book chapter 2: environment analysis Flashcards
when do landlords (suppliers) raise prices)
when tenants require more space that is currently available
when do prices stabilize?
when supply meets demand
what are leases?
contracts that let tenants use space
what can be the duration of a lease?
can rance from one day to many years
what does demand for space in commercial properties depend on?
the overall level of economic activity
occupancy rate
the percentage of built space in use
vacancy rate
the percentage of built space that is currently vacant
what happens when occupancy rate increases?
rent rises
what can economic down cycles do in Real Estate?
decrease demand, decrease occupancy, and decrease rent prices
decrease cash flow
decrease the property’s market value
absorption rate
the rate at which uses take occupancy
how is the absorption rate measured?
measured as units of space per periods of time
in square feet per year
how does global economic activity affect national economic activity?
through trade
how does increased economic activity affect demand?
it increases demand as well
how can economic activity in other countries affect supply?
pricing of material and labor
cost of construction
many commodities required for real estate are sourced globally, so thats affected
wage rates go up as demand for labor increases
where do real properties typically find their primary market?
among users located in a particular geographic region
how does consumer confidence affect demand for retail property?
consumer confidence affects retail spending
this in turn determines demand for retail space
what do people often times own that can impact consumer confidence?
housing prices
the value of their assets
what directly affects consumer spending?
unemployment levels
the length of unemployment
availability and access to credit
what has a significant impact on the amount of space dedicated to each worker?
worker productivity
number of labor hours to complete a task
telecommunicating
what can affect demand for retail property?
consumer confidence
employment levels
credit accessibility
what determines the pace at which adolescents leave their parents’ homes for multifamily housing (apartments)?
why?
job availability
if there is high unemployment rate, rent cannot be affordable
what determines leaving apartments to buy a house or simply just buying a house?
interest rates
mortgage availability
what are renters by choice?
group of long-term multifamily users
appeared after the 2008 financial crisis
have income to afford a house but do not see the benefit in that after witnessing the crash
what are key indicators of warehouse space?
overall levels of inventories
shipment of goods