Glossary
Commercial real estate terms, defined.
Plain definitions of the terms in commercial leases, from gross-up and base year to load factor and breakpoint.
Recoveries & CAM
Base Year
The reference year whose operating expenses are built into base rent, so the tenant pays only its share of increases above that level in later years.
CAM Cap
A contractual limit on how much a tenant's recoverable expenses can increase year over year, tested after the base-year deduction.
Expense Stop
A fixed dollar amount of operating expenses covered by base rent, above which the tenant pays its share of the excess.
Gross-Up
An adjustment that raises variable operating expenses to what they would have been at a target occupancy, so tenants in a partly vacant building pay the same share they would in a full one.
Pro-Rata Share
The percentage of recoverable building expenses a tenant is responsible for, normally the tenant's rentable square footage divided by the building's.
Recovery Pool
A grouping of operating expenses reconciled together, each with its own exclusions, gross-up target, administrative fee, and cap.
Lease structures
Critical Date
A deadline in a commercial lease that carries financial consequence if missed, such as an option notice window or an insurance certificate expiration.
Modified Gross
A lease structure between full-service gross and triple net, where base rent covers operating expenses up to a base year or stop and the tenant pays increases above it.
NNN (Triple Net)
A lease structure where the tenant pays base rent plus its share of the three nets: common area maintenance, property taxes, and building insurance.
TI Allowance
A landlord contribution toward the cost of building out a tenant's space, usually stated per rentable square foot and disbursed against documented costs.
Billing
Breakpoint
The sales threshold above which a retail tenant begins paying percentage rent, either derived from base rent (natural) or negotiated (artificial).
Percentage Rent
Additional rent a retail tenant pays as a percentage of gross sales above a breakpoint, trued up annually against sales actually reported.
Measurement
Load Factor
The percentage added to a tenant's usable square footage to account for its share of building common areas, producing the rentable square footage rent is billed on.
Rentable vs. Usable Square Feet
Usable square footage is the space inside the demised premises; rentable adds the tenant's share of building common areas, and rent is billed on the rentable figure.
Stacking Plan
A floor-by-floor visual of a building showing which tenant occupies which space, how much area each holds, and when their leases expire.
Documents
Estoppel Certificate
A tenant-signed statement confirming the lease terms and current status, typically required by a lender or buyer during financing or sale.
Lease Abstract
A structured summary of a commercial lease capturing the terms that drive money and deadlines, used as the operating record instead of the full document.
SNDA
A three-party agreement (subordination, non-disturbance, and attornment) governing what happens to a lease if the landlord's lender forecloses.
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