Main Content

Commercial Real Estate Glossary

Glossary

A

Effective

An amount after a base amount has been adjusted for concessions, allowances, and costs.

Efficiency

A measure of the capacity or effectiveness of space to produce the desired results with a minimum expenditure of time, money, energy, and materials.

Efficiency percentage

The relationship of useable area to rentable area on a given property. Also see add-on factor, load factor, and rentable-to-useable ratio.

Formula:Efficiency % = Useable square feet Rentable square feet

Employment ratios

The percentage of total employees (at the firm or industry level) that are office space users.

Environmental conditions

Features or state of the physical environment and the surroundings, factors, or forces which influence or modify that environment.

Environmental hazards

Any physical or natural condition or event which possesses a risk to humans.

Environmental impacts

The repercussions of an activity or specific land use on the physical/social environment as a consequence of emissions, waste disposal, water and power useage, etc.

Equilibrium point

The price at which the quantity supplied equals the quantity demanded.

Equity lease

A type of joint venture arrangement in which an owner enters into a contract with a user who agrees to occupy a space and pay rent as a tenant, but at the same time, receives a share of the ownership benefits such as periodic cash flows, interest and cost recovery deductions, and perhaps a share of the sales proceeds.

Equity yield rate

The return on the portion of an investment financed by equity capital.

Exchange

Under Section 1031 of the Internal Revenue Code, like-kind property used in a trade or business or held as an investment can be exchanged tax-deferred. Under a fully qualified Section 1031 exchange, real estate is traded for other like-kind property. All capital gains taxes are deferred until the newly acquired real estate is disposed of in a taxable transaction. The underlying philosophy behind the deferral of capital gains taxes is that taxation should not occur as long as the original investment remains intact in the form of (like-kind) real estate (like-kind refers to real property as such, rather than the quality or quantity of property).

Expansion

A phase of the real estate or business cycle characterized by the dramatic short-term increase in the supply of available units in a given market (due to economic growth and increasing construction activity) as a response to increasing and/or pent-up demand and rising price levels.

Skip to content