OS Colliers Office tenant guide

Colliers

Occupier Services

Glossary of terms

The process of transferring both the rights and obligations under a lease to another party. This is one of your options to get out of a lease early, but it requires the landlord’s approval.

The percentage of the gross area that you can actually use. It is important to understand the building efficiency in order to make sure you are comparing options on an apples-to-apples basis.

Remaining in occupation of a space after the lease has expired. This is sometimes allowed and mentioned in the lease but is almost always subject to a significant rental increase during this period.

. A Assignment

. E Efficiency rate

. H Holdover

Escalation

HVAC

An offer by the tenant to the landlord to renew the lease early and combine the remainder of the term to the new term, thereby giving the landlord a longer commitment in exchange for a rene gotiated (reduced) rent. Determining when to use a blend-and extend strategy requires a company to confirm that the existing building and area are a strategic fit for the long term. Commercial buildings are typically categorised into different grades: A, B and C (although in certain markets, a distinction is made for the very top buildings, these are referred to as ‘pre mium’ grade). While there is no legal definition for each grade, it is generally accepted what constitutes a Grade A building in a certain market. The ‘carpet area’ plus the thickness of the outer walls and a balco ny (if applicable). The ‘super built-up area’ is the area that a tenant normally pays rent on. It is the ‘built-up area’ plus the tenant’s proportionate share of common areas.

The fixed amount or percentage by which the rent increases on a pre-agreed regular basis. In Australia, for instance, it is common for rents to have an annual escalation of between 3% and 5%, whereas in Denmark the rent is typically subject to annual index ation in step with the Net Price Index (NPI), often with a stipulated minimum and maximum uplift.

Heating, ventilation and air-conditioning.

. B Blend and extend

Building Grade

The quoted rent in the lease. This does not factor in any landlord incentives or any rental escalations.

An inducement from the landlord to the tenant to make its building more attractive. In general, incentives can be taken as a rent-free period, a rent abatement over the term or as a contribu tion to your fit-out costs (or a combination of these).

. F Face rent/ base rent

. I Incentive

Built‑up area/ super built‑up area

Facilities management (‘FM’)

The tenant.

FM is the integration of processes to maintain the services of a building. These may among other things include building main tenance and repair, janitorial services, vendor management and security.

. L Lessee

Lessor

A common term used in India. This refers to the area enclosed within the walls where you can actually lay a carpet. See also Net area.

This is the total area that you typically pay rent on. It is everything within the premises, measured from the outside of the walls (including wall thickness). It also includes a proportionate share of the common areas.

The landlord.

. C Carpet area

. G Gross area

Lock‑in period

Common area maintenance (‘CAM’)

Gross rent

The period of time during which no early termination is allowed.

See Management fees.

Rent and management fees combined.

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