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In reference to the inadequacy, disuse, outdated, or nonfunctionality of facilities, infrastructure, products, or production technologies due to effects of time, changing market conditions, or decay (a factor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).
Outlet center
A retail property type usually located in rural or occasionally in tourist locations, outlet centers consist mostly of manufacturers’ outlet stores selling their own brands at a discount. These centers are typically not anchored. A strip configuration is most common, although some are enclosed malls, and others can be arranged in a village cluster.
Overage rent
See percentage rent.
Oversupply
In reference to commercial real estate, oversupply is a stock or supply of a given commercial property type that is greater than that which can be cleared under prevailing prices levels and market conditions (for example, excess supply). Also, a phase of the real estate market cycle denoting that period of time in which commercial real estate markets become saturated with units due to overbuilding.
Owners moving expense
See moving allowance.
Owning
A means of obtaining the full economic use of a property for an unspecified period by obtaining an ownership interest.