Commercial Practice Exam Questions Flashcards
(159 cards)
1
Q
Areas distinguish themselves from surrounding areas through which of the following boundaries
A
geographic and economic boundaries
2
Q
When requesting a time extension, what should the landlord should specify
A
rental commencement date and the number of days the condition will be extended.
3
Q
What’s a common goal of landlords?
A
A. Ensuring tenant satisfaction to encourage long term leases.
4
Q
Breakpoint in rent is calculated by
A
Example:
Annual Base Rent: $100,000
Percentage Rent Rate: 5% (expressed as 0.05)
Breakpoint = $100,000 ÷ 0.05 = $2,000,000
5
Q
Gross Up factor is calculated by
A
Gross Up Factor = Gross Up Factor = Standard Occupancy % / Actual Occupancy %
Gross Up Factor Calculation
The gross up factor adjusts operating expenses to reflect a standard occupancy level (typically 95% or 100%). Here’s the math for this scenario:
Given:
Rentable Area (Total Building): 100,000 sq ft
Usable Area (Occupied Space): 85,000 sq ft
Steps:Calculate Actual Occupancy %:Actual Occupancy %
=Usable AreaRentable Area
=85,000/100,000=
85
%
Actual Occupancy %=
Rentable Area
Usable Area
= 100,000
85,000
=85%
Apply Gross Up Formula (Assuming 100% Standard Occupancy):
Gross Up Factor
=Standard Occupancy %
Actual Occupancy %=100%85%
≈1.176
Gross Up Factor=
Actual Occupancy %
Standard Occupancy %
= 85%100%
≈1.176 (or 1.18 rounded)
6
Q
Offer to lease should include type of _____________ used
A
measurement
7
Q
Gross building area
A
Total ross floor area, based on external measuremnts, excluding enclosed areas..
8
Q
Percentage Rent
A
Tenant only pays on income made above baseline. If sales dip below baseline, percentage rent is not paid.
9
Q
How is breakpoint calculated
A
Average rent / rent rate.
Example
$100 000 rent/10% rent rate = $1000000 in sales.
10
Q
How is percentage rent calculated?
A
projected gross income X percentage rent = annual rent
11
Q
Name 4 rent concessions
A
rent free period
early occupancy period
expense stop
escalations
12
Q
How is additional rent calculated?
A
Tenant rentable area / Rentable area of the building\example 150 meters/ 7100 sq meters=2.11 %
13
Q
Single tenant configuration= distance from out wall to building core/ central core.
Multi-tenant configuration, distance from outer wall to hallway surrounding the central core and other tenant spaces.
A
Leasing depth
14
Q
Total floor area/land
A
floor area ratio
15
Q
clear height
A
unobstructed distance from floor to ceiling.
16
Q
Combination of weight of equipment furnishings, people,
A
floor load
17
Q
Dead load
A
weight of structure itself.
18
Q
- Determine effective rental income (income -vacancy and credit losses)
- Calculate gross operating income (+ additional income)
3.determine NOI - Cap income into value
- cap rate into value.
A
Income Approach
19
Q
Adjusted NOI
A
Adjustments used by appraiser (or yourself) in income approach.
Adjusted Income =
Potential Gross Income –
Vacancy & Collection Losses ± Other Income Adjustments
20
Q
clear span
A
floor space- clear ofinterference.
21
Q
Net Lease
A
Base lease plus tenatn pays expenses.
22
Q
- perform macroeconomic landscape review
- review market inventory and new supply analysis (loopnet)
- Demand analysis (absorption)
-Vacancy and rent analysis
A
What is a CMA
23
Q
- Financial
2.MArket
3.Business
4.Building
A
What are the four type of commercial investment risk ?
24
Q
Cash flow after taxes-initial investment = result
result/ initial investment =% of Return
A
ROI
25
Annuity Due
Amortized at the beginning of a time period.
26
How do you convert a nominal rate to an effective rate?
1. Enter known rate
2. Enter payments/year
3. Solve for unknown
27
How do you account for difference in compounding periods on the calculator?
1. Enter nominal rate
2.Enter compounding periods per year [P/YR]
3. Solve for annual effective rate [EFF%]
4.Enter number of payment periods [P/YR]
5.Solve for equivalent nominal percentage rate for monthly compounding
28
How do you calculate NPV or IRR?
_ [P/Y]
_0CFj (initial investment make sure it's negative)
1 CFJ
_
_
_
_
5CfJ
_ I/Year
NPV
If you are solving for IRR
Just press IRR instead of I/Year. Everything else is the same.
29
When do you Solve for IRR
When comparing two similar investments. Which one gives you the best rate of return.
When you want to know the average return of each dollar for each year invested.
Taking into account, the initial investment, all csah flows and ultimate sales proceeds.
30
How Do you calculate the value or NPV of an investment when at the time of sale?
N (time period)
O Down payment
1. CFBT
2. CFBT
3. CFBT
4. CFBT
5.CFBT + Net Sales Proceeds
31
How do you deal with a client that asks you to withhold a disclosure
(j) refuse to provide further services to or on behalf of a client who
instructs him to withhold a disclosure required by the Act,
Regulations, Rules, Bylaws, or any other laws; and
(k) comply with the Education Code of Conduct for Learners.
32
Why is a market inventory analysis important when evaluating industrial properties?
It helps determine the total supply of similar spaces, identify market saturation or shortages, and forecast rents and vacancy trends.
33
What is a "CAM Cost" in a commercial lease?
Common Area Maintenance cost-an additional charge paid by tenants to cover shared maintenance and operating expenses (e.g., landscaping, snow removal, common utilities).
34
What does "Net Absorption" mean in market analysis?
The net change in occupied space within a property market over a specific time period, indicating whether demand is growing or shrinking.
35
How does municipal zoning affect industrial property value?
Zoning controls permissible uses, building types, setbacks, and density, directly impacting what activities can occur and future redevelopment potential.
36
Why is proximity to transportation infrastructure important for industrial properties?
Because access to highways, rail, ports, or airports reduces logistics costs and increases attractiveness to distribution and manufacturing tenants.
37
What does "General Use Industrial" refer to?
Industrial buildings that can accommodate a wide range of light manufacturing, storage, or distribution activities with flexible space layouts.
38
What characterizes a Heavy Industrial property?
Properties designed for large-scale manufacturing, processing, or storage involving significant machinery, often with high power needs and sometimes environmental risk (e.g., steel mills, refineries).
39
What is a Special Use Industrial property?
Facilities built for a specific industrial purpose, such as food processing plants, data centers, or research facilities, often with specialized equipment or layouts.
40
Define "Single Use Industrial" property.
Properties custom-designed/built for a single company or unique process, making them less adaptable for other uses (e.g., a brewery or automotive plant).
41
What is a Light Industrial property?
A type of industrial building used for activities like assembly, repair, research laboratories, warehouse distributions, and tech/electronics manufacturing, typically with minimal environmental impact.
42
What are the main types of retail properties?
Power centres, regional malls, community malls, neighbourhood malls, lifestyle centres, outlet malls, main street retail, freestanding. (Create additional cards- remember property features is how I'll be able to sell each property)
43
What are the main type of recreational properties
Create additional cards.(property features is how I will be able to sell each property)
44
What are key drivers of retail demand?
Demographics, income, consumer spending patterns, anchor tenants, local competition, visibility, access.
45
What analysis should be conducted to assess retail market supply?
A: Inventory of competing centres, tenant mix, anchor tenants, vacancy rates, new construction pipeline.
46
Which important in a retail lease analysis?
A: Base rent, percentage rent, lease term, CAM charges, escalation clauses.
47
Q: What external factors should be researched for retail properties?
A: Area demographics, retail trade area mapping, traffic counts, proximity to competitors, municipal zoning and planned developments.
48
Q: What research methods are useful to determine external factors for retail properties?
Demographic analysis using local census data
Consumer spending reports
Trade area mapping via GIS
Field surveys and site visits
Traffic and accessibility studies
Review of municipal planning documents
49
What are common industrial property types?
General use, special use, single use; light industrial (e.g. tech, food prep) and heavy industrial (e.g. manufacturing, distribution).
50
What features define an industrial building?
Bay depth, ceiling height, loading docks, floor load, cranes, HVAC, site access.
51
What drives industrial demand?
Local industry composition, transportation infrastructure, access to labor and suppliers.
52
Q: How is industrial supply analyzed?
A: Inventory of existing/pipeline buildings, site requirements, zoning, proximity to major highways/rail.
53
Q: What external factors affect industrial markets?
A: Proximity to transportation corridors, local employment base, municipal zoning, environmental regulations.
54
Q: What methods are used to research industrial external factors?
Location Quotient (LQ) for industry base
Industrial market and economic development reports
Review of transportation and logistics infrastructure
Environmental site assessments
Municipal land use planning/zoning reviews
55
Q: What are primary demand drivers for multi-residential?
A: Population growth, employment, immigration, affordability.
56
Q: What are important supply-side factors?
A: Stock inventory, new construction, vacancy rates, rent incentives.
57
Q: What external market factors impact multi-residential?
A: Neighborhood amenities, school quality, employment centers, transit access, regional rent control laws.
58
Q: How can you research external factors for multi-residential market analysis?
Census and municipal demographic data
Community and neighborhood profile reports
Rental market surveys and reports (e.g., CMHC)
Walk Score/transit score tools
Review of local rental regulations and development pipeline
59
Q: What are standard office building classes?
A: Class A (prestige), Class B (functional), Class C (value).
60
Q: What influences office space demand?
A: Corporate/institutional employment, government/tech sectors, business expansion and contraction
61
Q: What market indicators are vital for office analysis?
A: Vacancy rates, net/gross rental rates, tenant inducements, absorption rates, lease rollover.
62
Q: What external factors should be assessed for office properties?
A: Proximity to transportation and amenities, business climate, government policy, planned competing developments.
63
Q: What research strategies are key for determining office property external factors?
Employment and business growth trend analysis
Office market reports (vacancy, rents, absorption)
Stakeholder interviews (brokers, tenants)
Mapping planned office projects
Reviewing municipal economic development and zoning plans
64
Policy and Planning Review
Study municipal land use, development plans, and upcoming infrastructure projects.
65
Site Visits and Field Surveys
Assess visibility, access, neighborhood context.
66
GIS Mapping and Trade Area Analysis
Delineate competitive boundaries and access/location factors
67
Market Reports & Surveys
Collect data from industry sources (brokerages, CMHC, RECA, economic development offices).
68
Demographic and Economic Data Analysis
Use census, municipal, and business databases.
69
Define the steps in a listing proposal (create cards for each one)
objective and scope of work
site, building, and market analysis
marketing plan development
property valuation
listing process
marketing plan implimenation (more cards needed)
negotiations and drafting the contract
closing the transaction
70
10.FreeStanding Buildings
-(Range Road) Freestanding buildings can be
found in downtown areas, arterial roads, and near shopping centres. They
are often favoured by businesses with unique marketing services and
established patronage including gas/convenience stores, banks, and
restaurants. Other common freestanding retailers include furniture stores,
drug stores, and home products/decor merchandisers.
71
Main Street Retail.
- (124 Street )Main street commercial projects seek a
blend of old and new by creating a tenant mix of boutique stores,
convenience stores, travel agencies, coffee shops, farmer and artisan
markets, and other businesses flanked by older shops, offices, service
businesses, and restaurants
72
Outlet Malls
- (South Edmonton Common) To reduce overall land cost,
outlet malls are usually located outside of large urban areas but close to
major highways. Outlet tenant mix varies based on the target market but
can include manufacturer outlets, dominant category stores, and specialty
retail operations. Merchandise can range from the end of season sell-offs
to discontinued lines, to last year’s products.
73
Downtown Shopping Malls-
pedestrian malls, which are streets or
sections of streets lined with shops, restaurants, services, entertainment
venues, etc. and blocked off from traffic.For example, Stephen Avenue
74
Lifestyle Center
The lifestyle centre is a retailing
newcomer providing an open-air, village-like shopping experience for
upscale consumers. The lifestyle centre is differentiated from the
traditional enclosed mall in many ways. Vancouver
75
Neighbourhood Shopping Malls or Centers. (
Wolf Willow) The
neighbourhood shopping mall or centre is the smallest class of retail
centre. These setups are generally oriented to convenience shopping and
typically include only six to eight stores focused on day-to-day necessities. Examples of retailers commonly located in neighbourhood shopping malls
and centres include convenience stores, takeout and fast food
restaurants, and dry cleaners.
76
Commmunity Shopping Malls or Centers (Ellerslie)
- typically has two anchor tenants, which could include a discount or
department store, a big-box superstore, a supermarket, and a home
improvement store. They are commonly arranged as either a U-shape or an
L-shape.
- usually located on main arterial roads or at town centres in newly
developed communities. The market trading area is normally less
than 10 kilometres.
- Include outparcels, also referred to as retail pads. An outparcel is a
freestanding lot located in front of a shopping mall or centre.
77
Regional Shopping Malls-
(West Edmonton Mall) A regional shopping
mall offers a wide selection of merchandise to serve a large, regional
target market. These malls are typically enclosed and anchored with two
or more large merchandisers, such as a big-box superstore or
supermarket, that will draw a large number of shoppers to the mall. In a
shopping mall or centre configuration, these large merchandisers are
referred to as anchor tenants. An example of a super-regional shopping
mall is West Edmonton Mall
4. Commmunity Shopping Malls also offer 2 or more major retailers
78
Power Centres
- (Westmount) also known as retail parks, which contain
several big-box retailers within one locality. Some power centres may
contain four or five big-box superstores and a mix of other large and small
retailers, regional power centres can involve a much larger grouping of
big-box superstores spanning several adjacent blocks.
79
Big-Box Superstores-
( Tera Losa) large retailers that focus on a large
selection of goods at everyday low prices. They can be general
merchandisers that sell a variety of items ranging from groceries, clothing,
toys, and tools, or they can be specialty stores that focus on a specific product type such as electronics, home improvement, or sporting goods.
Many big-box superstores belong to large retail chains
80
The market for industrial properties is supply or demand driven
Demand driven
81
Flat Roof
The term flat is misleading however, because flat roofs do have some
degree of slope (or rise) for water drainage. For example, a 10 cm by 30 cm slope (4"
by 12") means that the roof rises 10 centimetres for every thirty centimetres of
horizontal run. Flat roofs have a very low slope compared to steep-slope roofs, which
are typically used for residential properties. Several roof surfaces are available, with a
built-up roof (BUR) being especially common. A BUR consists of successive plys or
layers of felt and asphalt over the entire roof.
82
Small Recreational Businesses
- A mountainside property consisting of a rural residential home the owner resides in
with separate, winterized cottages, a stable with horses and a sleigh, and a shuttle
service to ski hills
- A seasonal helicopter tour business complete with primary residence, office
complex, repair facility, and launch pad
- A campground with waterside convenience store and gas docks, seasonal
cottages, and boat storage
- The small recreational business category also extends into additional services
beyond accommodation, such as golf courses, ski hills with chair lifts, and
organized tours with guides and optional rental gear (e.g. snowshoes)
83
Wilderness Camps -
traditionally involve horseback riding, fishing, and/or hunting and
usually include accommodation and meals.
84
Bed and Breakfast Accommodations
- Typically located in a private residence, with rooms
available for guests who pay for accommodation and breakfast. A variety of entrepreneurial
B&Bs are available for the travelling public.
85
Ski Chalets and Small Lodges
- A ski chalet conjures images of decorative A-frame
retreats in the Alps, complete with an upper-floor balcony and exposed roof beams.
However, the term ski chalet now generally refers to any structure designed for
accommodation involving winter sports, whether or not it reflects Swiss design.
- cater to individuals, groups, and corporate outings. Chalets are typically marketed
based on location and sleeping accommodation. In some cases, the chalets are
part of a larger resort offering spa packages, restaurants, etc.
86
Hotels, Motels, and Lodges-
A hotel is broadly defined as a building in which temporary
lodging is provided, and may include meals and other services such as restaurants and
conference rooms. A motel is a hotel in which parking is provided near the room and may
include door access directly from the room to the parking area.
- A lodge typically consists of a main inn (the lodge), often complemented with
cottages or cabins. Unlike hotels and motels, lodges tend to be situated in rural
settings.
Boutique hotels are often focused on the used on the luxury accommodation market and boast lifestyle
preferences, such as wellness and spa facilities
87
Hotel Condominiums-
is a typical hotel-sized room or small grouping of rooms (i.e. a hotel
suite) that is owned by an investor and managed by the hotel management services. The
investor may occupy the suite but pays the going rate, as would any other customer.
88
Resorts-
The term resort can describe a specific property or a geographic area. Resorts
vary in size and complexity, as well as in the types of accommodation, services, facilities,
and activities they offer. For example, a mountain resort might include a lodge and cabins
in a quiet, rural setting with scenic views and easy access to trails for cross country skiing
or hiking.
89
Destination Resorts-
one in which patrons typically travel a considerable distance from
home.
90
Non-Destination Resorts-
A non-destination resort draws most of its clients from adjacent
areas, typically no more than two or three driving hours away. In Alberta, Drumheller is a
good example of a non-destination resort
91
What are the 7 steps in a Landlord Representation Process (leasing).
1. Preliminary Research
2. Discovery Session
3.Situation Assessment
4. Listing Proposal
5. Sign Leasing Agreement
6. Implement the Leasing Strategy
7. Secure a Tenant.
92
When performing the first step of preliminary research before meeting with a landlord, what do you search for in your personal database?
- Brokerages of Tenant representatives who represent ideal tenant
- Transaction details, details of transactions they participate in or which they become aware.
-Propects
-propsective tenants in their market of specialization
-past and present clients
93
Whats the difference between smaller and larger commercial real estate brokerages.
Larger brokerages are likely to have info on landlords already. Often have a research department devoted to collecting and entering transaction and market information into the brokerage’s database.
Smaller brokerages and their real estate professionals may also choose to subscribe to third party service providers who create and maintain a current database of transaction information and market analytics for a fee.
94
How do you get familiar with a property before meeting with a landlord?
Overall physical condition of the property
Names and industries of tenants in the building (Landlord Image).
understand bylaws affecting the property's use. (industrial and retail).
Overall physical condition of the neighboring properties.
Addresses and details of neighbouring properties advertising space for lease.
Addresses and details of neighbouring properties advertised for sale.
local amenities closw to the property such as restaurants, sports, parks, entertainment venues and shops.
Transportation options
Possibly demographic trends in neighbouring communities.
traffic counts for roadways adjacent to the property.
95
Discretionary uses
land uses deemed generally appropriate for the disctict but are not necessarily compatible with surrounding uses.
96
What are some other terms used intergangibly with Operating costs?
additional rent, common area costs (CAC), common costs, and triple net leases.
97
How do you identify competitive properties in commercial market ?
- In most cases, in the same geographic area and can be delineated on a map.
constantly review other real estate professional’s advertisements.
walk or drive around the areas you serve to familiarize with new listings.
market their listings directly to their peers to make them aware of newly acquired listings and keep them informed of any changes to existing listings.
98
Benefit of building relationships with commercial professionals.
ensures you remain current with properties that are available in the market and maximizes your ability to market your listings.
99
Gathering info about competing properties.
-Rental rates
-Operating costs
-Tenant Incentives Offered
-Building and area amenities
-Vacancy rates.
100
What does a market analysis entail.
Combination of micro and macro economics.
New supply coming to the market
The absorption rate
Rental and vacancy rates
Recent transactions
101
What is the purpose of a discovery session?
Gain an undertanding of the landlords real estate needs and objectives, and the property to be leased.
Discovery sessions involve touring the property, asking the landlord questions, and asking and/or searching for documentation and records that contain important information about the landlord and the property.
define features of the property that make it stand out in the market place.
102
What do you observe and ask about on a property tour with the landlord?
-overall condition of the property.
-age and type of building sysstems (hvac, plumbing, electicial), elevators, lighting, and telacommunciation infrastructure.
Age size and funfituation of the building
recent and planned renovations and upgrades
of floors,
Onsite amenities
Any additonal buildings or land area on the property. Are they leased seperatly?
Utilities specifications
existing tenants and their industries
loading and delivery access
parking options, rates and availablity
signage options
current ue of the property.
103
Define Additonal rent related to operating costs.
if a tenant occupies 20,000 square feet of a 100,000 square foot building, the tenant will be responsible for paying 20% of the building’s operating expenses.
104
Why should operation costs be included in marketing materials
Because Tenants are often responsible for their purportion of operating costs in triple net leases, or paying additonal rent.
105
Operating costs for office space often include.
Property taxes
Insurance
Maintenance and repairs
Janitorial
Management fees
Utilities
Common area maintenance (CAMs)
106
Boma Measurement standard has changed in the last few years for what property type?
Office.
107
Explain Boma measurment standards with R/U factor.
A building with higher annual operating costs per square foot may have a lower total cost compared to a building with lower annual operating costs per square foot if the rentable area is larger due to the difference in R/U factor between the useable and rentable area.
108
comparing two buildings, Building A and Building B. Both buildings have a usable area of 18,200 sq.ft. Building A has an annual operating costs amount of $18.50/sq.ft. The landlord of Building A uses the BOMA 1990 measurement standard, resulting in an R/U factor of 10% and a rentable area of 20,020 sq.ft.
This means the total operating expenses the tenant is responsible for in Building A are $370,370 annually (20,020 x $18.50/sq.ft). Building B has an annual operating costs amount of $17.75.
The landlord of Building B uses the BOMA 2012 measurement standard, resulting in an R/U factor of 19% and a rentable area of 21,658 sq.ft.
his means the total operating expenses the tenant is responsible for in Building B are $384,429.50 annually (21,658 x $17.75/sq.ft.).
Although Building A has higher annual operating costs per square foot, it is actually the less expensive option for a prospective tenant.
109
Name three existing lease agreement provisions that could impact an incoming tenant.
Restricted use
Exclusive Uses
Expansion or contraction options.
110
Restricted Use
used to ensure a particular tenant mix by controlling the number of similar-use tenants and excluding a tenant from utilizing the premises for a use that would directly conflict with another established or prospective tenant. For example, not more than 1 shue store in a shopping center.
111
Expansion/ Contraction clause.
An expansion option is a clause that gives a tenant an exclusive right to additional space as their business needs change at a future date. Alternatively, a contraction option gives a tenant an exclusive right to reduce their space at a future date. These types of clauses include a time period during which the option must be exercised.
112
Rent Roll
A document listing all of the tenants leasing space in a property along with the key elements of their respective leases, including the rent amounts, the date and amounts for future escalations, the start date of the lease, options and rights (e.g. expansion option), and the lease term. It may also be referred to as a tenant roll or tenancy schedule.
113
Stacking Plan
used in the office market, a stacking plan is a floor-by-floor representation of each tenant and the space they occupy within a building.
114
Modern Design and Amenities
Tenants are increasingly looking for spaces with modern
amenities like high-speed internet, energy-efficient designs, and flexible floor plans.
Properties that offer these features are more attractive, especially to high-value tenants
like tech companies and startups.
115
Prime location:
Properties located in high-demand areas such as central business districts
near transportation hubs, or in growing neighborhoods often command higher rents,
lower vacancy rates, and greater appreciation potential.
116
Sustainability and Green Buildings:
Energy-efficient buildings attract environmentally
conscious tenants and can reduce operating costs. Green building features are
increasingly becoming a competitive differentiator.
117
Creative Financing Solutions:
Offering flexible leasing options, such as rent deferrals,
shared spaces, or unique ownership structures, can attract more tenants or investors,
giving the property owner an edge.
118
In-Depth Market Research:
Commercial real estate investors who have deep insights into
local and national market trends, demographic shifts, and economic factors can identify
opportunities ahead of competitors.
119
Timing the Market
Acquiring properties during economic downturns or before a market
surge, and selling during peak periods, can lead to significant gains. Understanding market
cycles is crucial for capitalizing on the right opportunities.
120
Strong Brand Presence:
Well-established real estate firms or developers with a reputation
for delivering quality projects can attract more clients and tenants. Reputation for
reliability, quality, and innovation can significantly enhance market positioning.
121
Customer Experience:
Offering exceptional customer service, from initial inquiries
through to long-term tenant support, can set a Commercial real estate business apart
from its competitors. A focus on positive tenant experiences often leads to higher
retention and referrals.
122
Navigating Zoning and Regulations:
Having a strong understanding of local zoning laws and other regulations allows developers and investors to maximize the use of a property.
Compliance and Legal Strategies: Staying ahead of regulatory changes and ensuring
compliance with legal standards can prevent costly delays or fines, giving a competitive
edge.
123
9. Risk Management
* Insurance and Mitigation Strategies: Effective risk management strategies, such as comprehensive insurance coverage and natural disaster mitigation, can protect against
unforeseen events. This helps ensure business continuity and reduces financial losses.
124
10. Innovation in Marketing and Leasing
* Digital Marketing and Virtual Tours: Utilizing advanced marketing strategies like virtual
tours, drone photography, and digital advertising can attract more prospective tenants
and buyers. Enhanced digital presence and the ability to market a property across multiple
platforms improve visibility.
125
By combining these factors and continually adapting to the evolving market, commercial real estate
investors, developers, and property managers can establish and maintain a competitive advantage in
their respective markets.
1. Location
2. Property Features and Amenities
3. Effective Property Management
4. Financial Strength and Investment Strategy
5. Technology and Innovation
6.Market Knowledge and Timing
7. Brand and Reputation
8. Regulatory Expertise
9. Risk Management
10Innovation in Marketing and Leasing.
126
What's the difference between inducement and incentive.
inventive is something that a brokerage offers to the public to attract busines. INducements are are specific to indiviual transactions.
127
Provide an example of a Seller incentive.
a
commercial property owner might offer $35 per square foot for tenant improvements to tenants
who sign long-term leases in their building. When advertising a seller's incentive, ensure it is
clearly stated that the seller, not the brokerage, is providing the incentive. (
128
What is a breakpoint in percentage rent?
is the sales threshold at which the tenant starts paying percentage rent.
Calculate dby dividing the base rent by the percentage rent rate.
Example, if the tenant pays $45000 in base rent annually, the percentage rent is 5%. The naturual brek point would be $900 000 in gross sales.
If the tenants sales reach $100 0000, the tenannt pays 5% of $100 000.
Tenants can negotiate breakpoints based on their expected sales, which can help them manage costs when launching or expanding a business.
129
Whats the simplest and most effective way to avoid weeds on your property?
Prevention.
130
Provide an example of an Authorization Letter.
A landlord writes a letter to the city giving a tenant rights to apply for permits to improve
their space as the city will only interact with the property owner or a party with an authoriza
tion letter from the owner.
A seller gives the purchaser authority to apply for development permits prior to possession so
that the latter can get a head start in the development process.
131
What are the three types of Authorizaiton
Implied, apparent and express. Express
132
Capital Asset
For government accounting purposes, capital assets generally include any asset which has been
acquired, constructed or developed with the intention of being used on a continuous basis and is
not intended for sale in the ordinary course of business
133
Capital Gains
Profit earned from selling a capital asset.
134
Capital Gains Tax
An income tax paid from profits earned from selling an investment. It is calculated differently
from other income taxes. For example, in Canada 50% of capital gains are taxed up to $250,000
and 66.67% is taxed on the amount thereafter.
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Residual Value
The amount of income expected to be realized at the end of the useful life of the asset. It is also
known as salvage value
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Radon Concentration and treatment
Over 600 Bg/m3
Bewteen 200 and 6000
Recomended timelien
Less than 1 year (600)
Less than 2 years(200)
Long-term measurements are 3-12 months in length. In Canada, higher radon levels
are normally observed during winter months.
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A marketing brochure may contain:
-Floor plan
-property address
-interior phootos, and drone ---photos of exterior
-tenant incentives
-length of lease
-recent improvements
-transportaion access and proximity
-key construction and building system specs.
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When does a conflict of interest exist
the prospective tenant is:
-Represented by you
-Represented by another real estate professional at your brokerage and the brokerage practices common law agency
-Someone with whom you have a business (e.g. the prospective tenant is the law firm that handles the brokerages legal matters) or family relationship (e.g. the prospective tenant’s business is owned by your sister)
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No conflict of interest exists and you can proceed with reviewing and evaluating the offer if the prospective tenant is:
Unrepresented
Represented by a real estate professional at another brokerage
Represented by a real estate professional at your brokerage and the brokerage practices designated agency
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Addendum requesting a landlord time extension should include what?
Landlord’s and tenant’s legal names
Execution date for the offer to lease
New condition expiry date(s) or number of days by which the condition(s) will be extended
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What are the three most common reasons an offer needs to be renegotiated?
- Construction Costs
-Space planning
-Senior and executive management team approval.
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How can you counter a Landlord objective of the TI construction costs being too much?
increase rents to cover the additional costs over the term of the lease
request the tenant pay for any amount over and above the budgeted amount
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What is Gross Operating Income
Effective Income + Other Income
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What is Cash flow before taxes
NOI-Debt Service
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What are the two types of cash flow?
Operational (recurring income) and sales proceeds
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What are three important principles of Cash Flow ?
- Today's cash is more valuable than future cash
-After-tax cash flow gives a clearer picture than before tax.
-Compare yield across properties using CFBT and CFAT
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What's a sensitivity analysis
-helps identify risk.
-changes one variable at a time.
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What's the difference between user and investor?
User focuses on functionality, and location
investor focuses on financial return.
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When does a property qualify as an investment?
If the buyer's intention is to generate income or benefit from Value appreciation.
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What 4 sources of information that must be analyzed when preparing a market analysis ?
-Capital Market
-Asset Market
-Space Market
-Macro Economy
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What are 3 sources of property specific information you need when preparing a market analysis?
-Operating Expenses
-Capital Expenditures
-Rent Roll
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Why is it important to understand the space market when doing a market analysis?
The space market impacts the income a real estate asset can generate.
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Why is it important to understand the asset market when doing a market analysis?
impacts the valuation of that income along with the likelihood of new development (i.e. new supply)
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Space market analysis forecasting
The market analysis must provide necessary information to forecast future occupancy rates and lease terms in the event the property experiences lease rollover.
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What role does the space market have in determining value of a real estate asset?
1. Apod
2. Performa
Or
1. Rents, Vacancy, Absorption = NOI
2. Cap rates, discount rates, and cost of debt = Asset Value
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Define macro market
Global, national, regional macroeconomic factors that impact the economic conditions in a regional or metro market.
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Define local property market
Local and regional competitive markets for the asset, including past, current, and future market conditions with a focus on supply and demand for the relevant commercial real estate asset product type.
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Define subject property market
neighborhoood conditions for th ereal estate asset with a focus on supply and demand for the asset product tpe, but where the market is narrowed downs to sustitue product.
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