Browse Costs & Operating Expenses Terms
Base rent is only part of what you pay to occupy industrial space. Understanding operating expenses, CAM charges, and improvement costs upfront prevents surprises at lease signing and at year-end reconciliation.
Common Area Maintenance (CAM)
The landlord's costs for maintaining shared building areas — parking lots, roofs, landscaping, and common utilities — passed to tenants as a pro-rata operating expense.
View definition →CAM Reconciliation
An annual settlement process where actual CAM costs incurred are compared against estimated amounts collected from tenants, resulting in credits or additional charges owed.
View definition →Operating Expenses (OpEx)
All recurring costs of running a property, including property taxes, insurance, maintenance, management fees, and utilities, some or all of which may be passed to tenants.
View definition →Property Taxes (Pass-Through)
The annual tax assessed by local government on the property value; frequently billed to tenants as a direct pass-through under NNN and industrial gross lease structures.
View definition →Insurance (Pass-Through)
Building and liability insurance premiums paid by the landlord and recovered from tenants as part of operating expense reimbursements, pro-rated by leasable area.
View definition →Utilities
Electricity, gas, water, and sewer costs that may be separately metered per tenant or billed as an operating expense pass-through depending on the lease structure.
View definition →Net Rentable Area
The total floor area a tenant pays rent on, which may include a proportionate share of shared common areas calculated according to the applicable measurement standard.
View definition →Usable Square Footage
The actual floor area within a tenant's exclusive control, not including any common area allocation — the physical space the tenant occupies and operates within.
View definition →Gross Square Footage
The total floor area of a building measured from exterior walls, including all interior spaces regardless of function — used primarily for construction and land-use calculations.
View definition →Load Factor
The ratio of rentable to usable square footage; a higher load factor means the tenant pays for a greater proportion of shared common areas on top of their private space.
View definition →Rent Per Square Foot
The annual or monthly cost of occupying space expressed as a dollar amount per square foot of rentable area — the standard pricing metric for comparing industrial rents.
View definition →Security Deposit
Funds held by the landlord as financial collateral against tenant default, unpaid rent, or damage to the premises beyond normal wear and tear.
View definition →Letter of Credit (LC)
A bank-backed financial instrument used as a security deposit substitute, providing the landlord with a more liquid and enforceable guarantee of tenant payment.
View definition →Personal Guarantee
A commitment by an individual — often a business owner or principal — to personally satisfy lease obligations if the tenant entity fails to meet its financial obligations.
View definition →Tenant Improvement Allowance (TI)
Landlord-funded money per square foot allocated for constructing or modifying a space to meet the incoming tenant's specific operational requirements.
View definition →Build-Out Allowance
Financial contribution from the landlord toward tenant improvements, sometimes expressed as a total lump sum rather than a per-square-foot figure.
View definition →Landlord Work
Physical improvements or construction the landlord agrees to complete as part of the lease deal, typically specified in the work letter attached to the lease agreement.
View definition →Turnkey Build-Out
A space fully built out and delivered by the landlord to an agreed specification, so the tenant takes possession with no remaining construction responsibility.
View definition →As-Is Condition
A lease where the tenant accepts the space in its current physical state with no landlord improvements, credits, or TI allowance provided.
View definition →Gross-Up Provision
A lease clause that adjusts variable operating expenses to a 100% occupancy basis, ensuring all tenants pay their full pro-rata share even when the building is partially vacant.
View definition →Free Rent Period
A landlord concession providing a period of occupancy at no base rent cost, commonly granted to offset tenant fit-out time or moving expenses at lease commencement.
View definition →Annual Rent
The total base rent obligation for a 12-month period, used to compare lease costs across different buildings and term structures on an equivalent basis.
View definition →Effective Rent
The true average rent paid over the lease term after discounting for free rent periods, abatements, and other concessions — a more accurate comparison metric than face rent.
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