Glossary

Non-household population

That portion of the total population that is not considered to be part of the local residential housing market; composed of individuals living in dormitory-like facilities (including military bases) or institutional settings (such as students in residence halls).

NPV

See net present value.

Obsolescence

In reference to the inadequacy, disuse, outdated, or nonfunctionality of facilities, infrastructure, products, or production technologies due to effects of time, changing market conditions, or decay (a factor considered in depreciation to cover the decline in value of fixed assets due to the invention and adoption of new production technologies, or changing consumer demand).

Occupancy cost

The actual dollars paid out by the tenant to occupy the space. It can be expressed in either pre-tax or after-tax dollars.

Office

Low-rise - Fewer than seven stories high above ground level.

Mid-rise - Between seven and twenty-five stories above ground level

High-rise - Higher than twenty-five stories above ground level. [BOMA]

Office gap

The difference between the demand for office space and the supply of office space by property type, submarket, sector, or user classification in a given geographic market.

Office property

A commercial property type used to maintain or occupy professional or business offices. Such properties typically house management and staff operations. The term office can refer to whole buildings, floors, parts of floors, and office parks. Office space that can be used for a variety of purposes is sometimes referred to as generic office space. Office properties may be classified as Class A, B, or C. Class A properties are the most functionally modern. Properties Classed B and C in the same market typically command lower rents because they are older and in need of modernization. They may not be as efficient or desirable as Class A properties because their design or condition causes functional problems.

Operating expense stop

A negotiable amount at which the owner’s contribution to operating expenses stops. It also can be stated as the amount above which the tenant is responsible for its pro rata share of operating expenses.

Operating expenses

Cash outlays necessary to operate and maintain a property. Examples of operating expenses include real estate taxes, property insurance, property management and maintenance expenses, utilities, and legal or accounting expenses. Operating expenses do not include capital expenditures, debt service, or cost recovery.

Opportunity cost

The cost of selecting one alternative is the benefit foregone from the next best alternative. Also see discount rate.

Original basis

The total amount paid for a property, including equity capital and the amount of debt incurred.

Out-migration

The process by which a given geographic area expels or loses individuals/households to locations outside that area (an outflux of individuals/households from a given area).