AG HBU Possible Exam Questions Flashcards
What is Frictional vacancy?
The amount of vacant space needed in a market for its orderly operation. Frictional vacancy allows for move-ins and move-outs.
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What is Equilibrium vacancy?
The amount of vacancy that would be expected for a given market when it is at equilibrium. Also known as normal vacancy or natural vacancy.
The vacancy rate for a market at equilibrium (balance of supply and demand)
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If the market vacancy rate is xxx equilibrium vacancy, the market is undersupplied.
below
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If the market vacancy rate is equal to equilibrium vacancy, the market is in xxx.
balance
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If the market vacancy rate is above equilibrium vacancy, the market is xxx.
oversupplied
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In a residual demand analysis, normal/equilibrium occupancy/vacancy is the xxx used to determine if the market is xxx or xxx.
benchmark
oversupplied
undersupplied
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Normal/equilibrium vacancy is used to:
- estimate supportable (adjusted) demand.
- determine if the market is above or below equilibrium at a given point in time.
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Residual demand refers to a comparison of xxx to determine the xxx.
supply and demand
amount of oversupply or undersupply
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xxx considerations: An office building competes primarily with other office buildings in its own node, so the subject property’s location within the node is critical to determining its competitive position.
Intranodal
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xxx considerations: Office nodes compete with each other with regard to tenant appeal and, on a secondary level, an office building competes with buildings in different nodes. In both cases, the strength of the competition is the key element of comparison to consider.
Internodal
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Using regression analysis applied to the eight years of data, predict absorption for the upcoming year (Year 1) as well as for five years in the future (Year 5), and calculate the correlation coefficient.
Set up the problem using “years ago” as the x (independent) variable but input the numbers as negatives to represent time in the past. The HP- 12C requires that the dependent variable be input first, followed by the independent variable.
18th row: Put in time 1 and then input g ŷ, r. The regression program will calculate the y value (the amount of leased space) for one year in the future (we eyeballed this value at about 150,000).
19th row: Put in time 5 and then input g ŷ, r. The regression program will calculate the y value (the amount of leased space) in the fifth year following the current quarter.
20th row: The correlation coefficient (abbreviated as r) is a measure of the relationship between two variables and the degree to which they change together. The higher the correlation coefficient, the tighter the fit between two variables, in this case time and amount of office space leased. A line that fits perfectly has a correlation coefficient equal to 1.00 or –1.00. On the HP-12C calculator, the correlation coefficient is calculated whenever
x or ŷ is calculated and is displayed by pressing the ~ key. The correlation coefficient for this problem is 0.97, indicating a good fit.
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The correlation coefficient expresses xxx
… the amount of variation in the dependent variable caused by a change in the independent variable. As the factor moves away from 1.00 (or –1.00), other factors may be influencing the change.
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Project citywide employment growth in five years based on the historical average annual growth using linear regression.
If linear regression is used with the full data set, citywide employment growth is projected to be an additional 14,665 jobs.
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xxx
Total floor area of a building, excluding unenclosed areas, measured from the exterior of the walls of the above-grade area. This includes mezzanines and basements if and when typically included in the market area of the type of property involved …
Gross building area (GBA)
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Net rentable area (NRA):
The amount of space rented to the individual tenants excluding common areas.
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xxx
For office or retail buildings, the tenant’s pro rata portion of the entire office floor, excluding elements of the building that penetrate through the floor to the areas below. The area of a floor is computed by measuring to the inside finished surface of the dominant portion of the permanent building walls, excluding any major vertical penetrations of the floor. Alternatively, the amount of space on which the rent is based; calculated according to local practice.
Rentable area
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xxx
1. For office buildings, the actual occupiable area of a floor or an office space; computed by measuring from the finished surface of the office side of the corridor and other permanent walls, to the center of partitions that separate the office from adjoining usable areas, and to the inside finished surface of the dominant portion of the permanent outer building walls. Sometimes called net building area or net floor area.
2. The area that is actually used by the tenants measured from the inside of the exterior walls to the inside of walls separating the space from hallways and common areas.
Usable area
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xxx
In office buildings, the areas of the building that provide services to building tenants but that are not included in the office area or store area of any specific tenant. These areas may include, but shall not be limited to, main and auxiliary lobbies, atrium spaces at the level of the finished floor, concierge areas or security desks, conference rooms, lounges or vending areas, food service facilities, health or fitness centers, daycare facilities, locker or shower facilities, mail rooms, fire control rooms, fully enclosed courtyards outside the exterior walls, and building core and service areas such as fully enclosed mechanical or equipment rooms. Specifically excluded from building common area are floor common areas, parking space, portions of loading docks outside the building line, and major vertical penetrations. (BOMA)
Building Common Area
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xxx
The total horizontal surface of a specific floor; the total area of all floors in a multistory building, computed from the outside building walls of each floor with balcony and mezzanine areas computed separately and added to the total.
Floor Area
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xxx
In an office building, the areas on a floor such as washrooms, janitorial closets, electrical rooms, telephone rooms, mechanical rooms, elevator lobbies, and public corridors that are available primarily for the use of tenants on that floor. In essence, area represents all of
the area on the floor that is common to that respective floor with the exception of those areas that penetrate through the floor, such as the elevator shaft and stairwell. The significant point to be made is that this area is not part of the tenant’s usable area. (BOMA)
Floor common area.
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xxx
1. In appraising, the ratio between the rentable and gross area of a building.
2. In land utilization, the ratio between the value of the product flowing from the site and the expense of the labor and capital that produced it.
3. In economics, the ratio between the ends produced (output) and the means used (input).
Efficiency ratio
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xxx
A rental arrangement whereby the tenant’s rent is intended
to be inclusive of all expenses associated with occupancy; depending on region, this rent can include the tenant’s share of real estate taxes, insurance, operating expenses, and reserves for replacement.
Full-service rent
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xxx properties can be rated in a number of ways, but the most popular today is to categorize by xxx. The term xxx refers to a system of rating properties based upon their overall xxx This xxx ranges from the rare xxx building to the more common xxx properties.
Office
Class
Class
appeal in the market.
appeal
Trophy
Class A, B, and C
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Trophy Class
One of a kind property
High quality:
- construction
- condition
- design
- credit tenants
- management
Rare
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