Commercial Lease Acronyms That You Need to Know

Commercial Lease Acronyms That You Need to Know

If you’re new to the world of commercial investment—there are a lot of terms, lease types and calculations you’ll need to be aware of. On top of that, everything is an acronym. Learning the lingo of the industry can be overwhelming—but it should be ranked high on your to-do list.

If you’ve acquired a building and think you’re ready to start looking for a tenant, you’ll want to have the lease conditions drafted well ahead of time—but be prepared for negotiations! Here are some acronyms you should be familiar with before starting out.

Building Owners and Managers Association International (BOMA): A network for commercial real estate professionals and a source of information for industry standards, legislation and developments.

Common Area Maintenance (CAM): Operating expenses that are passed on to tenants such as building supplies and maintenance, snow removal and landscaping upkeep.

Rentable Area or Rentable Square Feet (RSF): The amount of the tenant’s usable space, plus a portion of the building’s common areas (hallways, restrooms, etc.). These areas are usually shared by all tenants in a building.

Tenant’s Improvements and Betterments (TIBs): Permanent changes to the landlord’s property or building that will increase its value.

Triple Net Lease (NNN): A common commercial lease type where the tenant assumes the responsibility of paying all real estate taxes, insurance and maintenance on top of a specified base rent.

Usable Area or Usable Square Footage (USF): The area that is usable by the tenant only and does not include common area space.

While there are dozens of terms not listed, you’ll run into the above quite often. It won’t be long before you find yourself fluent in the language of commercial real estate.

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