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Atlanta Blog

The Alphabet Soup of CRE Acronyms

May 2, 2016 | by Andy Roberts

As with many businesses today, the “alphabet soup” of acronyms in commercial real estate (CRE) can be daunting. 

Knowing and understanding these acronyms and their meanings can help to ensure that any decision on a property, contract, or lease negotiation will be an informed one. Below are some of the most common acronyms CRE professionals use in day-to-day business and interaction with clients.

SF = Square Footage or Square Feet

PSF = Per Square Foot

USF = Usable Square Footage—the actual space a tenant occupies to do business, including restrooms, corridors, stairways, etc.

RSF = Rentable Square Footage—the usable square feet of an office space plus a portion of the building’s common areas.

CAM = Common-Area Maintenance—property fees that pay for expenses shared by all tenants, such as landscaping.

NNN = Triple Net Rate (net-net-net—i.e., the base rate). In an NNN lease, the tenant is responsible for paying the three major expenses associated with commercial real estate ownership: property tax, insurance, and maintenance. The rent the landlord receives from the tenant is in effect net of expenses.

OPEX = Operating Expenses. OPEX are the building’s operating costs that are passed on to the tenants (e.g., HVAC, electrical, plumbing).

FS = Full Service—the price a tenant pays per square foot, which includes all expenses (NNN, OPEX, and CAM). In other words, NNN + OPEX + CAM = FS.
If a building is 100,000 SF, and the landlord or broker is quoting:

  • $20/SF/NNN
  • $1.75/SF/OPEX
  • $1.50/SF/CAM

…then the full-service lease rate for the tenant is $23.25/SF. These figures also tell us that the total OPEX for the building is $175,000, which is passed on to the tenants, and the total CAM for the building is $150,000, which is likewise passed on to the tenants.

BOV = Broker’s Opinion of Value. An estimate of a property’s current market value based an assessment of relevant market and property conditions.

FAR = Floor Area Ratio—the ratio of the total amount of usable floor area that a building has to the total area of the lot on which the building stands. The FAR is calculated by dividing the total, or gross, floor area of the building by the gross area of the lot.

GLA = Gross Leasable Area—in a building, the total amount of floor space available for rental to tenants.

NOI = Net Operating Income—all revenue from a property minus operating expenses. Operating expenses are those required to run and maintain the building and its grounds, such as insurance, property management fees, utilities, etc. NOI is a before-tax figure.

NPV = Net Present Value—the difference between the present value of cash inflows and the present value of cash outflows. NPV is used to analyze the profitability of a projected investment or project.

TI/TIA = Tenant Improvements or Tenant Improvement Allowance. If a potential tenant requires a substantial TIA, a landlord may be reluctant to lease to that tenant, as the ROI (return on investment) on the deal’s upfront costs may be weak.

This list is by no means exhaustive. As always, please feel free to reach out to us with any questions, as Cresa is happy to help our clients navigate through negotiations with industry-savvy landlords and their brokers. 

Blog contributed by Andy Roberts, Vice President with Cresa Atlanta. Andy has a passion for developing custom real estate strategies and works with companies across metro Atlanta. For questions or more information, contact Andy at 404-446-1866 or aroberts@cresa.com.