Office buildings encompass a broad spectrum of commercial real estate - from Class A downtown towers to suburban campus-style office parks - and represent one of the most complex lease structures in commercial real estate due to the prevalence of base-year expense pass-throughs, tenant improvement allowances, and multi-layered rent structures. Office leases are typically written as modified gross or full-service gross leases, with the landlord responsible for building operating expenses up to a defined base year or expense stop threshold.
The standard office lease structure is the full-service gross lease or modified gross lease. The tenant pays a stated base rent that includes building operating expenses up to the base year level; any increases above the base year are passed through to the tenant as "expense escalations." Large tenants (10,000+ RSF) often negotiate NNN structures with direct operating expense responsibility. Tenant improvement allowances are the primary landlord concession, typically ranging from $50 to $150 per RSF in primary markets depending on market conditions and lease term length.
Professional services firms (law, accounting, consulting), technology companies, financial services institutions, insurance companies, government agencies, healthcare companies, and corporate headquarters operations. Office tenants typically have established credit histories and multi-year planning horizons, making them generally lower credit risk than retail tenants.
These fields are most important when abstracting a office buildings lease. Click any field to learn what it means and where to find it.
Lextract automatically checks office buildings leases against these red flag rules during extraction:
Office leases frequently contain complex base-year and expense stop provisions that require careful extraction to avoid misrepresenting the true economic rent. The rentable-to-usable square footage ratio (the "load factor") is essential to extract, as it determines the tenant's proportionate share of building common areas and directly affects rent per usable foot calculations. Parking ratios and parking rent are critical in suburban office markets where parking is a competitive differentiator. Multi-floor leases may have floor-by-floor commencement and expiration dates that require granular extraction.
Usable square footage is the actual space the tenant occupies exclusively, measured from wall to wall. Rentable square footage adds the tenant's proportionate share of building common areas (lobbies, corridors, restrooms, mechanical rooms) to the usable area. Most tenants pay rent on rentable square footage, so a building with a 20% "load factor" means a tenant paying for 10,000 RSF actually uses only 8,333 square feet of office space.
The base year is typically the first full calendar year of the lease. The landlord pays all operating expenses in that year. Starting year two, the tenant pays its proportionate share of any operating expense increases above the base year total. If base year expenses were $15 per RSF and year three expenses are $17 per RSF, the tenant pays an additional $2 per RSF in that year.
TI allowances vary significantly by market, building class, and lease term. In primary markets, Class A office TI allowances typically range from $75 to $150 per RSF for new construction and $50 to $100 per RSF for second-generation space. Secondary markets and Class B buildings offer lower allowances of $30 to $60 per RSF. The allowance is usually tied to the lease term - longer leases command higher TI allowances.
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