Glossary of Commercial Real Estate Terms


Market Rent

The current rental rates paid by Tenants for like use (office space) in buildings of comparable size with similar qualities of construction and building amenities, and comparable surrounding neighborhood characteristics and environment. This term is often used in renewal clauses as the rent that will be paid if lease renewal occurs. Market rent is usually determined by an appraisal method.

Moving Allowance

An offer by a Landlord to pay all or part of a Tenant’s moving costs; can be a lump cash sum or an allowance stated in dollars per square foot.


Net/Net/Net Lease

Same as a Triple Net or NNN lease. This is a lease in which the Tenant is totally responsible for all operating expenses associated with its proportionate share of the building. This is particularly common in retail and industrial leases and for any type of single user building.

Net Present Value

Presented as part of a financial analysis on the economic terms of a lease, it represents the taking of an imputed or estimated total dollar value and/or the actual total dollars paid out by the Tenant up to a specified time period (for example, five years) and presenting this aggregate total rent in terms of current dollars. When presented in current dollar terms, the net present value is attempting to control the effect of inflation on money using an estimated percentage value that can be considered either as the amount of value that money loses each year because of increasing prices and living costs, or as the compounded earning potential of an amount of money set aside today as a lump sum in an alternative investment at the stated estimated rate of interest so that even though required rent payments were deducted from the investment each year, the overall interest earnings would provide the exact amount of money  necessary to meet each rent payment for the full time period without any required additional monetary input. Net present value is today’s dollar value of a future income or payment stream discounted for an estimated earning potential in alternative investments, or discounted for the reduced value of future dollars because of inflation factors when compared to today’s dollar.

Net present value is a complex concept and perhaps can best be explained by considering what one dollar today will be worth five years from now. Or, alternatively, if you invested one dollar today, what rate of interest would be required so that you had enough money to buy the same item five years from now? The net present value is provided so that a standardized basis of comparison can be made between different lease terms at different buildings and for different amounts of space.  The net present value provides an unbiased equality of value for comparing legality of economic terms of different lease arrangements.


Operating Expenses

The expenses associated with the operation of a standard office building, such as utilities, janitorial services, consumable supplies, property taxes, building insurance, repairs, and other items related to common area maintenance (“CAM”), including parking lots or garages and landscaping.

Operating Expense Exclusions

Typically a set of exclusions to Operating Expenses as identified in a Lease document.   Typical exclusions include leasing commissions, tenant improvement costs, personal income taxes of the building owners, penalties and late fees, etc. Landlords often provide an abbreviated list of exclusions to Operating Expenses and Tenants may negotiate to expand or clarify the list of Operating Expense Exclusions.

The Guidance Advantage

Guidance Corporate Realty Advisors provides corporate tenant / buyer representation services to corporate real estate users in the Denver metropolitan area including Boulder, Colorado. Guidance also provides these services in all major U. S. markets, as well as markets in Canada, Asia, South and Central America, and Europe.

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