The average Common Area Factor in medical office buildings runs between 15 – 25%. Other names for this are R/U Factor or Load Factor. [/toggle] [toggle title=”CPI (Consumer Price Index)”]An index published by the U.S. Department of Labor’s Bureau of Labor Statistics used to measure cost of living increases. Two types of the bureau’s indexes are frequently used in leases: the CPI-W (Urban Wage Earners and Clerical Workers Index), and the CPI-U (All Urban Consumers Index). [/toggle] [toggle title=”Expense Stop”]A fixed dollar amount of operating expenses related to the tenant’s leased premises that is to be paid by the landlord. The tenant assumes the obligation to pay his or her share of the operating expenses in excess of that amount. [/toggle] [toggle title=”Gross Lease”]A lease in which the tenant’s only monetary obligation is the payment of a fixed rent. (Seldom used in medical office building leases.) [/toggle] [toggle title=”Net Lease”]Generally refers to a lease in which the tenant pays not only a fixed rent but also other expenses including operating costs, taxes and insurance. Also may refer to a particular type of net lease that includes only expenses for taxes and utilities, in contrast to other specific types of net leases, such as a Net-net lease, which adds pass-throughs for repair and maintenance costs to the tenant’s obligation, or a triple-net lease (NNN), which further adds capital improvement costs. (Generally used for medical office building leases.) [/toggle] [toggle title=”Operating Expenses”]The costs and expenses incurred by a landlord in operating and maintaining its building. Operating Expenses are always defined in the lease. Typical operating expenses include costs for janitorial, utilities, all maintenance and repair, elevator, security, property taxes, ground lease, insurance, management fees, snow removal and trash removal. Sometimes defined as Common Area Maintenance (CAM) charges or Variable Operating Expenses (VOE). [/toggle] [toggle title=”Tenant’s Usable Square Feet”]The actual space (footprint) occupied by a tenant. [/toggle] [toggle title=”Tenant’s Rentable Square Feet”]The tenant’s usable square feet and its proportionate share of the floor and building common area (see definition for Common Area Factor). [/toggle] [toggle title=”Use Clause”]The typical terms in a lease that defines and restricts the kinds of operations that may be undertaken on the leases premises. [/toggle]
[toggle title=”Additional Rent”]A lease term that obligates a tenant to pay certain expenses in addition to its periodic rent. Additional rent may include late payment fees, collection costs, pass-through of operating expenses in a net lease, costs incurred by the landlord to cure any tenant defaults, and other miscellaneous costs, expenses and reimbursements. [/toggle]
[toggle title=”Base Year”]A term used to calculate a base amount of operating expenses for a long term lease. Generally, the tenant would be expected to pay its proportionate share of any amount of increased expenses over the base. The base year is usually the calendar year in which the lease is signed.[/toggle]
[toggle title=”Common Area Factor”]Refers to areas that are common to all the tenants of the building, such as corridors, elevator lobbies, restrooms, janitors closets, telecommunications and utility rooms, building lobbies and fully enclosed mechanical rooms. The Common Area Factor is typically defined as a percentage.