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4 Commercial Real Estate Terms Defined

Commercial Real Estate Terms

When working with your commercial real estate professional, it can be intimidating to hear words that you aren’t familiar with. Like any business, real estate operates with its own language and terminology.

But, with a little research, you can better understand these terms so you’re ready for a productive conversation with your commercial real estate professional. To get you started, here are explanations of four commonly-used words:

1. Triple Net (also known as NNN or Net Net Net)

Triple net is a type of lease agreement in which the tenant pays taxes, insurance and maintenance associated with the property in addition to the tenant’s regular monthly rent. Although they differ in every situation, they are often more costly to the tenant. However, they allow for more control of a property, in instances of a free-standing single tenant building; for example, tenant is responsible for the maintenance, but if you want to repaint your building every 5 years instead of at the landlord’s discretion, you can.

2. CAM

CAM is an acronym that stands for Common Area Maintenance. CAM fees are charges paid by the tenant for the maintenance and upkeep of the areas that will be shared by all tenants. Parking lots, dumpster pickup, landscaping and utilities are often part of CAM fees.

3. Modified Gross

Modified gross is another type of lease in which the tenant pays base rent at the start of the lease agreement, but in subsequent years also pays a portion of the total building expenses. A modified gross lease does not pass as many expenses on to the tenant as a triple net lease, but it is still important to review the terms carefully, as charges can vary.

4. Lease clauses

Lease clauses are additional provisions included in your lease agreement to provide additional detail about specifics of the agreement. Lease clauses can include everything from landlord’s right to entry and late fees to pest control and plumbing issues.


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Image: Calvin Dellinger

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