What are the different types of rent used in retail space?
The most common rent type is Triple Net (NNN.) Triple Net is the least inclusive type of rent structure. Triple Net rent only covers a tenant’s Base Rent, and does not include any Operating Expenses, such as taxes and insurance, Common Area Maintenance (CAM), garbage, utilities or janitorial services.

Some retail units are leased on a Gross rent basis, where a tenant's pro rata share of Operating Expenses are included in the Base Rent – instead of being an additional fee, as with Triple Net rent. But in most cases, a Triple Net rent plus Operating Expenses should be equal to a Gross rent.

What is a Common Area? Who pays for it?
In a multi-tenant retail building, there are often common areas used by all tenants and their customers, such as the lobby, elevators, restrooms or parking lots. Retail tenants pay rent on all these areas. However, instead of charging Tenants an extra fee for use of Common Areas, landlords determine each tenant’s pro rata share of the Common Areas, and then add that percentage to the “rentable” square footage. This is not always the case with retail. Some retail landlords do not make tenants pay a pro rata rent for Common Areas. But tenants need to ask so they know exactly much space they’re getting for their money.

What is a Load Factor?
The Load Factor of a building is the percentage of the building that is Common Area, or used by all tenants and customers. This percentage is used to determine how much extra rent per square foot tenants should pay to cover their pro rata share of rent for the Common Areas.

What is the difference between “rentable” square footage and “usable” square footage?
Rentable square footage is the amount of square footage on which you pay rent. Useable square footage is the actual amount of square feet in your unit (although in retail, they may be the same.) Rentable square footage includes a Load Factor, which is the tenant's pro rata share of Common Area. If 10% of a retail project is Common Area (for example, elevator, hallways and restrooms) then the rentable square footage includes a 10% load factor. In this example, the “rentable” square footage of 1,650 square feet actually has a “usable” (the actual size) square footage of 1,500 square feet. The extra 150 square feet for which the tenant is paying rent is that tenant’s pro rata share of the Common Areas.

What are Operating Expenses?
Operating Expenses are the costs the Landlord incurs for property tax, building insurance and common area maintenance (CAM). Those costs are passed on to the tenants on a pro rata basis. If a store leases 25% of a project, then it will pay 25% of the project’s Operating Expenses.

What happens if I stay in my space after my lease expires?
Unlike most residential leases, commercial leases often include a “Holdover Clause” that details exactly what will happen if a tenant stays past the Lease End Date. A Holdover Clause may stipulate that the tenant will pay 200% of their Base Rent. If you think you may stay past your Lease End Date, be sure to have a binding agreement in place with your landlord. When in doubt, consult your Tenant Agent.

What is “Vanilla Shell”?
Vanilla Shell is an industry term that describes how most landlords will deliver a space to a new tenant. It typically means that the property will have textured and painted walls, drop ceiling, and lighting fixtures, but no flooring. Most landlords will not offer anything in the way of Tenant Improvements beyond this for retail tenants. Vanilla Shell descriptions may be different from one landlord to the next, so it's important for tenants to ask for a detailed description of the Vanilla Shell.

What does “TI” stand for?
TI is an industry term for “Tenant Improvements”. A Tenant Improvement is work that a landlord will do to a space for a specific tenant; e.g., install tile flooring, a private office, or changing room. Since each retail tenant will have different build out needs, and most improvements will be removed when the tenant vacates, landlords do not generally offer Tenant Improvements beyond the Vanilla Shell definition above.

What is “Percentage Rent”?
Mostly seen in shopping malls, Percentage Rent is a rent structure where the landlord takes a percentage of a tenant’s sales – sometimes gross sales, sometimes after a certain sales milestone is met. This type of rent motivates landlords to promote their properties with advertising, thus helping tenants’ sales, which directly increases the landlord’s bottom line.