30 Key Office Leasing Terms You Need to Know

Negotiating a commercial office lease can be complicated; it’s sort of like trying to read a prescription from your doctor. There are abbreviations, jargon, and words that commercial real estate (CRE) professionals use every day, and they assume you know what everything means.

To make things even trickier, the exact same term can mean different things in different markets. So, if you’re not sure about something when you’re negotiating your office lease, be sure to ask. In the meantime, here are 30 key office leasing terms you need to know:

  1. Premises: Address of the building and specific suite number being leased.
  2. Use of premises: Tenant’s type of business and the allowable use of the space.
  3. Lessor: Name of the landlord; the person or entity giving the lease.
  4. Lessee: Name of the tenant; the person or entity taking the lease.
  5. Lease term: Specific dates for the beginning and end of the lease.
  6. Renewal option: Whether or not the tenant can extend the lease, how much notice must be given, and how the renewal rent will be determined.
  7. Rentable square feet: Amount of space the tenant is being charged for.
  8. Usable square feet: Amount of space the tenant is actually able to use.
  9. Base rent: Minimum fixed amount of rent, expressed as a per-square-foot charge or as a flat fee on both a monthly and an annual basis.
  10. Additional rent: Extra fees or rents that the tenant may be liable for, including utilities, common areas (CAM), maintenance, or any other charges not included in the base rent.
  11. Security deposit: Usually equal to one month or more of the base rent, and held by the landlord. Refundable to the tenant when the lease terminates, provided that all terms and conditions of the lease have been met.
  12. Rent adjustment: When and how much the base rent increases, usually annually, expressed as a fixed amount or percentage. Sometimes called a cost of living adjustment (COLA).
  13. BOMA: Building Owners and Managers Association. Publishes standards for office building management and development, including how to measure office space and common areas, energy consumption, operating costs, and building codes.
  14. Building core: Parts of the office building—such as stairwells, elevator shafts, and public restrooms—that are usually located near the center of the building and aren’t rented directly to tenants.
  15. Load factor: Used to calculate a tenant’s total monthly rental costs by combining the leased square footage with the tenant’s proportional share of the common areas.
  16. Common areas (CAM): Parts of the building—such as the core elements, lobbies, and parking—that are shared by all tenants and their guests.
  17. Full service gross lease: Tenant pays one fixed monthly fee and the landlord pays all other expenses, including utilities and maintenance.
  18. Modified gross lease: Tenant pays a fixed monthly fee plus extra charges, such as utilities or janitorial service.
  19. Net lease: There are three variations of a net lease:
  20. Single net, where tenant pays base rent + property taxes
  21. Double net, where tenant pays base rent + property taxes + building insurance
  22. Triple net (NNN), where tenant pays base rent + property taxes + building insurance + CAM
  23. HVAC: Heating, ventilation, and air conditioning, including the ductwork and filters of the system.
  24. Insurance: Tenants are required to obtain and pay for their own business liability insurance, including protection for lost business income and naming the landlord as an additional insured.
  25. Turnkey or move-in-ready: Office space that is ready for the tenant with no additional tenant improvements (TI) required.
  26. TIs or move-in allowance: Tenant improvements (TIs) required for the tenant’s specific use. Sometimes paid for by the landlord, or by the tenant in exchange for a move-in allowance credit toward the monthly rent.
  27. Improvements and alterations: Changing the space for the tenant’s use, such as updating flooring and paint, or relocating an existing interior wall.
  28. Maintenance and repairs: Specifies the responsibility of the tenant or landlord for maintaining the premises and making repairs, sometimes with shared costs, where the tenant pays up to a certain fixed amount or a percentage based upon the remaining lease term.
  29. Landlord access: Amount of notice the landlord must give before entering the space leased to the tenant.
  30. Sublease: Allows tenant to lease part or all of its space. In a sublease, the tenant becomes the sublessor; the entity the tenant is subleasing to becomes the subleasee.
  31. Termination: How and when the lease comes to an end, including how much notice must be given and any penalties for default.
  32. Holdover rent: Increased amount of rent a tenant must pay for not vacating the space when the lease terminates, usually at an amount significantly higher than the original base rent.
  33. Default: Conditions where the landlord or tenant has broken one or more terms or conditions of the lease, remedies available, and the recourse either party has if the breach is not remedied.
Patrick McGregor

Patrick McGregor

Patrick McGregor is a senior writer covering the real estate industry and overall economic trends in the United States for several Yardi product publications. He also holds an MBA from Thunderbird School of Global Management. Patrick was previously a commercial real estate analyst at Yardi Matrix for five years. His work has appeared in the New York Times, Bisnow, GlobeSt, The Real Deal, Business Insider, The Denver Post, The Motley Fool, and more.