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Industrial Leasing Guide
Glossary

Glossary of industrial leasing terms

Translating the lingo.

Building consent

  • Approval from the relevant authorities for carrying out building work on the premises, usually for tenant improvements.

Cap and collar

  • A term and method used in some market review clauses. It is a mechanism that puts a “cap” or maximum amount by which the rent can be increased, or a “collar,” the maximum the rent can decrease, on the rental rate review date. As industrial leasing markets strengthen, these review methods are more difficult to negotiate.

Gross effective rent

  • The rent payable under the lease, accounting for all incentives and including all building expenses.

Gross face rent

  • The rent payable under the lease, excluding any incentives but including all building expenses.

Lessee

  • That legal entity, company or person whose name appears as the occupier or user of space on the formal lease document, binding the lessee to the terms and conditions stated therein. Also known as the tenant.

Lessor

  • The party whose name appears as lessor on the formal lease document. The lessor is the landlord or owner of the property.

Make good

  • The lessee’s obligation to return the premises to their original condition prior to expiration of the lease.

Net rent, gross rent

  • Net rent is only the cost to lease the property. Gross rent is the rental rate including occupier’s share of the operating expenses (e.g., property taxes, insurance, property management). Lease terms such as modified or industrial gross, Net-Net, Triple Net, etc. describe different proportions of operating expenses paid by the tenant.

Operating expenses

  • All secondary expenses other than rent associated with insurance, operation, upkeep and/or maintenance of the building, including air conditioning, elevator maintenance, common area cleaning, security and electricity.

Rent review

  • The method by which your rent can vary during the term of the lease. This can be a market rate review, a predetermined figure (such as 3 percent) or a rate fixed to an index such as the CPI. The review structure is agreed upon prior to lease commencement.

Resource consent

  • Approval from the local governing authority with regard to zoning or changes in the permitted use of the premises.

Right of renewal

  • The lessee’s right to renew a lease for an agreed period of time prior to expiration of the initial lease.

Statutory expenses

  • Statutory expenses include costs such as municipal rates, water and sewer rates and usage charges.

Sublease/assignment

  • The mechanism under the provisions of the lease allowing the lessee to find a suitable replacement tenant. This is subject to lessor approval and unless specifically stated, does not limit your legal responsibilities during the term of the lease.
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Industrial Leasing Guide

This step-by-step industrial leasing guide has been assembled to reflect Colliers International’s knowledge of the leasing process....
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