CRE Glossary


CRE Glossary

Have you ever toured a potential office space, or read a lease agreement and just wondered, “What the heck are all these acronyms?!” Us too. The world of commercial real estate is complex, and I feel like brokers make up new words every day to try and impress us!

Consider this your go-to guide for commercial real estate terms. Go ahead, you can bookmark the page — we’ll keep updating it as we hear more of the lingo.

“So, how do you know these terms?”

Well, it’s what we at RefineRE do every day. We are a CRE data, analytics, and benchmarking software driving cost-savings and portfolio optimization. We are a bunch of real estate data nerds whose bread-and-butter is diving deep into commercial real estate portfolios (which makes the job of a corporate portfolio manager much easier!)

Abated Rent

Abated Rent is a provision that entitles the tenant to suspend rent payments or pay only a portion of the rent until a landlord completes property repairs.

Add On Factor

Add on factor is the percentage of a building’s gross usable space that is added to each tenant’s rented space to determine their total rent. This is typically accounting for common area space, which tenant’s use along with other tenants.

Average Annual Effective Rate

Average annual effective rate is the average annual effective rent divided by the square footage.

Base Rent

Base rent is the stated monthly rental rate in a commercial lease.

Building Class

Building class is not an exact science, but it denotes the general condition of a commercial property. Building classes range from A (the best condition) to C (the worst condition in comparison to other properties).


Build-to-suit is a commercial building or space specifically constructed to the tenant’s needs.


CAM is common area maintenance. CAM refers to the operating expenses that are incurred in the maintenance of the common areas (hallways, bathrooms, elevators, parking lots, landscaping).

Carbon Emissions

Carbon emission is the release of carbon into the atmosphere. To talk about carbon emissions is simply to talk of greenhouse gas emissions; the main contributors to climate change.

Carbon Footprint

Carbon footprint is the measure of the total greenhouse gas emissions produced by an individual, group, or company.


CBD is an acronym for Central Business District. This is typically the area of highest concentration of businesses in a city.

Certificate of Occupancy

A Certificate of Occupancy is a document issued by a government agency certifying a building’s compliance with applicable building codes and other laws, indicating it to be in a condition suitable for occupancy.

Commencement Date

Commencement Date is the date in which a lease goes into effect.


Coworking is a style of working in a shared environment. Typically, those in a coworking space are not in the same organization but sharing a large area/desks/conference room which makes them feel less isolated than working at home.

Delivery/Delivery Date

Delivery Date is the time when a building/space has completed construction and receives a certificate of occupancy. The tenant is now able to move in.


Escalation is a provision in a lease that increases the cost of rent for the tenant over time. Escalation is typically in line with operating expenses.


Environmental, Social, and Governance refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.

Flex Space

A Flex Space is typically an industrial space that can be converted into office space. Most of the time, a flex space is part warehouse, part office.

Full-Service Lease

In a Full-Service Lease, the landlord pays everything. The operating expenses, insurance, taxes, etc. are all covered in the base rent of the commercial real estate lease.

Gross Lease

In a gross lease, all if not most expenses associated with the property are included in the rent including property tax. In this lease, there are two main types: full service and modified gross.

Gross Leasable Area

Gross Leasable Area (GLA) is expressed in square feet and is the total floor area designed for the occupancy of tenants in a commercial space. GLA is used when referring to retail properties, while Rentable Building Area is used for commercial.

Gross Rent Multiplier

Gross Rent Multiplier (GRM) is the ratio of sale price to gross scheduled income only, at time of sale, or projected gross scheduled income for the first year of ownership. This is calculated by dividing the sale price by the gross scheduled income.

Ground Lease

A Ground Lease is an agreement where the landowner (lessor) agrees to lease their land for a set period of time. The lessor can stipulate what the lessee can and cannot do with the property, and these terms are typically between 20-99 years. If the lessee builds something on the property, at the end of the lease it the lessor gains control of whatever was constructed.

Historical Site

A Historical Site is a property that has been declared of special historical significance, and typically imposes restrictions on its use or ability to redevelop the property in the future.

Index Lease

An Index Lease is a provision that requires escalations in rent based on a published index, such a LIBOR, T-bills, or CPI.

Industrial Building

An Industrial Building is a type of building that has been adapted for the assemblage, processing, and/or manufacturing of products. It can also be used as a warehouse, distribution, or maintenance facility. Self-storage facilities are also classified as industrial.

Landlord Rep

A Landlord Rep is someone who markets a commercial property on behalf of the landlord (owner), in an effort to sell or lease the property. A Landlord Rep typically works directly with the Tenant Rep.


A Lease is a contract that creates the relationship of landlord and tenant. This binding agreement grants exclusive use of a property in exchange for rent.

Lease Buyout

A Lease Buyout is the process by which a party pays to extinguish the tenant’s remaining lease obligation. Terms of a lease buyout will be found in the commercial lease, and typically range from three months of rent, or the remainder of the lease.

Lease Commencement Date

A Lease Commencement Date is the date in which a lease goes into effect, and therefore the tenant starts paying.


LEED stands for Leadership in Energy and Environmental Design. LEED encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria.

Legal Description

A Legal Description describes a piece of property in such a way that the land can be identified.


A Lessee is a person/party who is renting or leasing a property. Lessees are also known as tenants.


A Lessor is a person/party that owns a property that is being rented/lease. Lessors are also known as landlords.


LIBOR is the London Inter Bank Offered Rate. The LIBOR is a daily reference rate based on the interest rates at which banks borrow unsecured funds from other banks in the London wholesale money market. In a lease, rental rates might increase at the same rate as LIBOR.


A Lien is an encumbrance against real property, typically used to secure payment for a debt. The lien is a legal document that forces the owner to pay off debts. If a property has a lien on it, the owner will not be able to sell until it has been removed.

Loan-to-Value Ratio (LTV)

LTV is the ratio between the principal amount of the mortgage balance and the current value of the underlying real estate collateral. This is typically expressed to a potential borrower as the percentage of value a lender is willing to finance.


An LOI is an acronym for Letter of Intent. A Letter of Intent is a document expressing the intent of each party in a real estate agreement, but it is not a legally binding contract. It’s typically used to reduce the misunderstandings between parties.

Market Rent

Market Rent is the rental rate that a property would command on the open real estate market.

Maturity Date

The Maturity Date is the date in a loan when the borrower’s final payment is due.


A Mezzanine is a section of a building where an additional level has been created, typically for office use.


Mixed-Use is a building that incorporates multiple uses within a single structure. Often times a mixed-use building has retail on the bottom floor and multifamily on the floors above.

Modified Gross Lease

A Modified Gross Lease is basically a Full-Service Lease that is changed in some way. A modification of the lease could be that the tenant must cover electricity or janitorial services.

Net Absorption

Net Absorption is the measure of total square feet occupied less the total space vacated over a given period of time.

Net Zero

Net zero refers to the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere. We reach net zero when the amount we add is no more than the amount taken away.

NNN Lease (Triple Net Lease)

A NNN Lease is a lease agreement in which the tenant pays a base rent plus an additional amount for taxes, insurance, CAM, and utilities. The tenant is typically not responsible for building repairs such as roof damage.

NOI (Net Operating Income)

NOI is the total income less operating expenses and adjustments. NOI does not take into account mortgage payments, tenant improvements, or leasing commissions.

Occupancy Date

Occupancy Date is the date at which the tenant may move into a space.

Operating Expenses

Operating Expenses are divided into three areas: Fixed, Variable/Operating, and Reserves. Fixed expenses are costs that do not vary due to occupancies, such as taxes or insurance. Variable/operating expenses tend to vary depending on occupancy or market conditions, such as utilities or maintenance. Reserve expenses are for short-lived items, typically for apartments, such as carpet, appliances, painting.

Origination Date

The Origination Date is the date at which a loan is funded, and the borrower receives the money in their account.


The Occupational Safety and Health Administration was created to ensure safe and healthful working conditions for working men and women by setting and enforcing standards and by providing training, outreach, education and assistance

Parking Ratio

The Parking Ratio is how many parking spaces a building has per 1,000 square feet. (# of spaces / Rentable Building Area in thousands of feet). For example, a 40,000 square foot building with 200 parking spaces would have a parking ration of 5:1,000

Percentage Rent

Percentage Rent is a condition in a lease where rent is based on a percentage of the monthly or annual gross sales made on the premises.

Personal Guaranty

A Personal Guaranty is a guaranty from the person soliciting the contract on behalf of the entity.

Preleased Space

Preleased Space is space that has been leased to a tenant and announced for future development but is not yet under construction.

Price Per Square Foot

Price Per Square Foot is the sale price (or rental payments) divided by the rentable square feet of a building.

Renewal Option

A Renewal Option is an option in a lease that allows a tenant to extend the lease beyond the original time frame at the same or different rental rate.

Right of First Refusal

Right of First Refusal is a provision in a lease that requires the landlord to offer available space to the tenant, who holds the right once a prospective tenant has made an offer on that space.

Security Deposit

A Security Deposit is an amount that a tenant must pay before the commencement date. Deposits are typically returned to the tenant after the agreement is terminated at the end of the lease term.


A Sublease is a lease in which the original tenant sublets all or part of the space to another tenant, while still retaining a leasehold interest in the property.

Tenant Improvements (TI)

Tenant Improvements are the preparation of leased premises prior to or during a tenant’s occupancy. TI may be paid for by the landlord, tenant, or both.

TI Allowance

TI Allowance is an expense amount that the landlord is willing to pay for tenant improvements.

Vacancy Rate

A Vacancy Rate is the percentage of physically vacant space divided by the total amount of existing inventory.

About RefineRE

We offer eight different modules that are built to accommodate and meet you where you are in your commercial real estate lifecycle. Is ESG becoming top of mind for you? Our ESG module analyzes and benchmarks carbon footprint and emissions data by using the electrical spend by lease from your dataset. Maybe your company has realized you can make-do with much less space. Our Flex module will identify which of your leases could benefit most from transitioning to flex space and examine details of individual flex space options nearby.

Whatever your needs are, we can help make your life easier (even if you don’t quite know what your needs are – our Data Foundations Analysts will figure it out for you)! In the meantime, enjoy our CRE Glossary of commercial real estate terms and try using the lingo to “flex” on your real estate team.

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