The office real estate sector abounds in many specialist terms used by the participants of the office market when renting a new office space or renegotiating the extension of a contract in the existing office.
AXI IMMO advisors from the office department have prepared this short glossary of terms related to renting office space with tenants in mind, to clarify sometimes typical industry terms that are not used on a daily basis but will be helpful when renting office space.
Absorption is the net change in the space occupied by tenants, taking into account the change in the amount of vacant space and the new supply of warehouse and production space in the analyzed period.
Access control is an IT system that allows regulated access to a given office space, limited only to authorized users/employees.
Add-on factor i.e. the ratio of common areas is a ratio for a given office building expressed as a percentage. Add-on factor includes horizontal common areas shared by individual tenants, such as: lobby, reception, elevator halls, shared toilets, etc. The larger the common spaces, the higher the tenant’s share of costs.
additional services that are provided in the vicinity of the office building.
An assessor is a person who submits an office building to the certification process in the BREEAM, LEED and WELL systems. Most often it is either an external expert or a specialized company that examines the energy, ecological and environmental performance of buildings.
The audit is the preparation of a full analysis indicating the advantages and disadvantages of the proposed office space.
The base rent is the rent rate negotiated and specified in the lease agreement per square meter of rented office space for a month or a year, usually quoted in euros in the case of A-class office buildings.
Building Management System (BMS) is an intelligent building management system. An integrated IT system that collects data and manages all installations, to which sensors installed in the building are connected. The BMS system detects and informs about critical events and locates them. The system allows you to maximize the functionality of the building, increase the comfort of tenants, control and minimize operating and modernization costs, and ensure safety and security.
Business Process Outsourcing (BPO) is one of the terms related to outsourcing, in which international companies consciously give up part of their business operations and transfer these services to specialized external companies.
Early termination option. A company that decides to use the break option is aware of the financial penalties resulting from breaking the existing contract.
BRE Environmental Assessment Metod is a certificate that assesses the efficiency of the building in terms of environmental performance in many areas during its construction and the entire building. The areas of assessment in the BREEAM certificate are:
- governance (general management policy, site management and procedural issues),
- energy (consumption of light energy and CO2),
- health and well-being (internal and external factors affecting them, such as the amount of daylight in rooms, temperature and air quality, acoustics),
- environmental pollution (water and air),
- transport (CO2 emissions, location of the office building and proximity to public transport stops, use of facilities for cyclists),
- land use (development of green areas),
- ecology (biodiversity of flora and fauna),
- materials (use of materials obtained from legal and local sources, with ecological certificates),
- water (application of water saving solutions).
Building standard (Class A, B, C)
The term A, B or C class building standard is primarily used to assess the quality and location of an office building. The standard of the building changes over the years, the building ages, which means that its classification changes.
- A-Class office buildings are the most modern buildings with a high standard of finish in a valued location, usually in the city center. Class A buildings are characterized by a very good location and access to public transport and easy access by car. In addition to the location, the building should have a modern design, height of office rooms min. 2.7 m, air conditioning, suspended ceilings and raised floors (spacer floors), high-speed elevators as well as a BMS system. Modern office buildings often receive certificates that clearly define the high standards met, e.g. energy efficiency.
- B-Class office buildings are spaces that include several years old office buildings after revitalization or modernization. These also include those located outside the city center. Class B office space often differs slightly in the quality of finish or modern technologies used in the building.
- C-Class office space does not have modern solutions. They are often located in buildings that are several years old or even several decades old, where modern technological solutions cannot be used without incurring high costs.
Closed Circuit Television (CCTV) i.e. a monitoring system that allows you to track the movement of people and events in a given office building.
Central Business District
Central Business District (CBD) – the term refers to the Central Business District, which brings together a large number of international corporations or large companies. In Warsaw, it is assumed that it is part of Śródmieście in the quarter of streets – Elektoralna, Nowogrodzka, Marszałkowska, and Al. John Paul II.
Concierge services support tenants in their daily tasks, e.g. ordering flowers, and picking up guests from the airport.
Cowork is a type of serviced office that is usually rented for a shorter period. Tenants most often use coworking spaces as part of project teams or while waiting for a new office. The offer of coworking offices is addressed to all companies from micro, small, medium to large corporations.
Early termination option
The option of early termination of the contract are provisions of the lease agreement, which, under strictly defined conditions related to deadlines and criteria, allow you to exit the contract before the full time included in the lease agreement. For example, a lease agreement for office space for 5 years allows it to be terminated after 3 years.
The effective rent is the base rent reduced by rent exemptions and other incentives offered by the owner of the office building, which are converted into the entire lease period.
Fit-out is all arrangement activities that result in offices that fully meet the tenant’s expectations in terms of functionality, architectural design, finishing and ergonomics.
Gross area is the net office space increased by common elements on the rented floor, e.g. they can be toilets, common corridors, most often for smaller leases plus the common area ratio for the whole building.
Hot desking is a way of organizing office work, where desks are not assigned to a specific employee, but function in a rotation system and require a reservation of space. Such an office space organization system enables its optimization. Hot desking is increasingly used because not every type of work requires constant presence in the office.
The hot parking rotational car park system is supervised by a dedicated application or Office manager. People who park their cars in the parking lot of the office building report that they will not use the parking space on a given day. Thanks to this, they allow other cars to park in the same parking space.
HVAC is an English abbreviation for building/area installation system. The system may include:
- heating installation (heating),
- ventilation (ventilation),
Installations are designed and assembled in accordance with the floor plan, where there can be a division into office zones, open space or conference rooms.
ITO / IT outsourcing
Information technology outsourcing is a type of activity related to outsourcing, in which external entities are commissioned to run integrated IT processes, e.g. help-desk.
The owner of the property. Most often it is represented by the landlord representation department (LL Rep) in the form of a dedicated asset manager or developer of a given property.
Leadership in Energy and Environmental Design – LEED certificate – it is the second, after BREEAM certification, the most popular method of environmental and ecological assessment of real estate. The rating is on a four-point scale from basic, through silver and gold, to the most desired by building owners, i.e. platinum. A detailed analysis is carried out on how the building fits into the surrounding space, what materials were used in its construction, whether and how water is managed, and to what extent natural sunlight can be used. Equally important are aspects related to the quality of the internal environment, location, transport, as well as what activities are carried out to modernize and improve the quality of the building itself.
The lessor is an entity that owns and offers office space for rent under certain conditions.
Letter of intention
LOI- Letter of Intention, Head of terms. A letter of intention is a type of agreement between the landlord and the tenant, which provides a kind of space reservation for a specific tenant, where there is, m.in a negotiated rental rate.
Minimum module for lease
The smallest office space offered by the landlord on a given floor and leased. The size of the minimum module for lease depends on the investment plan and the layout of the space on a given floor.
Net office space
Net office space area is the size of office space constituting only usable space without common parts for many tenants.
New supply is the number of new projects commissioned in a given period.
NPV is a statement of costs and showing their flows, taking into account indexation throughout the length of the lease agreement in individual comparable buildings at a given assumed lease area.
Open space is the type of office space where there are no partition walls and desks are set up in one larger space. Barriers are only furniture and other elements that improve the soundproofing of workstations. Open space is a popular form of office space combined with the use of new forms such as shared workspace, quiet work and conference rooms.
Operating costs incurred while using the space. Operating costs in the office include:
- utilities (electricity and gas, water),
- Technical Support,
- real estate tax and perpetual usufruct fee,
- costs of removing all kinds of failures,
- deratization services,
- disinfection and disinfestation services,
- materials and spare parts,
- snow removal costs.
A type of modern business services that are designed to support the parent company beyond the borders of its own country. Most often, outsourcing is outsourcing part or all of the services provided to external entities. This group includes business process outsourcing (BPO), shared services center (SSC), information technology outsourcing (ITO) and research & development (R&D). Companies decide to outsource services m.in due to cost reduction.
The number of square meters of gross building area per parking space in a given building.
Parking system and number plate recognition system
These are IT systems that enable faster access to parking spaces. They also make it possible to reduce the formation of traffic jams in front of buildings during peak hours.
Pre-let is a pre-lease agreement signed by the tenant for the target office space in another building, while the agreement with the previous landlord is still in force.
The property manager is a company or designated person responsible for the proper, current functioning of the office building. The property manager, on behalf of the owner, is responsible for ongoing repairs, security, cleaning of common areas, settlement of fees, and tenants’ rents.
Relaxation zone (chillout)
The relaxation zone is part of the office space intended for relaxation, rest and gathering strength for further work. The chillout space should stimulate the senses and help to break away from office reality. The relaxation zone should be cozy and facilitate relaxation. Some relaxation spaces allow you to separate yourself from your surroundings.
Relocation is a change of the existing office space to another target one.
Rent-free periods / Rent exemptions are periodic exemptions from rent payments, most often presented as months of exemption, described as a percentage of the rent postponed per month. For example, 3 full months of rent relief, payable as 6 months at 50% of the base rent from the first month of the lease (rental holiday).
Rental offer (proposal)
A lease offer is an official document prepared by the landlord with a proposal of rent and other business and technical assumptions offered by the landlord to the tenant for a given office space.
Research & development (R&D)
R&D is one of the classes of processes outsourced to outsourcing companies, in which specialized companies conduct activities related to research and development.
The service charge is usually paid in PLN per square meter of rented space. The service charge is a percentage of the costs that the tenant pays for the operation of the building. The operating fee includes property tax, building insurance, costs of security, cleaning or administration of the building.
Shared Services Center (SSC)
SSC Shared Services Center was established for the internal needs of a group of companies or cooperating organizations.
In other words, a short list of buildings selected by the tenant as those that best meet his criteria. Further negotiations leading to the selection of the final office will take place with the owners of the buildings on the shortlist. Most often, there are 2 to 4 office buildings on the shortlist.
Space arrangement budget
The budget proposed by the landlord for the tenant as a rate per square meter expressed in euros or zlotys, or the total amount, for the arrangement of potentially leased office space.
An area plan prepared by the landlord taking into account the criteria of the tenant. The space plan concerns the number of workstations and their use (open space, offices, mixed layout), the number of conference rooms, kitchens, rest areas, quiet work areas, server rooms or cabinets and storage rooms.
Spacer floors (raised floors)
Raised floors, under which it is possible to lay electrical, ventilation or energy installations.
Stock is the number of square meters of office space, most often given as the total stock of a given market.
Telecommunication cabling system available on office space. Structured cabling allows you to create computer networks, attach telephones and other devices.
Suspended ceilings are ceiling tiles installed in the office space, thanks to which air-conditioning and fire protection lines are hidden. Thanks to modern materials in suspended ceilings, the office space can be soundproofed and the room acoustics improved. Thanks to the boards with a high light reflectance coefficient, the office space is additionally illuminated.
A company that is looking for office space for lease and leases it from the landlord most often for the company’s headquarters or branches.
Well Building Standard WELL Certificate
Well Building Standard WELL is the latest way to certify buildings in terms of their impact on the environment and ecology. Depending on the purpose of the property, a different set of criteria is assessed. However, the two key parameters in this certification are the health and well-being of users. To determine them, the composition of air and water, the percentage of incoming light, room acoustics, security in the building and its surroundings, as well as the type and scope of services for users located in the vicinity of the property are analysed.V
A vacancy is unrented office space, available to tenants for rent in relation to the total office space in a given market/location.
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