Real Estate Glossary

Class "A"-- Building has excellent location and access to attract the highest quality tenants. Building must be of superior construction and finish, relatively new or competitive with new buildings, and providing professional on-site management. Class "B" -- Building with good location, management, construction land tenancy. Can compete at low end of Class A. Class "C"-- Generally an older building with growing functional land/or economic obsolescence. Class "D"-- An older building in need of extensive renovation as a result of functional obsolescence or deterioration.

A set of laws, usually enacted by city ordinance or other local jurisdiction, regulating the design, materials and construction of buildings.

A list of construction materials and finishes used in building out office space for a tenant that the landlord contributes part of the tenant improvements. Examples of standard building items are: doors, partitions, lights, floor covering, telephone outlets, etc. May also specify the quantity and quality of the materials to be used and often carries a dollar value. See Also: Workletter

One of three arrangements often used for financing tenant improvements (finishing out office space to accommodate a tenant such as walls, doors, carpeting etc.) Under this arrangement the landlord lists in detail all materials and costs to make the premises suitable for occupancy and provides a negotiated allowance for the tenant to customize or upgrade materials. See Also: Workletter

The cost of configuring and finishing new or relet space in accordance with a tenant's specifications.

Also known as a Construction loan, any of a variety of short-term (generally five to seven years) financing provided by a lender to a developer to cover the costs of construction and lease-up of a new building with the expectation that it would be replaced by long-term (or "permanent") financing provided by an institutional investor once most of risk involved in construction and lease-up had been over come resulting in an income producing property.

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.