UNDERSTAND THE LANGUAGE OF A COMMERCIAL VALUER - 3

M
Make Good
The obligation of a lessee at the end of their occupation to ensure that premises are returned to the same condition as at the commencement of the lease; for example, painting and restoring partitions.

Market Rent
The estimated amount for which a property, or space within a property, should lease on the date of valuation between a willing lessor and a willing lessee on appropriate terms in an arm’s-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. Whenever Market Rent is provided, the “appropriate lease terms” which it reflects should also be stated.

N
Naming Rights
The exclusive right given to the lessee to name the building, in association with their occupancy of the premises.

National Australian Built Environment Rating System (NABERS)
The National Australian Built Environment Rating System is a multiple index performance-based rating tool that measures an existing building's overall environmental performance during operation. The indicies covered by NABERS are being launched sequentially. The energy component of NABERS is the ABGR rating. The tool was developed by the Federal Department of Environment and Heritage (DEH) and is being managed, operated and further developed by the NSW Department of Energy and Utilities (DEUS) under a commercial agreement.

Net Absorption
Measures the change in volume of occupied space between two survey periods and is used to determine demand. Net absorption is occupied stock at the end of the survey period, less occupied stock at beginning of the period.

Net Lettable Area (NLA)
Used to calculate tenancy areas for office tenants.13 Refer to Method of Measurement published by the Property Council of Australia.

Net Rent
In a net lease the owner recovers outgoings from the tenant on a pro-rata basis (where applicable)

O
Occupancy Cost
The total of costs incurred by a tenant to provide space for operations. It includes net rent, operating costs (outgoings), capital costs, taxes, insurance and depreciation allowances.

Outgoings
The expenses incurred in generating income. In real estate, these expenses include but are not necessarily limited to property rates, insurance, repairs and maintenance and management fees. Operating expenses when subtracted from gross income equal net operating income.

P
Passing Rent
The rent specified by a given lease agreement; although a given contract rent may equate to the Market Rent, in practice they may differ substantially, particularly for older leases with fixed rental terms.

Peppercorn Rent
A term used where it is desired to reserve only a nominal rent for any period. A minimal rent which is below market values.

Plant And Equipment
Assets intended for use on a continuing basis in the activities of an entity including specialised, non-permanent buildings; machinery (individual machines or collections of machines, trade fixtures, and leasehold improvements), and other categories of assets, suitably identified. Tangible assets that: (a) are held by an entity for use in the production or supply of goods or services, for rental to others, or for administrative purposes; and (b) are expected to be used over a period of time.

Profit Rent (Over rent)
The amount by which the passing rent is greater than the market rent.

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