An experienced Healthcare Real Estate Professional will help you determine what your program requirements are currently and in the long term. This is critical to identify the correct size and geometry so that the facility will work for you in the foreseeable future. If the facility is too small, it may force you to relocate prematurely, resulting in a wasted investment in a facility. If the facility is too big, you may end up paying tens of thousands of dollars for space you do not need.

If you are acting as a tenant or buyer, you should never pay a dime for representation. In both residential and commercial real estate, the industry standard is for landlords and sellers to pay commissions to both their agent and the buyer’s or tenant’s agent. Avoid being taken advantage of by securing a qualified and well-trained healthcare real estate agent.

Yes, tens to hundreds of thousands of dollars. If your lease payment is off by even a small amount of money, it can add up to a significant loss of money over ten years in unnecessary, higher payments. Likewise, if you don’t receive the proper build-out period, free rent period, tenant improvement allowance, and more, you can leave the same amount of money on the table.

Because sellers and landlords pay commissions for both their listing agent as well as the buyer’s or tenant’s agent in commercial real estate transactions, an agent can exclusively represent your interests as a tenant and buyer for free. While this is definitely not a secret in residential real estate or to experienced corporations and businesses, many healthcare providers don’t realize the same is true in commercial real estate. Most landlords are represented by a listing agent who specializes in helping the owner maximize their return on each transaction. We, as the tenant representative, will simply split the commission with the landlord’s listing agent. Even if a landlord does not have an agent, they still pay the tenant agent’s commission, as that is standard practice in both residential and commercial real estate.

Real estate agents cannot perform a legal review of your lease. A licensed real estate agent is also only permitted by law to populate blank fields on a pre-approved form contract. Suppose a real estate agent was to give legal advice, draft legal language in a contract or perform any other activity that resembles practicing law. In that case, they’re not only putting their client at risk, but they’re also subjecting themselves to severe consequences, including losing their license, risking a potential lawsuit, paying substantial fines, jeopardizing the completion of the purchase, sale or lease, forfeiting commissions and risking or permanently damaging their career.

Saving dozens of hours of valuable time. Avoiding costly pitfalls, complications, and delays. Saving a substantial amount of money. Obtaining significant concessions. Ensuring your interests are always first and protected. Giving you peace of mind that you are in the best property and achieved the most favorable terms possible.

You cannot fairly represent two opposing parties. Both parties may have the desire to sell and purchase a practice or company, real estate, or another asset, but if one side’s desire is to get the lowest price and the other side’s desire is to get the highest price, they are competing and opposing interests.

Unfortunately, many tenants and buyers try this approach, only to discover they are not sure if the property or space is the best location or option for them. More importantly, they are not sure they are receiving the best terms. Bringing in a healthcare real estate agent anytime in a transaction is better than going it alone. However, the longer you wait and the more you try to accomplish on your own, the harder it is for your agent to undo mistakes and expedite the transaction. Your agent would need to undo any communication errors you potentially made, begin the process over from where it should have been at the beginning, and navigate a seller, landlord, or listing agent who is probably frustrated at that point of a transaction. You can save yourself a lot of wasted time and energy by hiring the most qualified representation you can find. Then, let them direct the process and achieve the most favorable results possible.

You should never pay anyone to be your agent if you are a tenant or buyer. While you should always have an attorney review any legal contract in every transaction, the attorney should not be finding properties or negotiating economic or business deal points any more than your agent should not be drafting legal language. The best attorneys won’t try and be real estate agents. Likewise, the best real estate agents won’t even consider drafting legal language or telling you they can be your attorney.

There is a vast difference between residential and commercial real estate. The best residential agents wouldn’t even consider doing a commercial transaction, and the best commercial agents don’t dabble in residential either. Each sector has a very different approach to the market, and commercial real estate has dozens of additional business and economic considerations that residential real estate does not have. A residential agent typically makes value determinations solely based on comparable properties in the market. On the other hand, a commercial agent understands how concepts like tenant improvement allowance, build-out time, free rent, annual escalations, and other options impact profitability.

Yes, landlords pay commissions for the tenant’s agent and their listing agent on both new leases and lease renewals. Every large national corporation knows this, as do most business owners. Some landlords will try to intimidate a smaller or local tenant and claim that brokerage fees are not paid to agents for lease renewals. However, this is simply a posturing tactic. Many landlords assume healthcare providers are unsophisticated and don’t know better about commercial real estate; unfortunately, the majority don’t. Landlords are notorious for using intimidation and scare tactics to force inexperienced tenants to forfeit their rights and opportunities.

There is no need for a consultant or attorney to be involved. Communicate that you want their help in the area that they specialize in, but the key to achieving the best terms possible is having each partner on your team perform the task and responsibilities they are most qualified to perform. Let your consultant be the consultant and your attorney be the attorney. Likewise, your agent should never try to be an attorney or another critical partner on your team.

Yes, lease and purchase contracts are legally binding documents. You receive the benefit of occupying and/or owning the space or building. With that benefit comes obligations of what you must do to maintain that occupancy or ownership. When looking for an attorney, your healthcare real estate agent should be able to give you the names of several attorneys you can interview to determine who can offer you the best combination of value, protection, price, etc.

One of the most common mistakes a tenant makes when looking for real estate for their practice is to contact a listing broker to get information and then inadvertently begin working directly with the listing agent or owner. This can be such a costly mistake because healthcare providers typically do not understand the dynamics of the relationships involved.

It should not unless you have poor representation and do not fully understand your options. It is easy for a landlord to take advantage of a tenant who attempts to go it alone, hires an unqualified agent, doesn’t fully understand all their options or the market, and doesn’t have the correct approach. They would love to charge you more than they should and give you fewer concessions than a brand-new tenant would receive.

HFS is a leader in healthcare real estate brokerage and design. We take great pride in helping dentists, physicians, physical therapists, and veterinarians improve the success of their practice. Whether you are opening a new office or expanding your existing healthcare facility, HFS has the expertise you need to navigate the cumbersome process with a single source of accountability. Our professional services include real estate brokerage, feasibility studies, space planning/test fits, architectural and interior design, design-build, and advisory services. We represent the interest of every type of healthcare specialty and truly understand the nuances and unique design needs of your practice. Our experts handle all the details and logistics using our proven process, allowing you the time you need to focus on what is most important, your practice!

Because sellers and landlords pay commissions for both their listing agent and the buyer’s or tenant’s agent in commercial real estate transactions, an agent can exclusively represent your interests as a tenant and buyer for free. While this is not a secret in residential real estate or to experienced corporations and businesses, many healthcare providers don’t realize the same is true in commercial real estate. Most landlords are represented by a listing agent specializing in helping the owner maximize their return on each transaction. As the tenant representative, we will simply split the commission with the landlord’s listing agent. Even if a landlord does not have an agent, they still pay the tenant agent’s commission, as that is standard practice in residential and commercial real estate.

For most healthcare practices, real estate is the 2nd or 3rd highest expense behind payroll. While payroll is minimally negotiable, real estate is 100% negotiable. And with it comes the ability to increase and maximize profitability that typically exceeds managing or negotiating any other top expense. The difference between a properly or poorly negotiated real estate transaction can cost or benefit you tens to hundreds of thousands of dollars over just ten years. With this much at stake, hiring expert representation and maximizing every real estate opportunity is paramount.

In commercial real estate, lease concessions are incentives, discounts, or benefits given by landlords and received by tenants in a lease transaction. Offering concessions to a prospective tenant or a renewing tenant is a competitive way for the landlord to market their property and keep their tenants from locating elsewhere.

An office condo can be an excellent purchase option, especially for buyers interested in purchasing a space now vs. developing or building their own property or with a smaller size requirement. Those requirements could look like: 1,000 to 10,000 SF, or someone who wants the benefits of ownership but doesn’t want to take on all the ownership and management responsibilities of running and managing a property by yourself.

Follow these simple steps: Hire an agent representing only healthcare tenants and buyers. Make sure you fully understand the market and all your top property options. Evaluate both lease and purchase options; office vs. retail vs. MOB, etc. Evaluate detailed economic comparisons. Hire an excellent real estate attorney. Allow your agent to create a custom strategy for your next real estate transaction and help you execute it.

While there are many classes, variations, and vintages of office, retail, and MOB space, the main comparisons typically boil down to window lines and natural light, signage, and exposure, cost, maintenance performed by the landlord vs. the tenant, building amenities, synergy or diversity of other tenants, parking, access and more.

Suppose you are interested in leasing or purchasing a building or space. In that case, you should contact a healthcare broker 12-month months ahead to allow time to identify a property, negotiate, sign a contract, and complete renovations. If you want to build a new facility from the ground up, you should contact a healthcare real estate broker at least 24 months before having a new facility up and running. Every development project can vary in duration; however, you must allow time for finding land, obtaining approvals, and constructing the building. Timing plays a significant role in identifying the top property options available and securing the best possible terms. You are always better off planning a little earlier than too late.

Answer: Architects and designers who have experience designing medical and dental offices know the specific requirements needed for healthcare facilities. Although every project is different, a specialized level of attention to detail is required. Failing to secure a designer without proper knowledge and expertise often results in costly pitfalls and oversights that not only delay a project but that also cause it to go over budget.

Answer: Most healthcare design requires specialized expertise and experience to ensure the facility will be compliant with healthcare code as well as flow and function at a high level. Once built, it is very difficult and costly to make changes to correct design flaws. Incorporating the proper details and specificity required for a healthcare project will also eliminate costly delays and budget overruns. At HFS, we only design healthcare facilities and have a proven process that factors in all the details to ensure your project will be a success.

Answer: It is critical to perform a test fit to verify that the size and configuration of the facility will accommodate your program. It is highly recommended to use a healthcare design expert to ensure the space is designed for maximum efficiency and functionality.

Answer: HFS is a leader in healthcare design. We have more than two decades of experience representing the interest of every type of healthcare facility and truly understand the nuances and unique design needs for your practice. Our experts handle all the details and logistics using our proven process. We can handle every aspect of your project from site selection to design and build-out of your facility. Healthcare is our passion. It is all we do!

Answer: There are a lot of variables that will determine the total cost of a project. We work very closely with every client to identify needs and goals to help create a budget. We then design the project to meet your budget and maximize the return on your investment. At HFS, we can offer guarantees on budgets and schedules with our design-build delivery.

Answer: It will depend upon the size of the project and whether you are looking to renovate an existing facility or build from the ground up. At HFS, we have a proven process that will factor in all aspects of the project including real estate, design, and construction. We will create a detailed schedule that will clearly communicate timelines and activities required to successfully complete your project.

Answer: HFS offers a wide range of professional services for the medical, dental, physical therapy, and veterinary industries. Our various services include site selection, feasibility studies, test-fits, architectural design, interior design, MEP engineering, design-build, green and sustainable solutions, and advisory services.

We customize a specific game plan and strategy for each client’s unique requirements and desired objectives. Several of our most impactful processes, include: market evaluations, site selection, demographics, heat mapping, purchase vs. lease comparison, lease analysis, negotiation strategy, assembling the most qualified team, and much more. Whether you’re opening your first office or scaling to hundreds of locations, every real estate transaction matters. We know that your continued success is predicated upon capitalizing on each opportunity. We evaluate every deal as if our own money, reputation, and success is on the line because in reality, it is. You can rest assured knowing your business’s livelihood is in good hands. Our sole focus is ensuring our clients are positioned in the best location with the most favorable terms. Let us help you achieve the highest levels of success for your business and investment.

HFS is a leader in healthcare real estate brokerage and design. We take great pride in helping dentists, physicians, physical therapists, and veterinarians improve the success of their practice. Whether you are opening a new office or expanding your existing healthcare facility, HFS has the expertise you need to navigate the cumbersome process with a single source of accountability. Our professional services include real estate brokerage, feasibility studies, space planning/test fits, architectural and interior design, design-build, and advisory services. We represent the interest of every type of healthcare specialty and truly understand the nuances and unique design needs for your practice. Our experts handle all the details and logistics using our proven process, allowing you the time you need to focus on what is most important, your practice!

HFS is focused on successful outcomes for our clients. This is exactly why you will want a qualified agent in your corner who cares about your practice. Our company’s focus is helping healthcare providers maximize every real estate opportunity. In doing so, we deliver the highest quality representation and results available.

Often and commonly referred to as free rent or early occupancy and may occur outside or within the primary term of the lease.

The rate, expressed as a percentage, at which available space in the marketplace is leased during a predetermined period of time. Also referred to as “Market Absorption”.

The net change in space available for lease between two dates, usually expressed as a percentage of the total square footage.

Often referred to as the Loss Factor or Rentable/Usable (R/U) Factor, it represents the tenant’s pro-rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. It is usually expressed as a percentage which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent.

Most often used in a yet-to-be constructed property, the tenant has a blank canvas upon which to customize the interior finishes to their specifications. This arrangement caps the landlord’s expenditure at a fixed dollar amount over the negotiated price of the base building shell. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price.

The acceptance by the tenant of the premises in their existing condition at the time the lease is executed. This would include acceptance of any physical defects, code violations, or other problems with the physical and legal condition of the premises.

Actual taxes and operating expenses for a specified base year, most often the year in which the lease commences. Once the base year expenses are known, the lease essentially becomes a dollar stop lease, meaning that the tenant pays the increases in taxes and operating expenses in excess of the base year figures.

Building classifications in most markets refer to Class “A”, “B”, “C” and sometimes “D” properties. While the rating assigned to a particular building is very subjective and relative to the market, Class “A” properties are typically newer buildings with superior construction and finish in excellent locations with easy access, attractive to credit tenants, and which offer a multitude of amenities such as on-site management or covered parking. These buildings, of course, command the highest rental rates in their sub-market. As the “Class” of the building decreases (i.e. Class “B”, “C” or “D”) one component or another such as age, location or construction of the building becomes less desirable. Note that a Class “A” building in one sub-market might rank lower if it were located in a distinctly different sub-market just a few miles away containing a higher end product.

Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, corridors). This factor can be computed for an entire building or a single floor of a building. Also known as a Loss Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage.

The space improvements put in place per the tenant’s specifications. Takes into consideration the amount of Tenant Finish Allowance (see Tenant Finish) provided for in the lease agreement. See also “Tenant Improvement Allowance”.

An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant’s specifications, often a specialized use.

Most traditionally calculated as Net Income before debt service divided by the purchase price and expressed as a percentage. The rate that represents a reasonable return on investment (on the basis of both the investor’s alternative investment possibilities and the risk of the investment). Used to determine and value an investment. Also called “free and clear return”. See “Capitalization”.

A document presented by a local government agency or building department certifying that a building and/or the leased premises (tenant's space), has been satisfactorily inspected and is/are in a condition suitable for occupancy.

Interior space required for internal office circulation not accounted for in the Net Square Footage. Based upon our experience, we use a Circulation Factor of 1.35 x the Net Square Footage for office and fixed drywall areas and a Circulation Factor of 1.45 x the Net Square Footage for open area workstations. Also see: Net Square Footage and Usable Square Footage.

There are two components of the term “common area.” If used in association with the Rentable/Usable or Load Factor calculation, the common areas are those areas within a building that are available for common use by all tenants or groups of tenants and their invitees (i.e. lobbies, corridors, restrooms, etc.). On the other hand, the cost of maintaining parking facilities, malls, sidewalks, landscaped areas, public toilets, truck and service facilities, and the like are included in the term “common area” when calculating the tenant’s pro-rata share of building operating expenses.

This is the amount of Additional Rent charged to the tenant, in addition to the Base Rent (see Base Rent), to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, insurance, and property taxes. Most often, this does not include any capital improvements (see Capital Expenses) that are made to the property.

Cash or cash equivalents expended by the landlord in the form of rental abatement, additional tenant finish allowance, moving expenses, cabling expenses or other monies expended to influence or persuade the tenant to sign a lease.

Measures inflation in relation to the change in the price of a fixed market basket of goods and services purchased by a specified population during a “base” period of time. It is not a true “cost of living” factor and bears little direct relation to actual costs of building operation or the value of real estate. The CPI is commonly used to increase the base rental periodically as a means of protecting the landlord’s rental stream against inflation or to provide a cushion for operating expense increases for a landlord unwilling to undertake the record keeping necessary for operating expense escalations. There are many different consumer price indices for different markets (urban, rural), and different goods or services. When using a CPI as a basis for rent increases, care should be given to selection of the proper CPI.

(1) Multiple suites/spaces within the same building which adjoin and which can be combined and rented to a single tenant; (2) A block of space located on multiple adjoining floors in a building (i.e., a tenant leases floors 6 through 12 in a building).

The complete set of design plans and specifications for the construction of a building or of a building’s interior improvements. Working Drawings specify for the contractor the precise manner in which a project is to be constructed. See also “Specifications”. “Working Drawings”.

Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, corridors). This factor can be computed for an entire building or a single floor.

The partition wall that separates one tenant’s space from another or from the building’s common area such as a public corridor.

A system in which a single entity is responsible for both the design and construction. The term can apply to an entire facility or to individual components of the construction to be performed by a subcontractor; also referred to as “design/construct.” This sometimes refers to a project constructed by a developer for a prospective buyer’s specific requirements on a turn key basis.

Spreading out the cost of a capital asset over its estimated useful life or a decrease in the usefulness, and therefore value, of real property improvements or other assets caused by deterioration or obsolescence.

The actual rental rate to be achieved by the landlord after deducting the cost of concessions from the base rental rate paid by a tenant, usually expressed as an average rate over the term of the lease.

Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies, rest rooms, and corridors). This factor can be computed for an entire building or a single floor of a building. Also known as a Core Factor or Rentable/Usable (R/U) Factor, it is calculated by dividing the rentable square footage by the usable square footage. See “Usable Square Footage”.

A clause in a lease which provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes, operating costs and the like. This may be accomplished by several means such as fixed periodic increases, increases tied to the Consumer Price Index, or adjustments based on actual changes in expenses paid by the landlord in relation to a dollar stop or base year reference.

A signed statement regarding the lease certifying that certain statements of fact are correct as of the date of the statement, and can be relied upon by a third party such as a prospective lender or purchaser. In the context of a lease, this is a statement by a tenant confirming that the lease is in effect, that no rent has been prepaid and that there are no known uncured defaults by the landlord (except those specified in the estoppel certificate).

Exclusive Agency: A generic term for a representation or listing agreement between landlord and a broker, providing that such broker is the only broker hired to list the property for sale or lease.

A lease clause giving a tenant the first opportunity to lease additional space that might become available in a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept. This right is often restricted to specific areas of the building such as adjacent suites or other suites on the same floor. See “Right Of First Refusal” and “Right Of First Offer”.

Usually a fixture is personal property (e.g. equipment, display pieces, shelving, racking) which becomes affixed or attached to real property. Unless the right to remove fixtures (and repair the leased premises) is reserved by the tenant, a landlord may claim ownership of fixtures at lease termination.

An all-inclusive rental rate which includes operating expenses and real estate taxes for the first year. The tenant is generally still responsible for any increase in operating expenses over the base year amount.

The total floor area of the building measuring from the outer surface of exterior walls and windows and including all vertical penetrations (e.g. elevator shafts, etc.) and basement space.

A lease in which the tenant pays a flat sum for rent out of which the landlord must pay all expenses such as taxes, insurance, maintenance, and non sub-metered utilities, with no pass through of these expenses or increase in these expenses to tenant.

An adjustment made to operating expenses to account for the present occupancy level in a building as compared to a higher level such as 95% or more. When operating expenses are "grossed up", it means that the building's variable expenses have been adjusted (usually) upward to the level that those expenses would be if the building were fully or almost fully occupied (typically 95%).

Rent paid to the owner for use of land, normally on which to build a building. Generally, this involves a long-term lease (e.g. 99 years) with the ground lessor retaining title to the land and owning the building upon ground lease expiration. Unless the ground lessor agrees to subordinate its interest to the ground lessee’s lender, the ground lessee will not likely be able to use the land for collateral for a loan.

The acronym for “Heating, Ventilating and Air-Conditioning”

Any agreement which gives rise to a relationship of landlord and tenant. A contract for the exclusive possession of the leased premises entered into between landlord and tenant reflecting agreed upon terms and conditions.

The date which usually constitutes the commencement of the term of the lease for all purposes, whether or not the tenant has actually taken possession, so long as occupancy is possible. In reality, there could be other agreed

Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the lease negotiations will include in some detail the improvements to be made in the leased premises by Landlord or in the alternative, an allowance provided to the tenant to fund improvements made by the tenant. See also “Tenant Improvements”. These improvements are usually considered landlord’s property upon lease termination.

A preliminary agreement stating the proposed terms for a final contract of purchase or lease. They can be "binding" or "non-binding", depending on their terms and the intent of the parties.

A partnership consisting of one or more general partners (see general partnership) and other partners called limited partners, where the liability for the acts of the partnership is total for each general partner. A limited partner whose role is generally passive, as an investor, has liability only to the extent of the specific amount invested in the partnership. A type of partnership, created under state law, comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more limited partners who contribute capital and share in profits but who take no part in running the business, and most important, incur no liability beyond the amount they have contributed to the partnership.

The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale with the buyer and seller each acting prudently and knowledgeably in the ordinary course of trade.

A lease in which a tenant pays a fixed sum for rent from which landlord pays all operating expenses for the first or lease year (or dollar stop), and thereafter tenant pays all increases in operating expenses or the increases beyond the fixed ceiling, called a dollar stop.

A lease in which there is a provision for the tenant to pay, in addition to base rent, certain costs associated with the operation of the property, which include some or all of property taxes, insurance, repairs, utilities, and maintenance. There are also “NN” (double net) and “NNN” (triple net) leases, depending upon the degree to which the tenant is responsible for operating costs. See also “Gross Lease.”

The floor area of a building which remains after the square footage represented by vertical penetrations, such as elevator shafts, stairways, plumbing and HVAC chases has been deducted. Common areas and mechanical rooms are included and no deductions are made for necessary columns and projections of the building. (BOMA Standard).

Although there are many variations of escalation clauses, all are intended to adjust rents by reference to external standards such as published indices, negotiated wage levels, or expenses related to the ownership and operation of buildings. During the past 30 years, landlords have developed the custom of separating the base rent for the occupancy of the leased premises from escalation rent. This technique enables the landlord to better ensure that the “net” rent to be received under the lease will not be reduced by the escalating costs of operating and maintaining the property. The landlord’s definition of Operating Expenses is likely to be broad, covering most costs of operation of the building.

The actual costs associated with operating a property including maintenance, repairs, management, utilities, taxes, and insurance. A landlord’s definition of operating expenses is likely to be quite broad, covering most if not all aspects of operating the building.

The intent of this ratio is to provide a uniform method of expressing the amount of parking that is available or required at a given building. Dividing the total rentable square footage of a building by the total number of parking spaces for the building provides the amount of rentable square feet per each individual parking space (expressed as 1/xxx or 1 per xxx). Dividing 1000 by the previous result provides the ratio of parking spaces available per each 1000 rentable square feet (expressed as x per 1000).

Refers to the tenant's pro-rata share of operating expenses paid in addition to the tenant’s base rent.

Unimproved shell space in a building.

A clause giving a tenant the right to extend or renew the term of a lease, usually for a stated period of time and at a rent amount as provided for in the lease and option clause.

The date on which a tenant is obligated to begin paying rent, as contrasted with the lease commencement date when the lease term commences, but payment of rent is deferred for a period of time.

Rentable Square Footage equals the Usable Square Footage plus the tenant’s pro-rata share of the Building Common Areas, such as lobbies, public corridors and restrooms. The pro-rata share, often referred to as the Rentable/Usable (R/U) Factor, will typically fall in a range of 1.10 to 1.16, depending on the particular building. Typically, a full floor occupancy will have an R/U Factor of 1.10 while a partial floor occupancy will have an R/U Factor of 1.12 to 1.16 ratio to the Usable Area.

The number resulting from dividing the Total Rentable Area in a building by the Total Usable Area. The inverse of this ratio describes the proportion of the rentable leased square feet that a tenant may expect to actually utilize.

Concessions a landlord may offer a tenant in order to secure the tenancy. While rental abatement or reduced rent over a fixed period of time is one form of monthly concession, there are many others such as: increased tenant improvement allowance; special signage; below market rental rates; and moving allowances. See also “Abatement”.

The formal and often customized compilation of the many considerations that a tenant might seek to reflect the tenant’s specific needs. Just as a building’s standard form lease document represents the landlord’s “wish list”, the RFP serves in that same capacity for the tenant. A standardized RFP issued to multiple prospective landlords gives the tenant the opportunity to compare various landlord proposals on the same criteria.

A right which a tenant may hold to lease additional space in the property or to purchase the property under the following circumstances. If and when landlord is prepared or has agreed (subject to this right of first refusal) to lease space to a third party or sell the property to a third party on certain terms and conditions, that same transaction must be offered to the holder of the right of first refusal who has a fixed period in which to exercise the ROFR and purchase the property or lease the subject space on the specified terms and conditions, or waive the ROFR. See definition for option and for right of first offer (“ROFO”) which is similar, but differences from ROFR should be noted.

The interior condition of the tenant's “usable square footage” when it is delivered to the tenant without improvements or finishes. While existing improvements and finishes can be removed, thus returning space in an older building to its "shell" condition, the term most commonly refers to the condition of the usable square footage after completion of the building's "shell" construction but prior to the build-out of the tenant's space. Shell construction typically includes the floor, windows, walls and roof of enclosed premises and may include some HVAC, electrical or plumbing improvements but usually does not include completion of demising walls or interior space partitioning. In a new multitenant building, common area improvements, such as lobbies, restrooms and exit corridors may also be included in the shell construction. With a newly constructed office building, there will often be a distinction between improvements above and below the ceiling grid. In a retail project, all or a portion of the floor slab is often installed along with the tenant improvements, to better accommodate tenant specific under-floor plumbing requirements.

A detailed plan depicting the location of improvements on a parcel of land and containing all information required by the zoning ordinance, best included as an exhibit to a lease.

A graphic representation of a tenant’s space requirements, showing wall and door locations, room sizes, and sometimes including furniture layout. A preliminary space plan will be prepared for a prospective tenant at any number of different properties and this serves as a “test-fit” to help the tenant determine its actual space needs and which property will best meet its requirements. When the tenant has selected a building, a final space plan is prepared which addresses all of the landlord and tenant objectives, and then is approved by both parties. It should be sufficiently detailed to allow an accurate estimate of construction costs. This final space plan should be an exhibit to the lease.

Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord or at landlord’s expense. See also “Leasehold Improvements” and “Workletter”.

Defines the fixed amount of money contributed by the landlord toward tenant improvements. The tenant pays costs that exceed this amount.

Personal property used in a business and attached to a structure, but removable upon lease termination because it is deemed to be part of the business, not of the real estate. This term often refer to articles of personal property by tenants for use in their trade or business, and are often removed from leased premises at lease termination.

A lease in which the tenant pays, in addition to rent, certain costs associated with a leased property, which may include property taxes, insurance premiums, repairs, utilities, and maintenances. There are also Net and “NN” (double net) leases, depending upon the degree to which the tenant is responsible for all operating expenses. See also “Gross Lease”.

The total amount of available space compared to the total inventory of space, expressed as a percentage. Computed by multiplying vacant space times 100 and then divided by the total inventory.