g., 3% annually), or tied to a CPI index.

The tenant's usable square footage plus their proportionate share of building common areas, as defined by BOMA standards. The measurement basis for most commercial rent calculations.

A tenant's right to receive the first offer to lease adjacent or additional space before the landlord markets it to outside parties.

A tenant's right to match any third-party offer for adjacent or additional space before the landlord accepts the third-party deal.

A refundable sum held by the landlord as collateral against tenant default. Typically equal to 1–3 months' rent for established businesses; higher for startups or weaker credits.

Subordination, Non-Disturbance, and Attornment agreement — a tri-party agreement between the landlord, tenant, and lender governing the tenant's rights in the event of a foreclosure.

A provision making the tenant's lease interest subordinate to the landlord's mortgage. This gives the lender priority over the tenant in case of foreclosure.

An arrangement where the original tenant (sublandlord) leases all or part of their space to a third party (subtenant). The original tenant remains liable to the landlord. Requires landlord consent in most commercial leases.

The point at which tenant improvements are sufficiently complete for the tenant to occupy and use the space for its intended purpose, typically defined by a certificate from the architect or general contractor.

A landlord-funded contribution toward the cost of building out or renovating the tenant's space. Typically expressed as $/SF (e.g., $50/SF TI). Any costs above the TIA are borne by the tenant.

The combination of tenants in a shopping center or mixed-use development, curated to maximize foot traffic, minimize direct competition, and create a complementary retail ecosystem.

A document summarizing the proposed key terms of a lease or lease modification, used to reach agreement on business terms before drafting full legal documents.

See NNN. The tenant pays base rent plus all three nets: property taxes, building insurance, and maintenance/CAM costs.

The actual, exclusive area of the tenant's leased space, not including common areas. Usable SF × load factor = rentable SF.

See Permitted Use. A lease provision specifying the exact type of business activity authorized in the leased premises.

The percentage of leasable space in a building, center, or market that is unoccupied. Low vacancy gives landlords more negotiating leverage; high vacancy favors tenants.

An exhibit to the lease specifying what build-out work the landlord will perform, what the tenant is responsible for, and how TI funds will be disbursed. Also called a "construction exhibit" or "build-out agreement."

A lease requiring nominal or no monetary rent, often used in ground leases or charitable/civic arrangements, or in property that is contributed to a development in exchange for equity participation.