Commercial Real Estate Dictionary pt. 1


There are many different components involved in leasing commercial real estate. Agents go to school to learn all the rules and regulations to help you make the most profitable deal which in turn help them financially, but there is no harm in learning some of the terminology yourself. In this continuing series will we go create a “Commercial Real Estate Dictionary” to help you become familiar with some of the terms we believe are most vital in gaining knowledge before, during, and after starting your search for available office space:


Absorption Rate: The rate at which rentable space is filled

Anchor Tenant: The major tenant in a commercial property

“As-Is” Condition- Acceptance by the tenant of existing condition of the premises at the time the lease I signed, including physical defects

Base Rent- The set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease

Build-To-Suit: An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant’s specifications

Common Area: Comprised of usable space and common grounds. Area within an office space that are available for use by all tenants or groups of tenants and their guests, such as lobbies, restrooms, parking facilities, sidewalks or landscaped areas.

Common Area Maintenance (CAM): The amount of added rent charged to the tenant to maintain the common areas; shared by tenants.

Contiguous Space: Multiple office spaces within the same building on the same floor that can be combined and rented to the same tenant.

Depreciation: Decline in value of an office space or building.

Easement: A right of use over the property

Equity: The fair market value of an asset minus any outstanding debts.

Fair Market Value: The estimated value of a property based on what an unpressured, knowledgeable buyer would pay to an equally unpressured and knowledgeable seller in the current market.