Commercial real estate is distinctly different from residential real estate. The terminology is very different and here is a list of new terms from A to Z. Unlike residential real estate, commercial real estate is primarily considered a business transaction. Learn the terms and you’re well on your way to moving smoothly through the process.
According to Value: The value of the property when computing property taxes.
Certificate of Occupancy: Issued by a city building department and is a necessary requirement prior to moving into the space.
Common Area Maintenance: Typically, an annual charge assessed to tenants based on their percentage of occupancy to pay for maintenance of parking lots, bathrooms and open areas.
Flex Space: A building providing mixed-use space such as an area combining an office and warehouse.
HVAC: Refers to the climate control systems for a building including heating and air conditioning.
Mechanic’s Lien: A legal claim typically filed by a subcontractor to obtain payment for services rendered. The claim arises under state law and is dependent on each states particular law.
Operating Expenses: Just as it sounds, operating expenses are those costs associated with operating a commercial property. Contract and state law typically govern the exact nature of the operating expenses.
Partition Wall: A wall built in the internal area of a suite to divide the general space. For instance, offices built during a tenant improvement project with have partition walls separating them.
Punch List: A punch list runs part and parcel with a walk through of completed construction work. The construction company and client will walk through the area and complete a punch list of items that need to be fixed or modified.
Shell Space: The interior of a commercial building that has been completed, but does not yet have any tenant build outs. The shell space generally refers to this gross square footage regardless of whether tenant improvements have occurred or not.
Substantial Completion: Notice given by a contractor to the client indicating the property has been completed to the point where a walk through and punch list review are appropriate.
Usable Square Feet: The square feet in a building, suite, warehouse and so on that can actually be used by tenants. Due to building regulations and design issues, certain amounts of a space in a tenant suite may not be usable and such footage is excluded from this calculation