Corporate Real Estate Glossary

Purpose of this corporate real estate glossary

This glossary explains a collection of terms and acronyms in common use within the profession of corporate real estate (CRE). CRE has its own specialized jargon, and understanding this language can help you communicate more effectively with the experts in this field.


This glossary is intended for informational purposes and is based on CoreNet Global’s resources. While this glossary contains many commonly used terms, acronyms, and definitions, it does not contain all CRE-related terms, acronyms, and definitions. This glossary is solely intended as a resource and a guide for practitioners and professionals within the profession of CRE.

If you need further advice or information or have any questions about the glossary, please contact David Lester.

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Absolute Net Lease

Tenant pays all expenses, similar to a Triple Net Lease plus structural maintenance and repairs – usually a long-term lease to a credit tenant. See Triple Net Lease for comparison.


The consumption of available vacant property in a building or market. ALT: The amount of vacant (new or existing) space leased up in a building or marketplace.

Accrued Depreciation

Difference between reproduction or replacement cost of improvements and the market value of improvements on the effective date of an appraisal.


Acquisition-means adding space to the portfolio which can be accomplished by leasing the space, purchasing the space or building the space. Acquisition begins the life cycle of the property.

Adjusted Basis

The beginning basis, or cost, of a property plus the costs of capital improvements, minus all depreciation expense.


An authorized individual who manages or transacts business on behalf of the principal or owner. See also Fiduciary Role for comparison.

Agreement of Sale

Also known as a contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract between seller and buyer with specific terms and conditions spelled out in writing and signed by both parties.


The estimation of the value of a legal interest in the property, usually conducted by a qualified professional person/company.

As If Complete

Market value on an appraisal date estimated as if all construction, conversion, or rehabilitation were complete.

Asking Rental Rate

Also known as Quoted Rental Rate, Face Rate. Rate per square foot or meter for a particular space being marketed for lease as stated by the broker or property owner. The basis for the asking rental rate is required (gross, modified, net, etc.).

Available Space

Total space available for lease or sale in a given time period. Space could be vacant, occupied, available for sublease, or available at a future date. If used for calculation, sub-tenant space should be excluded and the term Direct Available Space is recommended.

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Balanced Scorecard (BSC)

A tool that translates an organization’s strategy into a comprehensive set of performance measures. See also Key Performance Indicators (KPI).

Balance Sheet

The balance sheet is one of the key financial statements of the company and it describes, at a point in time, the assets, liabilities, and equity of the company.

Base Year

Also known as Comparison Year. Calendar or defined fiscal year defined within a lease – usually the year the lease commences. Used for calculations and comparisons such as increased rent and increased expenses.

Beacon Technology

The terms Beacon and iBeacon are often used interchangeably. iBeacon is the name for Apple’s technology standard, which allows Mobile Apps (running on both iOS and Android devices) to listen for signals from beacons in the physical world (such as in retail space) and react accordingly.

Business Continuity Planning

Business continuity planning is a process of identifying, and planning for the mitigation of risks that would impact the commercial viability of the company.

Business Units (BU’s)

Refers to internal business profit centers that can be organized in various ways such as by market segment or product offering. CRE relationship managers deliver service to these Business Units, also known as Strategic Business Unit (SBU) or Lines of Business in conjunction with other shared services departments such as Human Resources or Information Technology.

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Capital Lease

A capital lease is a long-term lease that transfers so much of the economic value of the asset that the lessee is effectively the owner of the asset. For the purpose of financial statements, the capital lease is recorded as debt.

Capital Planning

Capital Planning is synonymous with capital budgeting and entails a process of planning and budgeting for the purchase and acquisition of capital assets.

Capitalization (Cap) Rate

A ratio used to estimate the value of income-producing properties. The cap rate is not a discount rate.

Cash Flow

Cash flow is the net measure of the inflow of cash and the outflow of cash. Examples of cash inflows include selling products and service, selling an asset like a building or collecting on receivables, Examples of cash outflows include paying a routine business expense or purchasing a building. Positive cash flow does not mean profit.

Cash Flow Statement

Another of the key financial statements of a company. It describes the cash flow from the company and also describes where and how the enterprise generated either positive or negative cash from over the reflected period of time. It has three main parts showing cash from operations, cash from investing activities and cash from financing activities.

Change Management

Change management is any system designed to ensure that systemic changes are completely implemented and that the benefits associated with any change are achieved and remain in the long term. Change management plans focus on individual employees as well as teams to ensure that the current situation is known and understood and helps those individuals and teams best adapt to and accept the changes.

Client Relationship Management

Client relationship management or customer relationship management (CRM) is a term that refers to practices, strategies, and technologies that corporate real estate (CRE) organizations use to advise, communicate, and align with the needs and strategies of their internal business clients.


Grouping of space requirements on a large scale, such as: city plans, campus plans, regional or metro plans, distribution plans, sub-portfolio plans.


The placement together of multiple, and potentially diverse, divisions or components of a business in a single facility for the purpose of greater synergy, cost reduction or other business benefits.

Commercial Real Estate

Commercial real estate is any non-residential property used for commercial, profit-making purposes. Commercial real estate includes stores, malls, office buildings, and industrial parks.

Common Area

Non-rental areas of a property that the landlord owns intended for use by all tenants, groups of tenants, invitees, and adjacent areas. The landlord retains control and liability for this area. Examples of common areas include hallways, restrooms, foyers, parking, sidewalks, plazas, recreational areas, mail rooms, elevators, vending areas, janitorial, mechanical, and electric rooms.

Common Area Maintenance (CAM) Expenses

A portion of operating expenses incurred by the landlord to maintain common areas.

See also Operating Expenses.

Comparative Method

Also known as Market Method. An appraisal method which bases the value of the subject property on the price of similar properties which have sold recently.


The successive application of an interest rate to a present amount to establish its value in the future.

Contingent Work Force

A contingent work force is a provisional group of workers who work for an organization on a non-permanent basis, also known as freelancers, independent professionals, temporary contract workers, independent contractors or consultants.

CoreNet Global

CoreNet Global is the world’s leading association for corporate real estate (CRE) and workplace professionals, service providers, and economic developers. Over 9,500 members, who include 70% of the Fortune 100 and nearly half of the Forbes Global 2000, meet locally, globally and virtually to develop networks, share knowledge, learn and thrive professionally.

Corporate Real Estate (CRE)

Corporate real estate refers to the real properties that house the business activities of an organization that owns or leases and manages real estate incidental to its primary business, which is not real estate. Corporate Real Estate can be contrasted with commercial real estate, where the business is real estate. The goal for commercial real estate is to generate a return and the goal for Corporate Real Estate is to support the business.

Corporate Social Responsibility (CSR)

“Achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” While there is no single generally accepted definition of CSR, it can be explained as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. Source: Business for Social Responsibility

Cost Approach

Formerly called the summation approach. A method of appraisal which determines the value of a property by adding the market value of the land to the cost of replacing the existing building. The determination of the value of a property can be estimated by summing the land value and the depreciated value of any improvements. Appraisers use replacement cost and then deduct a factor for any functional disutility associated with the age of the subject property. The cost approach method is a hybrid of the cost and sales comparison approaches considering the replacement cost to construct a building and comparable data to determine labor, material, and other costs and analysis of comparable data for land values and depreciation.

The cost approach is considered reliable when used on newer structures, but the method tends to become less reliable for older properties. The cost approach is often the only reliable approach when dealing with special use properties (e.g. public assembly, marinas). This method is also used during economically depressed times to evaluate the market value of a building compared to its replacement cost.

Cost of Capital

The rate of return that must be earned on new investments having the same average risk as the firm’s existing assets in order to provide all investors in the firm with fair market rates of return.


The use of an office or other working environments by people who are self-employed or working for different employers, typically so as to share equipment, ideas, and knowledge. The aim of co-working is to bring bright, creative people together to collaborate and innovate.

Cyber Security

Cybersecurity is the body of technologies, processes, and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access.

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Debt Coverage Ratio (DCR)

Also known as the Debt Service Coverage Ratio (DSCR). The ratio of net operating income to annual debt service (amount paid toward the interest and principal of the mortgage as stated in the loan documents). Measures the ability of a property to meet its debt service out of net operating income.

Deferred Maintenance

The physical deterioration that has not been addressed but can be corrected, indicating the need for immediate expenditures. Does not necessarily mean inadequate maintenance in the past. Examples: stained or slightly damaged carpets, walls, ceilings; or a need for resurfacing parking lots.

Depreciation Expense

Periodic cost of owning depreciable assets – those subject to wear and tear such as buildings and equipment. No depreciation expense can be taken on land. Depreciation expense is a method of accounting for the initial cost of an asset in its subsequent periods of use.

Direct Costs

Also known as hard costs. Expenditures for labor, materials, subcontractor, and heavy equipment costs directly used for the construction of physical improvements to a property. See also Indirect Cost for comparison.

Direct Expenses

A portion of operating expenses relating directly to the tenant’s leased space. Examples include cleaning and utilities associated with the tenant’s space. See also Operating Expenses.

Direct Vacancy Rate

The term Direct Vacancy Rate should be used in calculations when sub-tenant space is excluded from the calculation.

Discount Rate

The interest rate used to convert future payments or receipts into present value. Depending on how it is extracted from the market or used in the analysis, the discount rate may or may not be the same as the internal rate of return (IRR) or yield rate.

Discounted Cash Flow (DCF) Analysis

Performed on either lease-by-lease or aggregate basis to a set of projected income streams and a reversion. DCF can be applied with any yield capitalization technique with specified quantity, variability, timing and duration of income streams along with quantity and timing of reversion and discounts to present value all at a specified yield rate.


Successive application of an interest rate to a future amount to establish its value in the present.


Disposition means the removal of the space from the portfolio through the ending of a leasehold or the sale of owned property.

Duration Matching

Duration matching is one principle of portfolio management. Simply stated, it means to match the investment in the space to the expected time that space will be needed.

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Limited right of use of another’s land by a landowner for the benefit of his land. The land receiving the benefit is called the dominant tenement and the land granting the benefit is called the servient tenement.


Earnings Before Interest, Income Taxes, Depreciation, and Amortization (EBITDA).

Net income adjusted for the effects of interest expense, depreciation and amortization, income taxes and minority interests.

Economic Development

Economic development is the process or efforts to improve the economic well-being and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the tax base.

Economic Life

The period over which improvements to real property contribute to property value. Relates to market extraction and age-life methods of estimating depreciation.

Effective Age

Age of property, based on the amount of observed deterioration and obsolescence it has sustained, which may differ from the property’s chronological age.

Effective Date

Applicable date when analyses, opinions, and advice in an appraisal, review, or consulting service took place.

Effective Gross Income (EGI)

Anticipated income from all operations of real property after allowances for vacancy and collection losses.

Effective Gross Income Multiplier (EGIM)

The ratio between sales price (or value) of property and effective gross income. Could be average for a single year or averaged over several years. Calculated as V/EGI.

Effective Rental Rate

Financial analysis tool for comparing alternative leasing transactions. Adapted from IREM, the effective rental rate is basically the equivalent constant rate per period that is equal to the present value of net cash flows over the term of a lease. The calculation of effective rental rate varies depending on perspective: tenant or landlord. The effective rental rate differs from net rental rate and includes not only expenses but also cash flows related to capital items such as tenant improvements and leasing commissions.

Eminent Domain

Right of the government to take private property for public use upon payment of just compensation.

Employee Engagement

Employee engagement is the extent to which employees feel passionate about their jobs, are committed to the organization, and put discretionary effort into their work. Employeeengagement is not the same as employee satisfaction.

Employee Wellness

A wellness program is any program implemented by an employer to improve the health of its labor force. A good wellnessprogram also helps individual employees overcome specific health-related issues.


A judgment, mortgage, lien, or any other claim which is registered against the title to property.

Enterprise Leadership

Enterprise Leadership means not real estate as an end unto itself, but rather as an enabler to the success of the corporation. Enterprise Leadership relies on a centralized approach to the management of real-estate of the organization rather than looking at real estate by business unit or location.

Environmental Remediation

Environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water. Remedial action is generally subject to an array of governmental regulatory requirements.


Difference between a property’s current market value or purchase price and the current debt incurred to purchase the property.

Escalation Clause

Also known as Expense Recovery Clause. A provision in a lease that provides for periodic adjustment of rent based on some event or index. Escalation payments are often based on increased operating expenses or changes in local wage rates or index such as the Consumer Price Index (CPI), inflation index.

Excess Land

Land that does not serve or support the existing improvement; land not needed to accommodate the site’s primary highest and best use. Could be vacant with plans for future expansion or have its own highest and best use.

Exposure Time

Time a property remains on the market with reasonable exposure – adequate, sufficient, and reasonable time and effort.

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Facility Management (FM)

Facility management (FM) is a profession that encompasses many disciplines and integrates people, place, process, and technology to ensure the functionality of the built environment. Facilities management is the integration of processes within an organization to maintain and develop the agreed services which support and improve the effectiveness of its primary activities. Usually refers to the Tenant / Occupier representative. See Property Manager for comparison.

Feasibility Analysis

Cost-benefit study of relationships involved in an economic endeavor.

Fiduciary Role

An authorized individual who has the power and obligation to act for the principal or owner. They are held to a higher standard and legal obligation than an Agent.


Finance is a set of theories and practices for evaluating and maximizing economic value. It is forward looking.

Financial Accounting

A set of rules (generally accepted accounting principles, or GAAP) that attempts to standardize the measurement of economic value.

Financial Management

Focuses on determining which assets should the company acquire and how should the company pay for those assets.

Floor Area Ratio (FAR)

Also known as land-to-building ratio or plot ratio. The built area floor area in comparison to the area of the plot (physical land dimensions). Pertains to building codes and planning and zoning FAR is often expressed as a decimal (i.e., 0.2 indicates the permissible buildable area of a building is one-fifth the total land area).

Focus Spaces

These are small private spaces for one-on-one conversations, private calls, or for heads down work. These spaces may have various names such as enclave, cockpit, bullpen, touchdown, harvest table or hive. Focus spaces are common in open collaborative workspaces as they create flexible on demand private spaces without the need to assign private offices.

Functional Utility

The ability of a property or building to be useful and able to perform its intended function according to current market tastes and standards. The efficiency of a building’s use in terms of architectural style, design and layout, traffic patterns, size, and type of rooms. See also Obsolescence / Obsolete for comparison.

Funds from Operations (FFO)

Net income or loss computed using GAAP, excluding gains (or losses) from sales of real estate, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures.

Furniture, Fixtures, and Equipment (FF&E)

Movable property that frequently wears out or becomes outmoded more quickly than other components of a property.

Future Value

It is the value of an asset at a future date which takes into account the time value of money.

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Generally Accepted Accounting Principles (GAAP)

A US based accounting rules and guidelines system to be followed in the preparation of Financial Statements. It is similar to the IFRS (International Financial Reporting Standards).

Global Reporting Initiative (GRI)

Standardized global system for measuring and reporting the economic, social, and environmental impacts of a company.

Government Incentives

Governmental incentives can play a role in location decisions. Such incentives can come in the form of free land, tax rebates, assistance in locating and training labor and expedited construction and can be provided by regional, state, provincial or city governments.

Gross Absorption

Total change in occupied space over a given period of time – counting space that is occupied by not space vacated by tenants. Gross absorption differs from leasing activity – which is the sum of all space leased over a certain period of time. The term Total Gross Absorption is used when including subleased space. The term Direct Gross Absorption is used when subleased space is excluded.

Gross Building Area (GBA)

The total floor area of a building including below-grade and basement space but excluding unenclosed areas. Measured from the exterior of walls.

Gross Leasable Area (GLA)

Total floor area designed for occupancy and exclusive use of tenants – includes basements and mezzanines. Measured from the center of interior partitioning to outside wall surfaces.

Gross Lease

Also known as Full-Service Lease. The landlord receives the rent and discloses the cost of and pays all or most of the property’s operating expenses and real estate taxes. See also Triple Net Lease for comparison.

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Hazard Insurance

Protection for damage caused to property by fire, windstorms, and other hazards. Does not typically include damage by floods.

Highest and Best Use (HABU)

An appraisal process to determine the use of the property which produces the highest value for the land, as if vacant. Vacant land or improved property that result in the highest value by reasonably probable and legal use, physically possible, appropriately supported or financially feasible.

In more complex appraisal assignments (e.g., contract disputes, litigation, brownfield or contaminated property valuation), the determination of highest and best use may be much more complex, and may need to take into account the various intermediate or temporary uses of the site, the contamination remediation process, and the timing of various legal issues. Highest and Best Use can change overtime based upon economic conditions and local growth patterns.

Holding Period

The holding period or retention period is the time space is held by the organization.

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Any buildings, additions and enhancements to increase the value of a property.

Income Approach

Also known as Income Capitalization Approach. Value derived for an income-producing property by direct capitalization of expected income.

Calculated: Value = Net Operating Income (NOI) divided by the Capitalization Rate. Procedures for deriving value involve converting anticipated benefits (cash flows and reversion) into property value.

Used to value commercial and investment properties to directly reflect or model the expectations and behaviors of typical market participants. When sufficient market data exists, this appraisal approach is generally considered the most applicable valuation technique for income-producing properties by determining value. Revenue multipliers or capitalization rates are applied to the first year Stabilized Net Operating Income (see Stabilized Net Operating Income) or multiple years of net operating income can be valued by a discounted cash flow analysis (DCF) model to value larger and more expensive income-producing properties, such as large office towers. This technique applies market-supported yields (or discount rates) to future cash flows (such as annual income figures and typically a lump reversion from the eventual sale of the property) to arrive at a present value indication.

Income Statement

The income statement is one of the three key financial statement produced by the organization and is also known as the profit and loss statement. It describes the revenues and expenses and net profit or loss of the organization over a period of time, typically a fiscal quarter or year.

Indirect Costs

Also known as soft costs. Expenditures or allowances for items other than labor and materials necessary for construction but not typically part of the construction contract.

Examples: administrative costs, professional fees, financing costs, interest paid on construction loans, taxes, all-risk insurance during construction, marketing, sales, lease-up cots to achieve occupancy or sale.

Individual Work Zones

Regardless of new open-plan workplace solutions, employees still need individual work zones where they can have quiet, individual private spaces so they can concentrate on their work.

Insurable Value

Value of assets or asset group or real property covered by an insurance policy; generally, does not include site value but usually covers allowances for debris removal or demolition less deterioration and non-insurable items.


Property/casualty coverage for property to cover loss or damage to the property caused by perils of fire, lightning, extended coverage, vandalism, malicious mischief and possibly flood and terrorism coverage.

Integrated Support Services

This model for organizational design relies on an integrated collaborative enterprise-wide approach uniting typically siloed non-core business departments such as IT, HR, Finance and Corporate Real Estate to serve as a resource for the enterprise to enable improved work experience, higher productivity, and lower cost.

Integrated Workplace Management System (IWMS)

A comprehensive information management system used to manage a wide variety of corporate real estate activities typically including portfolio management, project management, facilities management, occupancy management, and environmental management.

Internal Rate of Return (IRR)

The internal rate of return is the discount rate that results in an investment having a present value equal to zero. It is used in evaluating competing-investment or project alternatives. The project with a higher internal rate of return would generally be considered a better project from a financial perspective.

International Accounting Standards Board (IASB)

The International Accounting Standard Board creates standards for presentation of financial statements. Other similar bodies include FASB, the Financial Accounting Standards Board or the IFRS, the International Financial Reporting Standards.

International Property Measurement Standards Coalition (IPMSC)

The International Property Measurement Standards Coalition (IPMSC) is a group of 70 professional and not-for-profit organizations from around the world, working together to develop and implement international standards for measuring the property. Visit the International Property Measurement Standards Coalition for more information.

Internet of Things (IoT)

The Internet of Things (IoT) is a system of interrelated computing devices, mechanical and digital machines, objects, or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction.

Investment Duration

A measure of capital at risk in real estate. The longer the duration, the more capital at risk.

Investment Value

Value of property to one particular investor; usually higher than the market value of a property.

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Key Performance Indicators (KPI)

Financial and non-financial measures or metrics used to help an organization define and evaluate how successful it is, typically in terms of making progress towards its long-term organizational goals. KPIs are often monitored using Business Intelligence techniques to assess the present state of the business and to assist in prescribing a course of action. See also Balance Scorecard.

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Instrument granting exclusive possession of the property to another for a specified term, usually for rent. The individual who grants the lease is called the Landlord (or Lessor). The individual to whom it is granted is called the Tenant (or Lessee).

Lease Abstracting

Lease Abstracting is the process of creating a summary of the most important elements of a real estate lease. Those key elements include key financial terms, business, and legal information.

Lease Administration

Lease Administration covers a wide variety of tasks associated with the management of space held under lease. These tasks commonly include: lease abstracting, lease documentation administration, portfolio analysis, and performance reporting.

Leased Fee Interest

Ownership interest held by a landlord with the rights of use and occupancy conveyed by lease to others. Contract terms contained within the lease specify rights of lessor and lessee.

Leased Space

All space under contract – not necessarily physically occupied. Includes space offered for sublease. If used for calculation and sub-tenant space is excluded, the term Direct Leased Space should be used.

Leasehold Interest

Interest held by the lessee (tenant, occupier, renter) through a lease that transfers rights of use and occupancy for a specified term under certain conditions.

Leasing Activity

Sum total of space committed to and signed under a lease obligation for a specified building or market for a given period of time. The term does not account for actual occupancy status and includes direct leases, subleases, renewals, expansion of existing leases and preleasing activity for space under construction. The term Total Leasing Activity should be used when including sublease space and the term Direct Leasing Activity should be used when excluding sublease space.


The U.S. Green Building Council (USGBC), oversees the Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ which “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.” Other similar international green building systems are BREEM, BEEM, Green Star, Energy Star, and Green Globes.

Legally Nonconforming Use

Lawfully established and maintained use that is no longer conforming to current zoning and use regulations where the property is located.


Also known as Tenant. The individual to whom a lease is granted is called the Tenant (or Lessee).


Also known as the landlord. The individual who grants a lease is called the Landlord (or Lessor).


A charge or claim by one party on the property of another as security for the payment of a debt. Claim could include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor.

Life Cycle Costing

This is a technique to establish the total cost of ownership, The result of a life cycle costing analysis can be used to assist a company in the decision-making process when there is a choice of options. The accuracy diminishes as it projects further into the future, so it is most valuable as a comparative tool when long term assumptions apply to all the options and consequently have the same impact.

Liquidation Value

Commonly sought a standard of value in bankruptcy proceedings. Property is analyzed as either a forced liquidation or an orderly liquidation and assumes a seller who is compelled to sell after an exposure period which is less than the market-normal timeframe.

Listing Agent

The agent representing the seller. See Tenant Representative for comparison.

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Market Analysis

Study of market conditions for a specific type of property or identification and study of the market for a particular economic good or service.

Market Rent

Used for appraisal purposes. The rental income a property would be expected to command in an open market. Determined by current rents paid or asked for in comparable space.

Market Study

Macroeconomic study of general market conditions – supply, demand, pricing, demographic of demand for a specific area or property type. May include analyses of construction and absorption trends.

Market Value

Also known as Open Market Value or Fair Value. Most probable price at which an asset would trade in a competitive setting. The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller transacted after effective marketing and where both parties acted knowledgeably, prudently, and without compulsion.

Marketability Study

Microeconomic study of a given property or class of properties with a focus on market segments likely to generate demand. Useful for determining highest and best use, testing development of proposals, and projecting appropriate tenant mix.

Marketable Title

A title that is free and clear, enabling an owner to sell property freely to others. Objectionable items preventing a free and clear title include liens, judgments, unpaid taxes or other title defects.

Material Defect

Any attribute affecting a property’s value – may not be readily observable but might be known by the seller who is required to disclose. Residential sellers follow state laws and use state-mandated disclosure forms to inform potential buyers.


Debt Service Coverage – Combined NOI and Debt Service Coverage – EBITDA
These measures divide either combined NOI or EBITDA by the sum of interest expense and scheduled principal amortization on mortgage loans for continuing and discontinued operations.

Fixed Charge Coverage – Combined NOI and Fixed Charge Coverage – EBITDA
These measures divide either combined NOI or EBITDA by the sum of (1) interest expense on continuing and discontinued operations, (2) dividends on preferred shares and (3) distributions on preferred units in the Operating Partnership not owned by the Registrant.

Combined NOI as a Percentage of Combined Real Estate Revenues and EBITDA as a Percentage of Combined Real Estate Revenues
These measures divide either Combined NOI or EBITDA by total real estate revenues from continuing and discontinued operations.

General and Administrative Expenses as a Percentage of EBITDA or Combined Real Estate Revenues
These measures divide general and administrative expenses by the applicable measure.

Recurring Capital Expenditures as a Percentage of Combined NOI
This measure divides recurring capital expenditures by NOI.


Set of data that measures performance (typically associated with cost and utilization).


The borrower in a mortgage agreement.


Legal document from buyer to lender pledging property as security for payment of a loan and lien or claim against real property.

Mortgage Commitment

Written notification from a bank or other lending institution that mortgage funds in a specified amount will be advanced, enabling a buyer to purchase a property.

Mortgage Note

Written agreement to pay a loan, secured by a mortgage as proof of indebtedness and with terms under which it shall be paid.


Lender in a mortgage agreement.

Multinational Corporation (MNC)

Large corporate enterprise with activities and operations that span multiple countries.

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Net Absorption

The net change in occupied space in a given market for a given period of time (between current and previous measurement period). Net absorption calculates the change in inventory; positive when inventory decreases and negative when inventory decreases. The term Total Net Absorption should be used when including sublease space and the term Direct Net Absorption should be used when excluding sublease space.

Net Cash Flow

Net operating income minus capital expenditures.

Net Operating Income (NOI)

Company’s operating income. Calculated after operating expenses are deducted, but before income taxes and interest are deducted. When NOI is a positive value, it is referred to as net operating income, while a negative value is called a net operating loss (NOL).

Net Operating Loss (NOL)

Company’s net operating loss. Calculated after operating expenses are deducted, but before income taxes and interest are deducted. When this is a negative value it is called a net operating loss (NOL), while a positive value is referred to as net operating income (NOI).

Net Present Value (NPV)

A property’s net present value (NPV) is based on the cash flow that an asset generates for a specific owner under a specific use. Compare to Value-in-use which is the value to one particular user, and usually below the market value of a property.

Net Rentable Area (NRA)

An area on which rent is computed; measured to inside finished surface of the dominant portion of the permanent outer building floor without deducting for columns and projections and including restrooms, lobby, and other space such as that used for maintenance.

Net Sales Proceeds

Proceeds from the sale of an asset or part of an asset, less brokerage commissions, closing costs, legal and marketing expenses.

Net-Zero Energy Building

A net-zero energy building, also known as a zero net energy building, zero-energy building or net zero building, is a building with zero net energy consumption, meaning the total amount of energy used by the building on an annual basis is roughly equal to the amount of renewable energy created on the site.

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Diminished desirability and usefulness due to new inventions, changes in design, improved processes for production, or external factors – may be functional or external. Considered one cause of depreciation.

Occupied Space

Also known as Total Occupied Space. Space occupied by a tenant, subtenant, or owner. The calculation for occupied space is the amount of inventory less amount of vacant space. The term Direct Occupied Space should be used if excluding sub-tenant space. Statistics on Occupied space should include disclosure of owner-occupied buildings.

Off-site Costs

Also known as common costs or off-site improvement costs. Costs incurred for a project outside of actual building construction costs. Examples: sidewalks, streets, curbing, traffic signals, water, and sewer mains.


Proposal to purchase property at a specified price and terms.

Off Shoring/On Shoring/Near-Shoring

These concepts all relate to the location of the operations of an enterprise to adjust and optimize its global supply chain, lower cost and create proximity to the customer base. Off Shoring means to move an office, plant or another facility away from an organization’s “home” jurisdiction. Reshoring would be the opposite. And Near Shoring would involve moving a facility to a nearby country.

On-site Costs

Also known as Construction Cost and Direct Cost. Costs directly related to the actual construction of buildings and improvements on a particular parcel of land.

Open Standards Consortium for Real Estate (OSCRE)

The Open Standards Consortium for Real Estate (OSCRE) is a not-for-profit consortium that drives the development, synthesis, and adoption of e-business standards – open e-business data exchange standards for real estate.

Operating Expenses

Recurring expenses required for operations and maintenance of a property that may be broken down into Common Area Maintenance (CAM) expenses and direct expenses – those directly related to the tenant’s leased space (also called direct expenses). Operating expenses do not include real estate taxes, insurance, mortgage payments, capital expenditures, and depreciation.

Operating Lease

An operating lease merely conveys the right to occupy and use the space to the tenant or lessee. The risks of ownership remain with the landlord or owner of the space. The transaction is not recorded as debt but future committed rental payments must be disclosed in the notes to the financial statements.

Organizational Models

Refers to the approach(es) companies use to deliver real estate and facilities management services to the end customer (e.g., the internal business client). These typically involve a combination of internal and external resources. There is no “one size fits all” approach for organization of corporate real estate functions. Common organizational models include functional, geographic, process and customer. The functional model has real estate functions within each function reporting up to a global leader. The geographic model has a global lead with overall control; that Global lead would be supported by regional or country leads and so on. The process model involves structuring the real estate team around the delivery of real estate services. A customer model assigns relationship managers to manage business demand from various business units and then subject matter experts manage the supply side.


The process of contracting with an outside service provider to fulfill any of the activities performed by CRE.

Overall Capitalization Rate (OAR)

Income rate for a total real property interest. Reflects the relationship between a single year’s expected net operating income (NOI) and total property price or value. OAR is used as an indicator of overall property value.

Owner of Record

Individual or entity named in the public record as the owner of a property or mortgage.

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Parking Ratio

Standard comparison of the relationship of parking spaces or area and economic or physical unit of comparison (i.e. the number of parking spaces per rentable unit of area; a ratio of the total parking area to gross leasable area).

Payback Period

The length of time required to recover the project’s initial investment.

Performance Management

Process of assessing progress towards achieving strategic goals. Examines investment in the workforce, business process improvement (inputs, outputs, procedures quality) and productivity.

Portfolio Benchmarking

The process of comparing a company’s real estate portfolio to that of a larger group of companies (often “peer” companies in a similar business segment or industry) for the purpose of tracking performance in terms of cost, efficiency and other metrics.

Portfolio Flexibility

The degree to which physical assets are aligned with and responsive to business needs. Ability to expand and/or contract the space as needed by the Business.

Portfolio Management

The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk vs. performance. Includes categorizing / ranking of all sites by criticality to the Business in order to provide portfolio flexibility. The goal of CRE is to provide the right space, in the right place, at the right time.

Portfolio Optimization

Refers to matching enterprise resources to the core business strategy that extends throughout the value network as inter-related business partners’ portfolio lines blur, with the goal of lowering costs and improving efficiency.

Potential Gross Income (PGI)

Total income attributable to real property at full occupancy and before vacancy and operating expenses are deducted.

Pre-leased Space

Space leased prior to construction completion or certificate of occupancy (C of O) date. Recommended that data/statistics of pre-leased space be disclosed for proposed or planned projects.


Payment of mortgage loan, or part of a loan, prior to the due date. Mortgage agreement may include restrictions on pre-payment and associated penalty to prevent early pre-payment.

Present Value (PV)

The discounted value in today’s dollars of a sum or sequence of sums paid or received in the future. How much a future amount of money is worth today.

Project Management

Project Management, as defined by the Project Management Institute, means “the application of knowledge, skill, and techniques to execute projects effectively and efficiently.”

Property Lifecycle

The property lifecycle refers to the period of time that space is held (either owned or leased) by the organization. The lifecycle begins when space is acquired, runs all during the holding period and ends at the disposition of the space. Managing the property lifecycle requires applying the principles and process of portfolio management, aligning the portfolio with strategic business driver and priorities while also allowing flexibility to react to external or internal business changes.

Property Manager

Responsible for the care and maintenance of the premises. May also coordinate leasing activities either with the designated leasing agent or directly. Term usually refers to ownership representative. See also Facility Management for comparison.

Property Tax

Enforced charge by state and local government imposed on individuals, property, and income to support public services such as schools. Also, see Real Estate Taxes.

Purchase Price

Price including all amounts paid to a seller less adjustments made at closing.

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Qualified Buyer

A buyer who demonstrates financial ability to afford the asking price of a property.

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Real Estate Investment Trust (REIT)

An ownership conduit entity which collectively invests in real estate and avoids corporate taxation on distributed income. Emphasis on long-term real estate investing and payout of 90%+ of all taxable income.

Real Estate Taxes

Also known as Property Taxes. Based on the value as determined by the taxing authority (state, county, and municipality) where the property is located to include all real property (land, improvements, structures, buildings).

Real Options

Options that do not have an underlying security instrument. Unlike financial options for stocks, securities and other financial instruments, options in real estate do not have an underlying security. Real options models have two immediate applications in corporate real estate – to guide the flexibility strategy and to value flexibility to support of cost benefit analysis at a transaction level. Real estate options are more likely to take some type of action – to expand or not, to terminate a lease, to purchase an existing facility or build a new one, etc.

Recurring Capital Expenditures

Associated with operating properties – includes capital improvements, tenant improvements and incentives and leasing costs that were not considered prior to acquisition of the property. These expenditures tend to be replacement and not: improvements associated with the expansion of a building or its improvements, renovations to a building intended to change classification of the building – such as industrial to office or Class C office to Class B office or capital improvements that represent the addition of something new to the property rather than the replacement of something such as new HVAC.


To obtain a new loan or to pay off an existing loan. Usually done when interest rates have decreased and are lower than the current loan.

Replacement Cost

Estimated cost to construct, at current prices, a building with equivalent utility, using modern materials and current standards, layout, and design.

Reproduction Cost

Estimated cost to construct, at current prices, an exact duplicate or replica of a building using the same materials, construction standards, layout, design, and quality workmanship. Reproduction would replicate all obsolete, deficient, and super adequate features.

Restrictive Covenants

Restrictions on the use of real property created by deed and tied to the property binding existing and future purchasers. Restrictive covenants include limits such as:  density of buildings, size of buildings, style or price range.

Reversion Capitalization

Overall capitalization rate used to determine Reversion Value (Terminal Value). Based on end-of-year Net Operating Income (NOI) or next year NOI divided by capitalization rate.


In the context of Finance, risk is the expected potential variability of actual return from an expected return.

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Sales Comparison Approach

A real estate appraisal method based on the principle of substitution – that a prudent individual will pay no more for a property than it would cost to purchase a comparable substitute property. The Sales Comparison approach compiles data on sales of similar properties called comparable. Adjustments are made based on elements of comparison. It’s the most common and preferred method of land valuation when comparable sales data is available.

Sale Leaseback

A change of ownership in which the owner (typically a Corporation) will sell the building to a real estate investor and then lease back the building from the real estate investor for a long period (5 – 10 years).

Scope of Work (SOW)

Description of the amount and type of work to be completed by a service provider in a specific assignment.

Selling Agent

Agent who obtains a buyer, represents the buyer, or operates as a subagent of the seller.

Service Level Agreement

A contract between a service provider and a client that defines the level of service expected from the service provider. SLAs are output-based in that their purpose is specifically to define what the customer will receive.

Site Selection

Site selection or location decision is the process by which the organization determines where to locate a facility. Location decisions are impacted by the needs of the organization (e.g. access to talent or optimization of its supply chain) or external trends (technology, demographics, urbanization, globalization or development of emerging markets).

Smart City

A city in which investments in human and social capital and traditional (transport) and modern (ICT) communication infrastructure fuel sustainable economic development and a high quality of life, with a wise management of natural resources.

Special Lien

Right to retain something of value belonging to another person as compensation for labor, material, or money expended on another person’s behalf. Binds specified piece of property as opposed to a general lien which is levied against all assets.

Special Warranty Deed

Deed where grantor conveys title to the grantee and agrees to protect the grantee against title defects or claims. The grantor guarantees to the grantee that nothing occurred during the time title to the property was held that impaired the grantee’s title.

Speculative Property

Properties not yet leased or pre-sold that developers speculate on for future real estate demand prior to or just after property development.

Stabilized Net Operating Income

For appraisal purposes, the projected income less expenses are adjusted to reflect equivalent, stable property operations rather than temporary or atypical situations such as low occupancy.

Stabilized Occupancy

Without abnormalities of supply and demand, expected to continue over the economic life of the property – optimum range of income-producing, long-term occupancy.


A salesperson who works for an agent.

Surplus Property

Property (land and/or buildings) that is retained by an owner but not currently being used and typically not considered essential for business purposes in the near term.


LAND: Map or plat of land with elevations, improvements, boundaries, and relationship to surrounding tracts of land. Created by a licensed surveyor, the survey is often required by the lender to assure the property and building are aligned with the legal description.

Management Survey: Studies a property and factors that affect it. The survey includes an analysis of the region, the market, the neighborhood, and the property. The study includes the economics of various alternatives, a financial analysis, and a management plan.

Sustainable Development

Several definitions exist. The United Nations World Commission on Environment and Development offers this one: “Sustainable development meets the needs of the present without compromising the ability of future generations to meet their own needs.”

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Taxes and Insurance

Real estate taxes and property taxes and property/casualty coverage.


Telecommuting refers to having an employee work from home. The employee remains connected to the organization by use of technology allowing the employee to access information remotely. This alternative working arrangement offers benefits to both employer and employee.

Tenant Expenses

Include operating expenses, taxes, and insurance.

Tenant Improvements (TI)

New, fixed, remodeling and associated improvements paid by for the tenant, landlord or part by each that have been defined within the lease. Actual TI amounts may be negotiated in the lease. Also known as Fit Out.

Tenant Representative

Specializes in negotiating for tenants and is not affiliated with the leasing agent (landlord representative).

Time Value of Money

Time literally is money – the value of the money you have now is not the same as it will be in the future and vice versa. Knowing how to calculate the time value of money can help distinguish between the worth of investments that offer you returns at different times.


Lawful ownership of property. Right of ownership supported by title documents as evidence of an ownership interest in real estate.

Title Insurance

Protection against losses arising from title defects such as forged or miss-filed documents. The insurance policy protects lenders against loss of their interest in property due to legal defects in title.

Title Search

Also known as Title Examination. Search into public records to determine the current title is clear, not defective.

Total Occupied Space

Also known as Occupied Space. Space occupied by a tenant, subtenant, or owner. The calculation for Occupied Space is Amount of Inventory less Amount of Vacant Space. The term Direct Occupied Space should be used if excluding sub-tenant space. Statistics on Occupied space should include disclosure of owner-occupied buildings.


French word that means “slice” or “portion.” In real estate, certain securities may be comprised of tranches at a number of classes, with different interest rates, maturity dates, and level of risk, e.g. Collateralized Mortgage Obligations (CMOs).

Transaction Management

Transaction management refers to acquiring or disposing of leased or owned space.

Triple Bottom Line

Economic, Social, and Environmental Impacts of a company, also coined as the 3 P’s – People, Planet, Profit. The core concept is that, for anyone of these spheres to thrive long-term, all must thrive. A 4th P has emerged – Productivity.

Triple Net Lease

Net lease in which the lessee/tenant assumes including all fixed and variable operating expenses including common area maintenance that might apply. Typically, the landlord would remain responsible for structural repairs. See Absolute Net Lease for comparison.

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Usable Area

An area is available for assignment or rental to occupants including every type of usable space. Measured from inside finish of outer walls to the office side of corridors, including subdivided occupant space.

Useful Life

Period of time property may be reasonably expected to perform the function for which it was designed.

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Vacancy Rate

Percentage of the total amount of vacant space divided by the total amount of inventory. This measurement may apply to an individual building or an aggregation of buildings. The term Direct Vacancy Rate should be used if sub-tenant space is excluded from the calculation.


It is the value to one particular user, and usually below the market value of a property. Compare to a property’s net present value (NPV) which is based on the cash flow that an asset that generates for a specific owner under a specific use.

Value – As Is

Value of property under specific ownership rights – relates to what physically exists and is legally permissible. Excludes all assumptions about hypothetical market conditions or possible rezoning.

Virtual Office

A virtual office differs from a physical office in that there is no permanent physical location. The virtual office exists only on the Internet and is facilitated by technology such as cloud computing. This has enabled employees to store access and share data from a shared infrastructure platform. Hence an employee could have a virtual office almost anywhere so long as he or she has access to the Internet via Wi-Fi, a laptop and cell phone.

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Weighted Average Cost of Capital (WACC)

WACC represents the total return required by the firm’s investors; it reflects the return that they expect given the risk inherent in the company’s core business. A calculation of a firm’s cost of capital that weights each category of capital proportionately. Included in the WACC calculations are all capital sources, including common stock, preferred stock, bonds, and any other long-term debt.

Broadly speaking, the assets of a company are financed by either debt or equity. WACC is the average of the cost of each of these sources of financing weighted by their respective usage in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it borrows. In an analysis of a potential investment by the company, investment projects that have an expected return that is greater than the company’s WACC will generate additional free cash flow and will create positive net present value for stock owners.

WACC is often used as the discount rate to evaluate investment opportunities across the company.

Workplace Environment

The workplace environment refers to the physical and virtual spaces provided by the organization to house its workforce. The workplace environment is impacted by a multitude of factors such as the workplace strategy of the organization, cost, work styles and needs, generational factors, environmental factors, technology to name a few.

Workplace Strategy

This is the process of aligning an organization’s workplaces to support its business goals while optimizing real estate performance. This strategy is developed based upon a number of dimensions within the company – including its physical and virtual work environments, culture, behaviors, business processes, technologies, and other resources – with the ultimate goal of encouraging people to work in ways that support the organization’s mission.

Workspace Utilization

A metric in corporate real estate and workplace management that describes the degree or extent to which a specific office or workspace is currently utilized as measured by the presence of employees. Example: an office in which 40 of 100 seats are being utilized by employees has a 40 percent utilization.

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Also known as the Return, the Income / Value appreciation of an investment; the Return On Investment. Yield is expressed in terms of the purchase price of that investment.

Yield Capitalization

The method used to convert future benefits into present value by discounting future benefits at an appropriate yield rate or developing an overall rate to reflect the investment’s income pattern, value change, and yield rate.

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Zoning Ordinances

Acts of an authorized local government to establish regulations for types of use, density, and set-backs for a property.