NET ABSORPTION: Net absorption is a measure of the total square feet leased over a period of time, and is equal to the amount of square footage occupied at the end of the period minus the amount occupied at the beginning of the period, and takes into consideration space vacated in the same area during the same period. (See also Gross Absorption.)
NET LEASE: A lease in which the tenant pays, in addition to rent, certain costs associated with a leased property, including property taxes, insurance premiums, repairs, utilities, and maintenance. There are also net-net (double net/NN) and net-net-net (triple net/NNN) leases, depending upon the degree to which the tenant is responsible for operating costs. (See also Gross Lease.)
NET RENTABLE AREA: Floor area of a building less any vertical penetrations of the floors. No deductions are made for necessary columns and projections of the building (BOMA Standard).
NON-COMPETITIVE SPACE: Space in office buildings that contain or are intended to contain one office occupant so that the space is rarely if ever available for lease or sublease.
NON-RECOURSE LOAN: A loan that does not allow for a deficiency judgment against a borrower in the event of default. The borrower cannot be held personally liable. The lender’s only available recourse in the event of default is the collateral or property.
NONJUDICIAL FORECLOSURE SALE: A property sale by a trustee under a deed of trust, or a mortgage under a power of sale of a mortgage.
OPEN SPACE: The total area of land and/or water not improved by a building, structure, street, road, or parking area, or containing only such improvements as are complementary, necessary, or appropriate to the use and enjoyment of the open area.
OPERATING EXPENSES: The actual cost of operating income-producing property, including management, utilities, and similar day-to-day expenses, taxes, insurance, and reserves for the replacement of items that wear out.
OPERATING COST ESCALATION: Refers to the clause in a lease agreement used to adjust rents over the term of a lease to account for increased operating costs.
OWNERSHIP: Rights to the use, enjoyment, and alienation of property to the exclusion of others.
PARKING INDEX / PARKING RATIO: Figure representing the number of parking spaces available per 1,000 square feet of gross building area (typically rentable space).
PARTIAL TAKING: The taking of part of an owner’s property under the laws of eminent domain. Compensation must be based on damages or benefits to the remaining property as well as the portion taken.
PASS THROUGHS: (1) A method of escalation found in modern leases whereby the tenant directly pays increases in operating expenses of the property. (2) A method of paying interest directly to certificate holders of a mortgage pool. (3) Building and operating expenses that are paid by the tenant under the terms of a lease.
PE: Professional Engineers are licensed after they complete a four-year college degree, work under a Professional Engineer for at least four years, pass two intensive competency exams and earn a license from their state’s licensure board. Only a licensed engineer may prepare, sign and seal, and submit engineering plans and drawings to a public authority for approval, or seal engineering work for public and private clients.
PERCENTAGE LEASE: A lease, generally on a retail business property, in which the rent is calculated as a percentage of gross or net sales. There is usually a minimum or base rent in the event of poor sales.
PERFORMANCE BOND: A bond posted by a contractor guaranteeing the owner that the bonding company will complete construction if the contractor defaults.
PHANTOM SPACE: Generally refers to space that is under lease to a tenant but not presently occupied. Usually created when a tenant consolidates or reduces operations in space it leases prior to the end of its lease term. The vacant but leased space may or may not be formally marketed on a sublet basis or counted among a market’s vacancy.
PITI (PRINCIPAL, INTEREST, TAXES AND INSURANCE): An acronym used to indicate the four major portions of a typical monthly mortgage payment on real property.
PLAT (PLAT MAP): A map dividing a parcel of land into lots, as in a subdivision.
POWER OF SALE: Clause in a mortgage or deed of trust giving the mortgagee or trustee the power to sell the property in the event of default.
PRECAST CONCRETE: Concrete building components fabricated at a plant site and shipped to the site of construction.
PRELEASE: A signed lease for space in an office building or other project that has not yet received a Certificate of Occupancy.
PRIME SPACE: First generation (new) space that is currently available for lease but has never before been occupied by a tenant.
PRIME TENANT: The major tenant in a building, shopping center, etc.
PROFFER: (1) A development plan and/or written condition that, when offered by an owner and accepted by the county, becomes a legally binding part of the property in question. (2) To offer or tender, as in the production of a document and offer of the same in evidence.
PUNCH LIST: An itemized list noting incomplete or unsatisfactory construction. It is usually prepared by the tenant’s architect after the contractor has notified the owner that the tenant space is substantially complete.