Two separate articles about “jargon” got me thinking about all the terms that we brokers in the corporate real estate world toss around when speaking with clients. And frequently, I am reminded by the blank looks on my clients faces that they have no idea what we’re talking about.
In an effort to take some of the mystery out of the language of Corporate Real Estate, here are a few frequently heard terms and what they mean. There are many more than what’s on the list below, but these are a few of the common terms that immediately jumped to mind.
Blend & Extend: This is simply the landlord offering a lower rent to an existing tenant in exchange for an extension of the lease.
Plug & Play: Space that is “ready to go” and doesn’t require construction, installation of furniture, etc before the tenant can move into the space.
Loss Factor/Add-On Factor: The calculations differ slightly, but essentially it’s a way to calculate the difference between the square footage of the actual demised space (also called “Usable space“) and the rent stated in the lease. It takes into account common corridors, bathrooms, lobbies, etc.
Rentable Area: This is the actual rent written into the lease. It’s the demised premises plus the Loss Factor or Add-On factor.
Base Year: In a traditional lease (at least here in NJ) the total rent is comprised of both the net rent (which the landlord uses for items like debt service and profit) and the building operating expenses and taxes. The base year is the first year of the lease and the tenant is typically responsible for any proportionate increases in those expenses over the base year.
True-up Statement: the invoice that a landlord sends to each tenant at the end of the year outlining any additional expenses that have accrued during the course of the year.
TI Allowance: The money provided by the landlord to a tenant so the space can be reconfigured to accommodate the tenant’s use.
I work very hard to explain what I do and how I deliver services to my clients in plain English. I take pride in the fact that on a very basic level, my six year old daughter can explain what it is that I do.