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Terms and Definitions
By: Maria Sicola, CEO, Integrity Data Solutions, LLC
Release Date: April 2017
Commercial real estate is an ever-changing field, and is constantly adding new terms to its lexicon. There can, however, be disagreement about how to define those terms.
The 2017 edition of NAIOP’s terms and definitions remains the place to turn to for standardized CRE industry terminology.
This latest edition is completely updated and far more comprehensive. It defines almost twice as many terms as the 2012 glossary did, and includes new sections providing retail, investment, and space market definitions.
The document expands upon two earlier editions, which were written by teams of industry professionals over more than a decade. The terms and definitions are also available on an online glossary.
Download the 2017 Terms and Definitions.
Common Lease Types Matrix
| Lease Type | Responsibility for Expenses | Other |
|---|---|---|
| Gross (full service) | Landlord pays all of the operating expenses and taxes. | Costs of operation must be disclosed in lease. |
| Modified Gross | Expenses are divided between tenant and landlord in a predetermined manner. | Costs may include an expense stop. Also called semi-gross, net net or double net. |
| Net | Tenant pays all operating expenses. | Landlord must disclose tenant responsibility in lease. |
| Triple Net (Net-net-net or NNN) |
Tenant pays all operating expenses, taxes and insurance. | Landlord is frequently responsible for HVAC, structure, roof. Landlord is occasionally responsible for parking lot. |
| Master | Lease types vary, but master leases tend toward the NNN end of the lease spectrum. | Lessor typically has the right to sublease the space subject to any constraints in the master lease. |
Industrial Building Types Matrix
| Manufacturing | Warehouse | Flex | |||||||||
| Primary Type | General Purpose |
General Purpose Warehouse | General Purpose Distribution | Truck Terminal/Trans-load | Gateway Fulfillment Center | Multi-market Fulfillment Center | Last-mile Fulfillment Center | Cold Storage | General Purpose Flex | Service Center or Showroom | Data Center |
| Primary Use | Manufacturing | Storage | Distribution | Truck Trans- shipment |
Distribution | Distribution | Distribution | Distribution and Storage | Research and Development, Office, Lab, Light Manufacturing, High-tech, Life Science |
Retail Showroom | Storage |
| Subsets | Heavy, Light Manufacturing | Bulk Warehouse High-cube Long-term | Overnight Manufacturing Services Air Cargo | Heavy, Light Manufacturing | Delivery directly to consumer or multi-market/last-mile center | Direct to Consumer | Direct to Consumer | Complete cold storage, Box in a Box | |||
| Clear Height (ft) | 18+ | 32+ | 32+ | 16+ | 40+ | 40+ | 32+ | 50+ | 28+ | 28+ | 18+ |
| Loading (Dock) Door- to-square- foot Ratio | Varies | 1 per 10,000 | 1 per 10,000 | 15 per 10,000 | 1 per 10,000 | 1 per 10,000 | 1 per 10,000 | 1 per 10,000 | 15 per 10,000 | 1 per 10,000 | Few |
| Office Percentage | < 20% | < 5% | < 5% | < 5% | < 20% | < 20% | < 20% | < 5% | 30+% | 30+% | Low |
| Vehicle Parking Ratio | Varies | 1:1,000SF | 1:1,000SF | Low | 1:1,000SF | 1:1,000SF | Varies | Low | High | High | Low |
| Trailer Parking | Low | Moderate | High | Very High | High | High | High (Delivery Vehicle Space) | Moderate | Moderate | Moderate | None |
| Truck Court Depth | 130 | 130 | 130 | 130 | 130 | 130 | 130 | 130 | 130 | 130 | n/a |
Note: This matrix is intended to be an aid in classifying the principal industrial building types. It is subject to the following considerations:
- These reflect frequently found characteristics of different properties, but actual characteristics may vary and are subject to tenant/developer needs.
- Some properties may be easily classified into a single category, and some may cross multiple functions.
- The truck court depth may depend on size; however, industry standard is 130 feet of space in a truck court for all types.
Office Building Classification Matrix
| Class A | Class B | Class C | |
| Rents | Asking gross rents lead the market. |
Asking gross rents revolve around the mean for the market. |
Asking gross rents are lowest in the market. |
| Location | The site is excellent and well-located. |
Has an average to good location. |
Often in a less desirable location. |
| Building Systems | The mechanical, elevator, HVAC and utility systems can deliver services that meet both current tenant requirements and anticipated future tenant needs. |
The mechanical, elevator, HVAC and utility systems are adequate to deliver services currently required by tenants. |
The mechanical, elevator, HVAC and utility systems have capacities that usually meet the basic needs of tenants but may not handle the needs of demanding tenants. |
| Building Finishes | The finishes feature highquality design and materials. Buildings must remain competitive with new construction. |
The finishes use average- to good-quality design and materials. |
The finishes often project a dated appearance and may have deferred maintenance. |
| Building Services | Services include above average maintenance, management and upkeep. |
Services include average to good maintenance, management and upkeep. |
Services frequently include below- average maintenance, management and upkeep. |
Note: This matrix is intended to serve as a guide for those who are evaluating buildings and determining their classifications; it comes with the following caveats:
- Designations are ultimately subjective.
- The final designation of Class A, B or C is always relative to the local market or submarket being analyzed. For example, buildings considered Class B in the central business district (CBD) might be considered Class A in the suburbs. A Class B building in a gateway market (e.g., New York or San Francisco) may be considered a Class A building in a secondary or tertiary market.
- Some considerations for determining class are listed in the matrix. Other variables worthy of consideration may include age, amenities, parking, construction materials and architecture.
- Buildings must exhibit more than one of the characteristics in each category, but they need not exhibit all of them to obtain that classification.
Retail Building Types Matrix
| Center Type | Concept | Square Feet (Approx.) | Typical Anchor(s) | Parking Type and Ratios | Primary Trade Area | Examples |
|---|---|---|---|---|---|---|
| Super-regional | Typically enclosed, large anchor tenants, general merchandise and fashion, more variety than a regional center. Few new ones constructed. | 800K + | Formerly defined by including five or more department stores, now defined by square footage and large trade area | Surface or structured | 25 miles | Tysons Corner Center, Tysons Corner, VA King of Prussia Mall, King of Prussia, PA Mall of America, Bloomington, MN |
| Regional | Typically enclosed, large anchor tenants, general merchandise and fashion. Regional centers are gradually being replaced by Lifestyle centers. | 400K to 800K | Fewer than five anchor tenants, tenants that sell a large variety of goods | Surface or structured | 15 miles | Santa Monica Place, Santa Monica, CA Roosevelt Field, Garden City, NY |
| Community | Open to parking lot, provides general merchandise and commodities | 125K to 400K | Discount department store, supermarket, drugstore | Surface | 3 to 6 miles | — |
| Neighborhood | Open to parking lot, provides commodities to nearby neighborhoods | 30K to 125K | Supermarkets or drugstores | Surface | 3 miles | — |
| Strip or Convenience | Open to parking lot, located along transportation arteries, and centrally located to residential populations on shallow parcels | Less than 30K | Surface | — | ||
| Lifestyle | Upscale national chain specialty stores, dining or entertainment, urban-like Main Street concept, pedestrian circulation in core, vehicular circulation along perimeter | 150K to 500K | Bookstore or other large-format specialty, cinema, small department store | Structured or street |
8 to 12 miles | The Grove, Los Angeles, CA Americana at Brand, Glendale, CA |
| Power | Multiple category- dominant anchors. Big boxes such as Home Depot, Lowe’s, etc. | 250K to 600K | Home improvement; warehouse club; off price | Surface | 5 to 10 miles | — |
| Freestanding – Big Box | A freestanding category- dominant retailer such as Home Depot or Best Buy | Minimum of 40K |
Surface | |||
| Freestanding – other | Stand-alone retail structure that is not part of a complex (e.g., bank, bowling alley, Walmart) | Minimum of 40K |
Surface and/or street |
|||
| Outlet | Manufacturers’ outlet stores | 50K to 400K | Manufacturers’ outlet stores | 25 to 75 miles |