Understanding the Terms That Shape Every Lease in Alabama

Commercial real estate has its own language, and if you don’t speak it, it’s easy to miss what a lease is really saying. We put together this glossary to help you make sense of the terms that come up most often when renting, buying, or managing space. It covers lease types, financial terms, and property features in clear, practical language that makes complex details simple.

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10 Terms Every Business Owner Should Know

Below you’ll find a quick look at ten of the most common terms every business owner should know. You can also download the full glossary with all 57 definitions for quick reference anytime, so you never feel lost in a lease again.

Triple Net Lease (NNN)

A lease where the tenant pays a lower base rent plus most or all property expenses, including taxes, insurance, and maintenance. Common in retail and industrial spaces, it shifts more responsibility to the tenant but often comes with greater control over the property.

Gross Lease

Your rent includes nearly everything: taxes, maintenance, insurance, and sometimes utilities. This “all-in” approach simplifies budgeting and is common in office settings.

Base Rent

The starting rent you pay before adding in any additional costs like utilities, maintenance, or shared expenses. It’s the foundation for your total lease payment.

Common Area Maintenance (CAM)

Shared fees that cover upkeep of common areas like lobbies, hallways, parking lots, and landscaping. CAM costs are divided among tenants and help keep the property looking sharp.

Tenant Improvements (TI)

Custom changes made to a space to fit your business needs, such as new flooring, walls, or lighting. Who pays depends on the lease; sometimes the landlord, sometimes the tenant, sometimes both.

Letter of Intent (LOI)

A short document outlining key terms before a full lease is signed. It’s not legally binding, but it helps both sides agree on the basics early in the process.

Build-Out (or Fit-Out)

The construction or finishing work needed to make a raw space usable. Think flooring, paint, lighting, or office walls; everything that turns a shell into a working environment.

Anchor Tenant

The major tenant that draws customers and lends credibility to a commercial property, like a grocery store in a shopping center. Smaller tenants often benefit from the traffic they bring.

Escalation Clause

A section in the lease that allows rent to increase at specific times during the term, often tied to inflation or operating costs. It’s worth understanding how and when those increases apply.

Zoning

Local government regulations determine whether a property can be used for retail, office, industrial, or mixed-use. Zoning ensures properties are developed in line with community planning.

Want the Full Glossary?

These ten terms are just a starting point. The full guide includes 57 essential definitions that help you navigate leases, understand property details, and communicate clearly with landlords, brokers, and lenders. It’s written in plain language, designed to make even the trickiest terms easy to understand.

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Keep Learning About Commercial Leasing

Once you know the language, you can start putting it to work. Our other resources take you beyond the basics, showing you how to read leases, plan your move-in, and secure the right space without the chaos. Each one is built from real experience and written to help business owners make smart, simple moves in commercial real estate.

Read Navigating Commercial Leases View the Tenant Checklist

Ready to Put What You’ve Learned to Work?

Understanding the language is just the first step. Right Space Commercial is here to help you apply it—finding the right property, negotiating the right terms, and getting your business set up for success. Let’s talk about what you’re looking for and start building your next move, the right way.