Lease Office Space Key Terms

Release your potential with these necessary terms to lease office space

By Lisa Maloney

If you've ever undertaken a hunt for office space to lease, you know that the variety of available real estate--and its ratings and cost--can be highly subjective. Add in legal terms governing the actual lease, and finding the right office building for your business can be downright bewildering.

All but the smallest of businesses need at least a small office to use as a home base. Use this list of basic vocabulary to help you get oriented as you shop for business space.

Gross lease

If you've secured office space through a gross lease, you are paying a set, flat fee for using the space while the landlord is responsible for all utility costs and other expenses.
Try: BusinessDictionary.com defines a gross lease and gives a list of typical expenses paid by the landlord in a gross lease situation.

Lessor

The lessor is, in terms of office real estate leases, the person or business entity that owns a property and rents it out to a tenant, which may be a person or business entity. The tenant is sometimes known as the lessee.
Try: GreatRealtyUSA defines the real estate term "lessor" and offers a link to the definition of "lessee" also.

Net leases

A net lease is a rental agreement where the lessee agrees to pay a lump sum of rent, in addition to a portion of one or more of the following as they relate to the property being leased: property taxes, insurance and maintenance.
Try: REALTECH Real Estate Services gives an in-depth explanation of net leases.

Base year

The base year is a calendar year presumed to be average in terms of office space operating and maintenance expenses, which is then used as the standard for how much of the office space's operating expenses will be paid by the landlord in following years, with the lessee responsible for paying anything above the amount of the base year expenditures.
Try: In his ActiveRain blog, Evan Keith Langert, director of KW Commercial Real Estate, explains what the base year is, how it's calculated and gives an illustrative example.

Common Area Maintenance

Common Area Maintenance or CAM charges are fees paid by tenants for services that are of benefit to all tenants--for example plowing a parking lot, building-wide security or maintenance of common areas, such as the lobby in an office building.
Try: Stuart Maue explains typical CAM charges and what to look for in an audit to be sure that CAM charges are appropriate and reasonable.

Class A, B and C

Class A, B and C are ratings given to office space or other commercial real estate that are used to set price points. Determining factors for which class an office building falls into may include how recently a building was renovated, what amenities are provided and where it's located.
Try: HowStuffWorks explains the differences between typical Class A, B and C office buildings.