Glossary of Commercial Real Estate Terms

The percentage of usable area that is charged to a Tenant in an office building in order to determine a Tenant’s rentable area. This allocates a pro rata portion of an office building’s Common Area to each Tenant. For example, a Tenant with 900 usable square feet and a typical CAF of 15% would pay rent on 1,035 rentable square feet.  See also Rentable Square Feet and Usable Square Feet.

The maintenance that a Landlord provides for the “common” areas of an office, industrial or retail building or project.  CAM charges vary depending upon the Lease language but typically include building maintenance costs, landscape maintenance costs, and parking lot maintenance costs including snow removal.  Depending upon the Lease language, Landlords may also add in other non-maintenance costs including property management fees, common area utility charges, day-porter cleaning services, security services, etc.  The costs of CAM are typically charged back to the Tenants of the building or project on a pro-rata basis calculated as the Tenant’s leased square footage divided by the total square footage of the building or project.

Giving in, admitting, or yielding to the requests or demands of, or an offering used as an enticement to, an individual or entity. The concession may or may not be of monetary value. Concessions of monetary value used to entice an office user include reduced rent, rent abatement period (free rent), reduced rate of rent increases, dollar credits for construction, cash payments for such things as moving expenses or new telephone systems, gifts, etc. A non-monetary concession would be conceding on the inclusion (or exclusion) of a particular lease clause. However, concessions that appear at first glance to be non-monetary may in fact have a monetary value, as when a Landlord agrees to extend the standard operating hours of a building. The increased hours can be translated into a cost for things like additional maintenance, operating, and janitorial expenses.

An all-encompassing term to describe all the necessary plans and blueprints to construct a Tenant’s space or a building properly and accurately.

A short-term loan, also known as interim financing, for use during the construction of an office building and until permanent financing or a mortgage can be arranged for the new building. The loan covers costs of construction, brokerage commissions, marketing, etc.

Office suites adjacent to each other or having a common demising wall.

A method of drilling holes in building floors and ceilings to allow telephone, computer, electrical and plumbing installation. May require X-rays of the floor area to be drilled.

A floor in a high-rise building where one bank of elevators connects to a different bank of elevators, thereby allowing Tenants to have access to floors in other elevator banks without returning to the lobby of the building.