Commercial real estate has its own language, and understanding a few key terms can help property owners make better decisions when leasing, buying, selling, or managing property.

One of the most important terms is NOI, or Net Operating Income. NOI is the income a property generates after operating expenses are deducted, but before mortgage payments and income taxes. It is one of the main ways owners and buyers evaluate a property’s performance.

You may also hear the term cap rate, short for capitalization rate. This is a common way investors measure a property’s potential return based on its income and value.

Lease structure is another area where terminology matters. In a gross lease, the tenant usually pays a set rent amount and the landlord covers most operating expenses. In a net lease, the tenant pays rent plus some or all of the property’s expenses, such as taxes, insurance, and maintenance. A triple net lease (NNN) is a common example.

Owners should also be familiar with CAM, or Common Area Maintenance. These charges typically cover the cost of maintaining shared areas such as parking lots, landscaping, sidewalks, and common hallways.

It is also helpful to understand the difference between usable square footage and rentable square footage. Usable square footage is the space a tenant actually occupies, while rentable square footage includes that space plus a share of common areas.

If you are selling, refinancing, or purchasing property, you will likely encounter due diligence. This is the review period when leases, title, zoning, financial records, and property conditions are examined before a transaction moves forward.

A Letter of Intent (LOI) is often the first written step in a sale or lease negotiation. It outlines the main business terms before formal legal documents are prepared.

Finally, zoning is a term every owner should understand. Zoning regulations determine how a property can be used and what may be built on a site, which can directly affect value and future plans.

Commercial real estate does not have to feel overly complicated. Knowing these basic terms can help property owners move forward with greater confidence and make more informed decisions.

Granite Commercial Real Estate is ready to assist property owners, investors, and businesses with practical guidance and experienced support. Whether you are planning to lease, sell, buy, or evaluate your property, our team is here to help.  Contact us!  (603) 669-2770 or info@granitecre.com