Healthcare Commercial Real Estate Glossary

An Ambulatory Surgical Center (ASC) is a healthcare facility where surgical procedures are performed on an outpatient basis, without requiring overnight hospital admission.

An anchor tenant is a large, well-known tenant in a commercial property whose presence drives foot traffic and attracts other smaller tenants to the same building or retail center.

As-Is condition means the property is being leased or sold in its current physical state, with the landlord or seller making no repairs, improvements, or modifications prior to occupancy.

An assignment of lease is the transfer of a tenant's full rights and obligations under an existing lease to a new tenant, typically requiring landlord approval.

Base rent is the fixed, minimum rent amount specified in a commercial lease, excluding additional charges such as CAM fees, property taxes, and insurance.

CAM (Common Area Maintenance) charges are fees paid by tenants to cover the upkeep of shared spaces in a commercial property, such as lobbies, parking lots, and landscaping.

Capitalization rate (cap rate) is a metric used to evaluate the expected return on a commercial real estate investment, calculated by dividing net operating income by the property's value.

Due diligence is the investigative process conducted before signing a commercial lease or completing a purchase, verifying property condition, financials, zoning, and legal compliance.

An exclusivity clause is a lease provision that prohibits the landlord from renting other spaces in the same property to a directly competing business or specialty.

Flex space is a type of commercial property that combines office, light industrial, warehouse, or service uses in a single adaptable unit, offering tenants operational versatility.

A gross lease is a commercial lease structure where the tenant pays a single fixed rent amount, and the landlord covers most or all operating expenses including taxes, insurance, and maintenance.

A holdover tenant is a commercial tenant who remains in possession of a leased space after the lease term has expired, without executing a new lease or receiving formal eviction.

A lease renewal option grants the tenant the contractual right to extend the lease for an additional term, typically at pre-agreed rent terms or at fair market value.

A Letter of Intent (LOI) is a non-binding document that outlines the key proposed terms of a lease or purchase agreement before a formal contract is drafted.

LOI is an abbreviation for Letter of Intent — a non-binding document that outlines the proposed terms of a commercial lease or purchase before a formal contract is executed.

A Medical Office Building (MOB) is a commercial property designed and equipped to accommodate healthcare providers, including physicians, dentists, therapists, and specialists.

Net Operating Income (NOI) is the annual income generated by a commercial property after deducting operating expenses, but before debt service and income taxes.

An NNN (Triple Net) Lease requires the tenant to pay base rent plus property taxes, building insurance, and maintenance expenses — in addition to utilities.

Operating expenses (OpEx) in commercial real estate are the ongoing costs required to operate and maintain a property, typically including taxes, insurance, utilities, and maintenance.

Rent escalation refers to the scheduled, contractual increase in base rent over the course of a lease term, typically expressed as a fixed annual percentage or tied to CPI.

Right of First Refusal (ROFR) is a lease provision giving the tenant the right to lease adjacent or additional space on the same terms offered to another prospective tenant.

A sublease is an arrangement where an existing tenant (sublessor) rents all or part of their leased space to a third party (sublessee), while remaining liable under the original lease.

A Tenant Improvement Allowance (TIA) is a sum provided by the landlord to cover the cost of customizing or renovating a commercial space to meet the tenant's specific needs.