Basic Retail Vocabulary terms for Tenants to Understand
Net (NNN) Lease:
Most common type of retail lease and is defined as a lease in which the tenant agrees to pay rent and it’s proportionate share of the center’s ongoing expenses, such as taxes, insurance and property repairs and common area maintenance (CAM).
Modified Gross Lease or Full Service Lease:
In a Gross Lease, the rent is all-inclusive. The Landlord pays all or most of the expenses associated with the property, including taxes, insurance and maintenance out of the rents received from Tenants. In a Full Service Lease, utilities and janitorial services are also included in the within the one rent payment.
A clause inserted into a shopping center lease that restricts the category of merchandise or items that a retailer or restaurant is allowed to sell. Additionally the use clause outlines the exact type of merchandise sold or business to be conducted within the premises.
Base Rent or sometimes termed Minimum Rent:
Basic rent a tenant pays; usually expressed as a price per square foot and is the specific dollar amount paid by a tenant for the amount of square footage leased. The basic rent that a tenant will pay the landlord each year in twelve equal, consecutive installments, computed based on an amount of rent per square foot: also called base rent.
Common Area Maintenance (CAM):
The additional amount of money charged to tenants for their shares of maintaining a center’s common area separate from the base rent. The charge that a tenant pays for shared services and facilities such as electricity, security, and maintenance of parking lots. The area maintained in common by all tenants, such as parking lots and common passages. The area is often defined in the lease and may or may not include all physical areas or be paid for by all tenants. Items charged to common-area-maintenance may include cleaning services, parking lot sweeping and maintenance, snow removal, security, and upkeep.
Term of Lease:
The length of the lease term, subject to change during each option period.