About CoStar Group (CSGP)–Commercial Real Estate Intelligence Provider

Commercial Real Estate Glossary

Effective Gross Income

This is the total income generated after adding Other Income, if any, and deducting for vacancy and collection loss.

Effective Rent

The average rent paid over the term by a tenant adjusted downward for concessions paid for by the landlord (such as free rent, moving expenses, or other allowances), and upward for costs that are the responsibility of the tenant (such as operating expense pass throughs). Example: Effective Rent is the rental rate net of financial concessions such as periods of abated rent and includes escalations. Although there are technically several correct methods to calculate effective rental rates, the most common method employed is a simple straight-line method. For example, assuming no escalations, if a tenant signs a two-year lease at a nominal rental rate of $1.00 per square foot per month in year 1 and receives three months of abated rent inside the lease term (the tenant pays rent during only 21 of the 24 months), the effective rental rate is computed as follows: $1.00 x 21/24 = $0.88 If the abated rent is received outside the lease term (the tenant pays rent for all 24 months, but an additional three-month rent abatement period is added to the lease term), the effective rental rate is computed as follows: $1.00 x 24/27 = $0.89

See also: Asking Rent, Average Weighted Rent, Estimated Rent, Estimated Gross Rent, Services

Efficiency Ratio

The ratio between the rentable area and the gross building area. This indicates a percentage of the building that can be leased, which can be compared to competing properties: Example - Rentable Area 11,500 SF / Gross Building Area 13,000 SF = .8846.

Electrical Power

The flow of electrons in a conductor is called current. A basic unit of electrical current is measured in Amperes, or "Amps". Any service exceeding 400 Amps is typically a commercial service. Generally, flex buildings will have between 200 and 400 Amps. Large industrial buildings will likely have 800+ Amps; at least 480 Amps needed to run machinery, and 220 Amps needed for lights. Industrial buildings with 800 Amps or greater according to CoStar's definition have "heavy power".

Voltage is an electromotive force whose basic unit is the Volt. Typical voltage services for commercial buildings are 120/208 or 277/480. Both require a 3-Phase service as opposed to a Single-Phase service, which is used in residential properties. Phasing is based on the amount of volts required. Volts are also expressed in low to high, due to the fact that some buildings are equipped with transformers that may allow power to be stepped up or down.

Phase is the splitting of the volts. Wire is how many splits. Example: 3-Phase, 3-Wire. or 3-Phase, 4-Wire (fourth wire being the ground wire). Commercial services require a 4-Wire service to carry the greater amount of Amps and Volts requested by the end user for the type of equipment to be operated. Residential properties typically only need a 3-Wire service.

Elevators

If there is/are elevators, and how many.

Eminent Domain

The right of the government or a public utility to acquire property for public use by condemnation; the owner must be fairly compensated.

Employees at Location

The number of employees the tenant has at this location.

Empowerment Zone

An area designated by the U.S. government where financial incentives (such as corporate income tax credits) are provided for economic development purposes. The Empowerment Zone Employment Credit (EZ Wage Credit) give businesses an incentive to retain or hire individuals who both live and work in an Empowerment Zone (EZ). For example, individuals who work within the boundaries of the DC Enterprise Zone are eligible for a home address within the limits of the District of Columbia. The most common benefit for operations within designated zones are eligible businesses can claim a wage credit for "qualified wages" to eligible employees for operations within designated zones.

Enclosed mall

A shopping center entirely inside a roofed structure, so that entrance to the mall is controlled by a limited number of entrances and most stores are accessible only via interior corridors.

End Cap

The ends of a strip center, whether the configuration is linear, L-shaped, U-shaped, or other.

ENERGY STAR

ENERGY STAR is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy helping us all save money and protect the environment through energy efficient products and practices. See http://www.energystar.gov

Entertainment complex

A shopping center that features theaters, restaurants, amusements and related retail stores.

Equity Dividend Rate

(AKA Cash on Cash, Cash Flow Rate, or Spendable Rate) A technique for calculating the return on an investment by dividing the before tax cash flow by the amount of the down payment, expressed as a percentage. IRV can also be used to calculate this rate.

Escalator Clause

A clause in a contract (lease) permitting an adjustment of certain payments (rent) either up or down over the term of the lease.

Estate/Probate Sale

The sale of property that was left in an estate/trust by a deceased person. The seller is the executor or executrix of the estate/trust typically named by the owner(s) of the estate/trust when it was created. (See living trust or pour-over will) Sometimes the sale is a court-approved sale that occurs during probate when the Superior Court has jurisdiction over the administration of the estate.

Estimated Rent

The estimated amount the tenant pays in rent per square foot per year (or month). Based on the asking rent of building at the time the tenant moved into the current building or location.

Estimated Spread/SF

Spread/SF is the difference between the building's asking rent/SF and the tenant's rent/SF paid. Spread/SF = (Current Asking Rate) - (Estimated Rate paid). A positive value denotes a favorable dollar differential for the tenant. A negative value denotes an unfavorable dollar differential for the tenant.

Evaporative Cooler

Prior to modern air conditioning a type of climate conditioning used typically in residential and industrial facilities. Cool moist air was produced by saturating large screened filaments with water and drawing air through the filaments using a fan built into the structure. This type of equipment was commonly used in warm, dry climates in the southwestern United States.

Excess Land

Is a portion of the site that can be sold off as a legal separate lot. It will typically have separate access and possibly a different Highest and Best Use. Not to be confused with Surplus Land, which cannot be separated from the original site.

Exchange

Also known as a tax deferred exchange, the Internal Revenue Code Section 1031 provides that no gain or loss will be recognized (taxed) on the exchange of any type of business use or investment property for any other business use or investment property. Buyers and sellers must work with a qualified intermediary who specializes in section 1031 tax deferred exchanges to insure strict compliance with IRS regulations.

Exercise Facility

Indicates that a health club or exercise facility is located in the building or in the building park. The facility may be public or for the exclusive use of tenants.

Exercise of Option

Executing a right granted under a real estate agreement (not a lease) in which the buyer had an option to purchase the property and is now exercising that option. The date that the option price was established is important in relation to the date of sale.

Existing Building Status

Buildings that have been completed and are ready for occupancy. A certificate of occupancy has been received. Abbreviated EX.

Existing Inventory

Existing inventory refers to the total square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space that is either planned, or under construction.

Expansion

The buyer purchases the property for the purpose of expanding an adjacent or nearby property. Typically the buyer has an existing business on an adjacent or nearby property and they need more room. Rather than relocate to a larger property they buy an adjacent or nearby property to expand into. Often they will pay a premium to acquire the property, which may be considered Assemblage.

Expense Stop

A per square foot dollar amount at which the owner stops covering operating expenses and passes them on to the tenant. Almost always applies to Full Service Gross or Modified Gross office building leases.

Expiration or Expires

The date the tenant's current lease expires.

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