Real Estate Glossary

Common Area Maintenance.

A process of determining the value of real property in which project income is divided by a predetermined annual rate (capitalization rate). For example, a building with annual project income of $100,000 is worth $1,000,000 at a 10 percent capitalization rate ($100,000 X 10% = $1,000,000). See Also: Capitalization Rate

A process of determining the value of real property in which project income is divided by a predetermined annual rate (capitalization rate). For example, a building with annual project income of $100,000 is worth $1,000,000 at a 10 percent capitalization rate ($100,000 X 10% = $1,000,000). See Also: Capitalization Rate

The rate that is considered a reasonable return on investment (on the basis of both the investor's alternative investment possibilities and the risk of investment). Used to determine and value real property through the capitalization process. Also called "Free and clear return." See Also: Capitalization

The rate that is considered a reasonable return on investment (on the basis of both the investor's alternative investment possibilities and the risk of investment). Used to determine and value real property through the capitalization process. Also called "Free and clear return." See Also: Capitalization

Various costs that are incidental to property ownership (e.g., taxes, insurance costs and maintenance expenses).

Certified Commercial Investment Member.

A certificate issued by a local government building department or agency stating that a building is in a condition suitable for occupancy. Sometimes also called a "C of O" or a Non-Residential Use and Occupancy Permit (NON RUP).

A section of the Federal Bankruptcy Code dealing with business reorganizations. A separate section, referred to as Chapter 7, deals with business liquidations.

A parking structure with vertical columns on the outside edges of the structure and a clear span between columns, making it unnecessary for vehicles to maneuver between columns.

The total area within the shopping center that is not designed for rental to tenants but that is available for common use by all tenants or groups of tenants, their invitees, and adjacent stores. Parking and its appurtenances, malls, sidewalks, landscaped areas, public toilets, truck and service facilities, and the like are included in the common area.

Include income collected from tenants for operating and maintaining items pertaining to common areas. Shopping center leases usually contain a clause requiring the tenant to pay its share of operation and maintenance on common areas and defining the basis on which charges are made and the type of cost items allocable to maintenance of the common area. Of the ways to prorate the charges among tenants, the most common are (1) a prorated charge based on a tenant's leased area as a portion of the total leasable area of the center or the linear exposure in store frontage, (ii) a fixed charge for a stated period, and (iii) a variable charge based on a percentage of sales. Some centers include a cost-of-living increase in the common area charges.

Recorded sales of properties similar in size, use, construction quality, age, and often located within the same sub-market used as comparisons to determine the fair market value of another particular property.

Space in office buildings which contain or are intended to contain more than one occupant. In addition to the multiple tenant criterion, typical characteristics of Competitive Space include: tenants generally have short-term leases (10 years or less) and the interior of the building is not designed with one organization in mind but rather to accommodate the widest variety of tenants.

Cash expended by the landlord in the form of rent abatement, build-outs allowance, or other payments to induce the tenant to sign a lease.