Glossary of Terms

A  B  C  D  E  F  G  H  I  J  K  L  M  N  O  P  Q  R  S  T  U  V  W  X  Y  Z  

A

Absolute Net: Under this type of lease a tenant pays all costs of operating, maintaining and repairing the building, real estate taxes and utilities, in addition to base rent. Often the tenant is directly responsible both for all such costs and for the active handling of the items themselves.

Absorption Rate: This is an estimate of the amount of rentable space leased in a given year and is used to forecast leasing activity as a measure of market strength.

Additional Rent: Any rent amount over and above base rent or net rent that a tenant has to pay to the landlord. Usually it includes the Realty Taxes, Operating Costs and Hydro.

Add-on Factor: Rent for spaces is shared by all of the tenants in a building in the form of an "add-on" to the rent that is charged for the actual useable space a tenant occupies.

Agency: An agent is an entity contracted to act on your behalf.

Allowance: An allowance is any sum of money that a landlord agrees to provide a tenant for items such as improvements and moving expenses. The tenant is usually responsible for any costs in excess of the allowance. Cost savings are typically retained by the landlord, unless the lease specifies otherwise.

Alternative Workspace: Refers to any non-traditional office space usage such as telecommuting, hotelling, office sharing and open office plans.

Amortization: When you amortize a loan, you pay it off with periodic installments that are composed of principal plus interest.

Amps: A unit of measure of current (amperes) flowing in a circuit. Used to measure available electrical power supplied to a building.

Appraisal: An opinion or estimate of the value of property made by a qualified appraiser based on relevant current market data.

Architect: A professional who is registered, licensed or certified to practice architecture within a jurisdiction administered by a governmental agency or an architectural association legally mandated by the government.

As-is condition: This means that the tenant agrees to take the space in the condition it is currently in and agrees to be responsible for any necessary repairs or improvements.

Asking Rental Rate: The listed or advertised rental rate for space available for lease. The rate is influenced by the prevailing market supply and demand conditions for comparable space.

Assessed Value: The value of real property as determined by a municipality for property tax purposes.

Assignment: A method of transferring title to property from one person to another.

Attornment: Under this type of agreement a tenant agrees to remain a tenant in the event that the landlord changes because of a mortgage default.

Average Gross Rent: Average annual contract rent over the lease term, including the cost of combined operating expenses and real estate taxes minus any rent abatements.

Average Net Rent: Average annual contract rent over the term of the lease, excluding the cost of combined operating expenses, real estate taxes and any rent abatements.

B

Base: The total amount of built space in a particular market.

Base Building: The condition of a building before the tenant makes any improvements.

Base Building Improvements: Property improvements to the structural elements of a building and its common areas, such as the shell and core, HVAC systems, lobbies, restrooms, corridors, etc. Base building improvements do not include interior improvements and finishes within a tenant's leased premises.

Base Rent: The minimum rent due under a lease that calculates rents as a percentage of sales.

Base Year: Usually the first calendar year in a lease, used as a benchmark on which to base subsequent escalations of rent.

Bay Size: The distance between the structural supports of a building.

Broker's Commission: A fee that is paid to a real estate broker for helping to find a space and negotitate the lease between the landlord and the tenant.

Building Owners and Managers Association (BOMA): An office building industry trade association. BOMA publishes the definition of rentable and useable area, which is used to determine the square footage leased in most commercial office buildings.

BOMA Standard: Trade name for the Standard Method for Measuring Floor Area in office buildings developed by BOMA. ANSI/BOMA Z65.1-1996 is the latest edition of the standard issued in 1996.

Build-to-suit: Under a build-to-suit agreement the landlord constructs a building to the specifications of the eventual tenant.

Building Class: A rating describing the condition, location, and image of a structure within the context of its market. Buildings may be classed as:

• Class A. Typically the most prestigious of buildings, they are newly-built or recently refurbished with high quality finishes with state of the art systems and provide a full complement of on-site amenities and services such as restaurants, convenience stores, meeting spaces, available parking, etc. Class A buildings are well located within the business district. Those Class A buildings with higher quality construction or architectural significance are sometimes referred to as "trophy" buildings.
• Class B. Typically Class B buildings offer good finishes and adequate systems but not on the level of Class A buildings. They normally do not offer the same range of amenities (if any) either.
• Class C. Generally this class encompasses older properties that are functionally obsolete or in need of maintenance. They are usually, though not always, situated in less desirable locations.

Building Code: Regulations imposed by municipalities governing the minimum structural requirements for buildings.

Building Core: The central mechanical components of a multi-story building such as elevators, utility closets, stairwells and ventilation shafts.

Building Common Area: The lobby areas and other common areas in general use by all tenants of an office building.

Building Permit: An official document issued by a municipality permitting construction of a building.

Building Permit Application: An application to the city for permission to construct or improve a building.

Building Shell: The external supporting structural elements of a building and the exterior materials that enclose the building.

Building Standards: A list of improvements made to a commercial space itemizing the type and quantity of materials and finishes typically contributed by the landlord, such as floor coverings, doors, partitions, lights, outlets, etc.

Buildout: The construction work and costs of building any interior improvements made to a leased space according to the specifications and requirements of the tenant.

Bulk Warehouse: An industrial property with clear ceiling heights equal to or greater than 24 feet, dock-high doors, and less than 10% office build-out.

C

Capitalization Rate: A rate of return used to calculate the capital value of an income stream or an income producing asset (e.g. office building). Capital value is determined by dividing annual income by the capitalization rate.

Central Business District (CBD): The downtown or main business section of a city, generally consisting of a mix of office, retail, entertainment, hotel, high-density housing and governmental land uses.

Ceiling Height: Represents the measurement taken from the finished floor level of an office space to the underside of the finished ceiling. In flex buildings, the measurement is taken from the finished floor to the underside of the roof support structure.

Certificate of Insurance: A document issued by an insurance company or its agent to verify the existence of an insurance policy and identifies those who are covered.

Certificate of Occupancy: A permit from the government that allows tenants to occupy a newly constructed building. The document verifies that the necessary building inspections have been completed and that the structure complies with the necessary public codes and regulations.

Churn: Relocation of personnel and supporting equipment (phones, furniture, etc.) from one workspace to another within the leased premises. Due to the expenses involved, high churn rates are best avoided.

Circulation: The hallways, corridors, and other passageways in an office space that are used to travel between offices, cubicles, conference rooms, reception area, etc. Circulation can add as much as 35% more square footage to the size of an office suite.

Clear Height: The minimum clearance below the roof structure or dropped ceiling of an industrial building.

Commencement Date: This is the date of the beginning of a lease, usually the same day that the tenant takes occupancy.

Common Areas: The areas of a property that are used by all tenants including areas such as lobbies, corridors, stairs, elevators, service facilities, etc.

Common Area Maintenance (CAM): Fees charged by the landlord to the tenant for maintaining and operating common areas of the building such as lobbies, courtyards, hallways elevators, etc.

Concessions: Financial incentives granted by the seller/landlord to the buyer/tenant to induce sale/lease. Concessions are directly affected by the available supply of real estate and the level of demand from other users of space.

Construction Cost: The cost of tenant improvements, including contractor fees and overhead, general conditions, engineering fees and possibly allowances for design and architectural drawings.

Construction Allowance: Interior improvements made to a commercial space by the landlord such as partitions, doors, lights, outlets etc., usually expressed as a dollar amount per square foot.

Construction Documents: Construction drawings and specifications prepared in conformance with municipal building codes. The drawings and specifications may include architectural, structural, mechanical, electrical and other details. Many jurisdictions require these documents to be prepared by or certified by an architect.

Constructive Eviction: A situation in which a landlord's breach of a lease contract causes the tenant to cancel the contract and vacate.

Consumer Price Index: A widely recognized method of measuring price levels and inflation, at times used to calculate rent escalations.

Contiguous Space: Physically adjoining spaces in one building that can be combined and leased to a single tenant.

Contingent Fees: Fees that are payable by the tenant in the event of a future occurrence. For example, a broker's commission is contingent upon closing the sale or lease of a piece of property.

Contract Rent: The contracted amount of rent due from the tenant to the landlord.

D

Default: Failure to perform an obligation or promise as specified in a lease agreement.

Demised Premises: The space subject to a lease, separated from spaces leased to others by a "demising" partition. Also measured as useable area.

Demising Partitions: The walls or partitions that separate one tenant's premises from other tenants' premises. Also, any common areas of a property.

Digital Subscriber Link (DSL): A high-speed Internet connection over copper wire. Access speeds diminish in proportion to the distance from a Competitive Local Exchange Carrier's point of presence.

Direct Available Space: Office space available for lease directly from the landlord.

Direct Vacancy Rate: A percentage derived by dividing Direct Available Space by inventory.

Discount Rate: An interest rate used to calculate the present value of future cash flows.

Distribution: Industrial properties with clear height ceilings between 18 and 24 feet, with drive-in and/or dock-high doors and office build-out of between 10% and 30%.

Divisible Space: A space that can be subdivided into smaller parts in order to lease to two or more distinct tenants.

E

Effective Net Rent: This is the net rent discounted over time collected by a landlord over the term of a lease after deducting transactional costs such as tenant improvements, lease commissions, rental concessions, etc.

Effective Rent: Calculated by discounting the contract rental stream back to present value and then projecting the present value over the term at the same discount rate in order to establish a level payment.

Effective Useable Area: Calculated by deducting the areas that cannot be effectively used by the tenant, such as spaces taken up by columns, from the total area on which the tenant pays rent.

Equivalent Level Rate: The flat rate per square foot that will equal the same total present value as a proposed lease's variable cash flows, if paid each year in nominal dollars. It is calculated by discounting all cash flows to a net present value per square foot and then amortizing this lump sum amount evenly over the term of the lease on a cost per square foot basis.

Escalation: An escalation provision in a lease requires the tenant to pay more rent based on future increases in costs. The provision may specify fixed rent increases, cost of living increases based on indexes such as the CPI, or direct expense increases adjusted according to expenditures paid by the landlord.

Estoppel Certificate: A clause in a lease whereby a tenant agrees to state that the lease is in effect, the landlord has fulfilled all obligations and the rent has not been pre-paid. The tenant is thus "estopped" from making any future claims to the contrary. An estoppel certificate is often required by the buyer of an office building.

Existing Conditions Space: An existing conditions space has already been improved or built out for a former tenant and is often more economical to rent because it requires less expensive remodeling than space in a raw condition.

Expansion Lease: A lease that expands the space occupied by a current tenant.

Expansion Option: This lease condition gives the tenant the opportunity to lease additional space under the terms of the original agreement.

Expense Stop: A fixed amount of the operating expenses and real estate taxes the landlord will assume responsibility for. The tenant becomes responsible for any expenses in excess of the expense stop through additional rent payments.

Extension Option: This option gives the tenant the right to continue to occupy a space under the same conditions that existed under the original lease. It differs from a renewal which implies new terms or conditions.

F

Fair Market Rent: This is the rent that could fairly be charged for a property if it were currently available on the market. In a lease, the definition of "fair market rent" is usually subject to extensive negotiation and interpretation.

Fiberoptic Connection: High-speed data connection using optical cable.

First Generation Space: Space that has yet to be occupied by its first tenant.

Flex: Industrial properties with a maximum clear ceiling height of 16 feet, drive-in doors, at least 30% of office build-out and parking spaces.

Floor Area Ratio (FAR): The relationship between the total rentable area of a building and the square footage of the lot the building is situated on.

Floor Common Area: Common areas for the general use of all tenants of a floor of an office building which are usually allocated to the rentable area of all tenants on a floor on a pro rata basis.

Floorplate: The square foot measurement of either the gross or the rentable floor area of a typical floor in an office building.

Footprint: The shape and dimensions of a property or space.

Free Rent: A free rent condition is used to induce tenants to rent in a depressed market. It basically excuses the tenant from paying rent for a stated period.

Full Service Lease: A lease in which the stated rent includes all taxes, insurance, common area maintenance, utilities, etc. for the building.

G

Gross Absorption: The change in occupied space in a given market, including sublease space.

Gross Lease: Under a gross lease the landlord is responsible for paying all property expenses such as taxes, utilities, repairs and insurance. Gross lease is sometimes referred to as a full service lease.

Gross Rent: Annual contract rent over the term of the lease, including the cost of operating expenses and real estate taxes for the property.

Gross Up: An adjustment, accounting for the occupancy level in a building, made to operating expenses. In effect what this means is that a building's variable expenses are increased to the level that would be incurred if the building were fully occupied (typically 95%).

Ground Lease: Typically a long term (30 years +) lease of vacant land or land exclusive of any buildings situated on it. Ground rent should not be charged back to the tenant as an operating expense.

H

High Rise: Generally a building over 10 stories in height that is equipped with elevators.

Hotelling: A workspace concept where employees who spend a lot of time outside of the office book shared workspaces as needed instead of being assigned exclusive workspaces.

Hold Over Tenant: A tenant who retains possession of the premises after the term of the lease has expired.

HVAC: An acronym used to refer to a building's heating, ventilation and air conditioning systems.

I

Improvements: Any additions to raw, vacant land such as buildings, streets, sewers, etc. that increase the land's value.

Increases: A yearly amount by which the base rent is increased during a lease term.

Institutional Ownership: Real estate owned by pension funds, REITs, money management advisory firms, or life insurance companies, as a long-term placement of capital that provides investment returns that complement or directly match obligations to members, beneficiaries and shareholders.

Inventory: The amount of built space in a given market.

J

Janitorial Services: Cleaning and maintenance of a building's occupied spaces and common areas.

L

Landlord (Lessor): One who owns and rents income producing property to a tenant under a contract for a specified period of time and a specified sum of money. The landlord may be referred to as the lessor in a lease agreement.

Landlord's Standard Form Lease: A standardized lease agreement that a landlord will attempt to utilize with as few amendments as possible for all rental transactions. The clauses within the landlord's standard form lease are generally drawn up in favour of the landlord.

Largest Contiguous Space: The maximum amount of adjacent or adjoining space that can be assembled for the use of a single tenant.

Lease: A contract by which a landlord transfers the right to occupy a property for a specified period of time to a tenant in return for an agreed upon rent.

Lease Comparable: Comparable leases are any other leases transacted in the same market for roughly equal space. They are often used to determine what is a fair lease under the prevailing market conditions.

Lease Proposal: A non-binding document specifying the terms of a potential formal lease.

Lease Term: The specified period of time for which the landlord gives the tenant a right of possession and use for a property or space.

Leased Occupied: Total square feet of tenant-occupied space as of survey date.

Leased Vacant: Total square feet of space leased but not actually occupied, for instance in the case when a tenant has moved out before the expiry of a lease, but is still responsible for the lease.

Leasehold Agreement: A legal document conveying the right of possession and use of a space to a tenant for a specified period of time and for a specified consideration.

Leasing Agent: A real estate brokerage company or individual that works on the behalf of a landlord to find tenants.

Lender: A bank, insurance company, pension fund, or other lending institution providing funds for the finance of income producing property. The lender may also be referred to as the mortgagee where the property has been pledged as security under a mortgage.

Lessee/Tenant: A person to whom the right of possession and use of a property is rented under a lease in return for consideration (rent).

Lessor (Landlord): One who rents property to another under a lease in return for a consideration (rent).

Letter of Credit: An arrangement, with specified conditions, whereby a bank agrees to substitute its credit for a customer's. A letter of credit is often provided by a tenant as security for specific performance of obligations under the lease.

Letter of Intent: A written statement confirming that a party desires to enter into a contract based on certain terms and conditions. Unless caution is exercised in drafting the terms and conditions, a letter of intent may constitute a contractually binding agreement between the parties.

Lien: A charge against property making it a security for the payment of a debt, judgment, mortgage or taxes. A lien constitutes an encumbrance against title to a property and must be satisfied before ownership may be transferred.

Load Factor: A multiplier applied to a tenant's useable space that accounts for the tenant's pro rata share of the common areas of a building. Also referred to as the add-on factor.

Loss Factor: A percentage of rentable space taken up by the common areas of a commercial building. Also referred to as "common area factor".

Low Rise: A building no higher than 2 stories in height, not including rooftop penthouse structures.

Lowest Divisible Space: This is in effect the smallest area in a building that a landlord can rent. Contributing factors to the lowest divisible space calculation include building and fire code requirements.

M

Managing Agent: A company or individual retained by the landlord to take care of the day to day operation of the subject property, including at times leasing responsibilities.

Market Area: A discrete geographic area, typically encompassing a city and its suburbs, which supports a competitive environment for investment in income producing real property.

Master Lease: This is the original lease for a certain space or property. In the context of a sublease, the Master Lease is the overlying lease under which the sublease is written. A sublease cannot legally grant a greater interest in real estate than that granted by the master lease. For example, if a master lease is for a 3 year-term, a sublease cannot legally exceed 3 years.

Mid-rise: A building between 3 and 9 stories in height not including rooftop penthouse structures.

Modified Gross Lease: Under this type of lease the landlord and tenant share in the building's operating expenses. Generally, the landlord pays for common area maintenance while the tenant assumes responsibility for the remainder of all other operating expenses.

Month-to-Month Lease: A lease agreement without a set term length. It is extendable or cancelable each month by either party.

N

Net Absorption: The net change in total occupied space in a given market over a given period.

Net Lease: Under this type of lease the tenant pays such expenses as taxes, insurance and maintenance in addition to the rent. The tenant is responsible for the payment of these costs either directly or as additional rent.

Net Present Value: A method of calculating whether the expected performance of a proposed investment promises to be adequate. The formula takes into account both the netting of cost and benefits and the time value of money.

Net Rent: Annual undiscounted contract rent, minus the cost of combined operating expenses and real estate taxes, over the term of the lease.

Net Rentable Area: The area (square footage) of a building that may be rented to tenants. Generally, it is the gross area of the full floor less common areas and space devoted to elevators, stairwells, mechanical shafts, etc.

New Lease: A lease signed for space occupied by a new tenant.

Non-disturbance: This type of condition guarantees that the landlord or any successor will not disturb the tenant's right to occupancy under a lease, so long as the tenant is not in default of the lease agreement.

O

Occupancy Cost: Occupancy cost includes any costs incurred by a tenant arising out of a lease including rent, moving expenses, operating expenses, parking charges, moving expenses, etc.

Occupancy Date: The date on which the tenant takes possession of the leased premises. An alternate date may be specified as a term of the lease.

Occupancy Rate: The percentage of units in a building, city, neighbourhood, or complex that are currently rented.

Office/flex Building: A building zoned for multiple purposes that can accommodate offices, R&D and other uses. Typically low rise with open floor plans, these buildings are a viable option for companies seeking lower occupancy costs and more flexible space.

Operating Expenses: The money spent on maintaining a property, day-to-day expenses such as janitorial costs, management fees, utilities, as well as taxes, insurance and periodic repairs. Financing expenses, capital expenses and depreciation are excluded.

Optical Cable 3 (OC3): A high speed, fiber-optic connection line.

Other Leasing Costs: These include costs such as moving allowances, legal fees, lease assumption and other quantifiable leasing costs.

Overall Available Space: Total office space available for lease or sublease in a given market.

Overall Vacancy Rate: A percentage arrived at by dividing overall available space by inventory.

Owner Occupied: A building where a minimum of 50% of the space is occupied by the owner.

Owner's Representative: An agent who represents the landlord.

P

Parking Ratio: The number of parking spaces per 1,000 square feet of rentable space in the building.

Pass Throughs: Pass throughs are increases in operating expenses and real estate taxes of a property over the base year amount that are passed on to and paid by the tenant.

Pre-leasing: If you pre-lease space it means that you lease it before it becomes available for occupancy.

Premises: Typically this refers to the entire rentable area leased to a tenant, but sometimes premises refer solely to the useable area leased by the tenant and not the common areas used by the tenant.

Present Value: The present value is an amount invested now that produces a known future value at a given interest rate.

Property: Real estate. The rights that an individual has in lands or goods to the exclusion of all others.

Proposed Building: A project with all necessary municipal approvals and permits that is not yet under construction.

Punch List: A list of items that the landlord still has to complete or correct before a tenant occupies a space.

R

Rail Access: Industrial properties serviced by a railroad spur.

Raised Floor: A flooring system raised above the floor slab to provide space for distribution of services. Flooring raised from 4" to 6" off the floor slab is generally sufficient for power and telecommunications cabling.

Raw Space: This refers to unfinished space that requires complete interior tenant improvements, such as drop ceilings, light fixtures, partitions, doors, floor coverings, outlets, etc.

Ready to Occupy: This refers to space that requires no further landlord or tenant improvements.

Real Estate Investment Trusts (REIT): A real estate mutual fund allowed by income tax laws to avoid the corporate income tax. It sells shares of ownership and must invest in real estate or mortgages. If it pays at least 95% of its net income in the form of tax deductible dividends, it is not taxed on that income. Shareholders must list such payouts on their personal tax returns.

Real Estate Taxes: Taxes assessed on a property by various levels of government (usually by a municipality) based on an official valuation of the property.

Reasonable Consent: This type of condition in a lease limits the landlord's ability to withhold consent for any activity on its premises that a reasonable person would give consent to.

Recapture Clause: This type of clause allows the landlord to recover possession of a leased property under certain conditions that cancel the lease.

Renewal Lease: A lease that renews the rights of possession and occupancy of an existing tenant.

Renewal Option: The right, but not the obligation, of a tenant to continue a lease pursuant to the specific terms of the agreement.

Rent: A charge for the occupancy and use of real property.

Rent Abatement: Under a rent abatement, the landlord agrees to give tenants a discount on rent for a specified period of time in order to entice prospective tenants in a weak market.

Rent Adjustment: Any lease provisions that provide for future increases in rental obligations, such as the pass through of future increases in real estate taxes and operating expenses, fixed rental increases and rental increases due cost of living indexes.

Rentable Area: The area of a premise for which rent can be charged. Generally, it is the gross area of the full floor less the area of all vertical penetrations (elevator shafts, stairwells, mechanical shafts etc.).

Rentable Square Feet: The square feet of a premise that a tenant actually is charged rent on. Typically, it is the usable square feet of the demised premises plus a pro rata share of the common areas of the building.

Rental Rate: The periodic charge per unit for the use of a property. Depending on the specific use of the property, the rate may be stated in terms of per unit or per square foot, on a per month or per year basis.

Request For Proposal: This is a formal request by a prospective tenant or the tenant's agent to a landlord or an agent of a landlord asking the landlord to submit a proposal for the leasing of a vacant space. The request for proposal states the specific areas of interest to the tenant, such as the space in question, the lease term, rental rate, etc. Proposals from landlords are then used to pre-qualify available space for more intensive review and possible lease negotiation with the building owner.

R&D Building: A building containing a mix of office space, manufacturing, research or assembly space and warehouse space.

Right of First Offer or First Opportunity: This type of condition gives the tenant or other party the right to exercise the first opportunity to lease or buy space if the owner decides to sell or lease. The landlord does not have to have a legitimate offer that the tenant can then match or refuse. If the parties cannot agree on terms, the property can then be sold or leased to a third party.

Right of First Refusal: This type of condition gives the tenant the right to match the terms of a proposed contract to lease or buy a space before that contract is executed. The owner must have a legitimate offer that the tenant can match or refuse. If the tenant refuses, the property can then be sold or leased to the party making the original offer.

Right of Offset: This type of lease clause gives the tenant the right to deduct any money owed the tenant by the landlord from the rent.

Rules and Regulations: Standards of conduct governing the use and occupancy of a building by its tenants.

S

Security Deposit: A cash payment required by a landlord to be held during the term of a lease to offset damages incurred due to actions of the tenant.

Shell Space: Space that requires tenant improvements before it is ready to occupy.

Space Plan: This is typically a graphic depiction of the leased space or of the tenant's requirements for the leased space. It is usually prepared in accordance with local building codes by an architect or space planner. The depiction typically shows the location of walls and doors, the size of rooms and proposed furniture layouts.

Space Pocket: A portion of a leased premise that is set aside to accommodate a tenant's growth. Typically, space pockets are fully improved at the commencement of the lease, though no rent is due until actual use commences or a specified future date passes.

Speculative (Spec) Development: A land development or construction project where no formal commitment from end-users of the development has been secured. Usually undertaken based on optimistic projections for space demand growth. Speculative development may result in overbuilding, creating imbalances in supply and demand.

Stop Work Order: Directive ordering a halt to construction work issued by a Building Official to a builder, generally for breaches of building code regulations or failure to adhere to construction documents approved under a building permit.

Sublease: A lease from one tenant to another tenant, under which second tenant is a subtenant or sublessee. The sublease may be different in terms from the original lease, but cannot contain a greater property interest. A sublease is subject to the terms and conditions of the master (original) lease. This type of lease may require the consent of the landlord.

Submarket: A discrete, contiguous portion of a market area that supports a competitive environment for investment in income producing real estate.

Subordination: This type of clause requires the tenant to subordinate its lease to any mortgage or charge subsequently registered against title to the property. Without the protection of a non-disturbance covenant the lender would then have the right to terminate the lease in the event of landlord default of its mortgage obligations and subsequent foreclosure.

Substantial Completion: A premises is deemed to be substantially completed when all of the tenant improvements to the premises have been completed in compliance with the tenant's specifications.

Suburban Area: A largely residential and low-density town or developed geographic area located in close proximity to a city.

T

T1 Line: A twisted pair or coaxial cable line that supports DS1 level transmissions at 1.544 mbps.

T3 Line: A twisted pair or coaxial cable line that supports DS3 level transmissions at 44.736 mbps.

Tenant: One who, under a lease, is given temporary possession and the right of use of a property, or portion thereof, by the landlord for a specified period and for a specified periodic consideration. The tenant is also referred to as the lessee.

Tenant Improvements: These are changes to a property made to accommodate the specific needs of a tenant. Tenant improvements include moving interior walls, changing floor or ceiling coverings, adding shelves, toilets, windows, etc. The cost of tenant improvements may be born by the landlord or by the tenant, depending upon the conditions negotiated in the lease. Tenant improvements typically remain after lease expiry.

Tenant Representative: An agent that represents the best interest of the tenant without taking any head landlord listings.

Total Inventory: Total rentable square feet of active office space in a market as of survey date. Includes government, owner-occupied and mixed-use buildings, but not medical and academic buildings and those under construction.

Triple Net Lease: Under this type of lease, the tenant pays operating expenses such as taxes, common area maintenance, utilities and insurance in addition to the fixed base rent.

Turnkey Construction: A development where the landlord assumes responsibility for the total completion and cost of improvements made to a property pursuant to the specific requirements and specifications of the tenant. Turnkey tenant improvements are provided at the landlord's expense according to plans and specifications previously agreed upon by the parties. The landlord bears the risk of construction in a turnkey situation.

U

Under Construction: A building is deemed to be under construction after ground is broken and improvements beyond site preparation are under way.

Urban Area: A high-density, geographic area typically located in a central city.

Useable Area: The square feet of office space occupied exclusively by a tenant within that tenant's leased space. The useable area is always less than the rentable area as the latter includes the tenant's proportionate share of hallways, lobbies and other common areas.

V

Vacancy Rate: The percentage of total units or space that is unoccupied or not rented at a specific survey date.

Value Engineering: A reduction in costs or an increase in benefits of a project through redesign, prioritization or other similar actions.

Vertical Transportation: Elevators, stairs or escalators employed in moving people or freight in a building.

Virtual Office: The portable computers, phones and other devices that allow an employee to conduct business from virtually any location.

Volts: Unit of measure of electrical pressure.

W

Weighted Average Rental Rate: Calculated by averaging rents for space for lease in proportion to the rentable area of the space available in a building or market area.

Working Drawings: Architectural drawings prepared by a licensed architect detailing the exact specifications of construction work, to be completed by contractors in the construction of tenant improvements. Also referred to as construction drawings.