Glossary of Leasing Terms

Lease terms can often be confusing or misunderstood. Below is a list of commonly used terms used in leases, along with their definitions. Please feel free to contact our office at 303.830.2064 if you would like further assistance. We’re here to help!

Base Rent

A set amount used as a minimum rent in a lease. Base Rent may remain the same over the term of the lease, or be increased each year over the term of the lease.

Base Year

The initial year of a lease agreement. The baseline used for determining rent increases, either in the base rent amount or in the operating expenses.

Build Out

The cost of reconfiguring and finishing new or released space in accordance with a tenant’s specifications.

C.A.M.

Common Area Maintenance

Common Area

The total area within a building that is not designed for rental to tenants but that is available for common use by all tenants. Restrooms, hallways, elevator lobbies, and service facilities, such as fitness facilities, are examples of common areas.

Estoppel Certificate

A statement concerning the status of an agreement and the performance of obligations under the agreement relied upon by a third party in the context of a lease, a statement by the tenant stating that the lease is in effect and certifying that no rent has been prepaid and that there are no known outstanding defaults by the landlord (except those specified).

Expense Stop

Provision in a lease establishing the maximum level of operating expenses to be paid by the landlord. Expenses beyond this level are to be reimbursed by the tenant.

Full Service Rent

A rental rate that includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increases in operating expenses over the Base Year amount.

Gross Building Area

The total floor area of a building measured in square feet. The area extends to the outer surface of exterior walls and windows.

Gross Lease

A lease which provides that the landlord pay all expenses of the leased property including taxes, insurance, maintenance and utilities.

Net Lease

A lease in which the tenant pays, in addition to Base Rent, certain costs associated with a leased property, including property taxes, insurance premiums, repairs, utilities and maintenance.

Net Rentable Area

Floor area of a building less any vertical penetration of the floors such as elevator shafts and stairways.

Operating Expenses

The actual costs of operating a property, including utilities, repairs, maintenance, property taxes and insurance premiums.

Pass Throughs

Building and operating expenses that are paid by the tenant under the terms of the lease.

Rentable Square Feet

Useable square feet plus a percentage (the Core Factor) of the common areas on the floor, including hallways, bathrooms and telecommunications closets, and elevator lobby. Rentable square footage is the number of square feet on which a tenant’s rent is based.