Office Flashcards
What are the important internal features for office buildings?
Air conditioning, electrical system, lifts, fire services, security systems, operating costs, floor space
What are the important external features for office buildings?
Location, car parking, local retailers
How do you measure an office space?
NLA using PCA Guidelines
What are the valuation approaches for office?
Capitalisation of net income (primary for small properties)
Discounted cash flow (primary method for large properties)
Direct comparison (support method)
What is the equivalent yield? (market yield)
(Market rent - non-recoverable) / sale price (+/- below the line adjustments)
What is the reversionary yield?
(Market rent - non-recoverable) / sale price
Recessionary yield equates to a passing yield if it was at market levels. Doesn’t allow for letting up and vacancy.
What are the two types advertising rights when it comes to office buildings?
Signage rights (a prominent space where an advertiser might place an approved sign) and naming rights (carry the right to place the approved name on the building)
What is a two tiered rental market? (office)
Sitting tenant generally paying more than a new tenant seeking space with vacant possession
Market rent definition
The current annual open market rental value of the demised premises based on a lease (exclusive of any incentives and
allowances) between a willing but not anxious Lessor and a willing but not anxious Lessee
What is commercial 1 zone for?
Mixed use commercial, retail, office, entertainment, higher-density residential
What is commercial 2 zone for?
commercial uses for office, bulky goods (some manufacturing and industry), retail
What is the initial yield? (passing yield)
(Passing rent - non-recoverable) / sale price
What is IRR and how is it calculated
Internal rate of return is the annualised return of something based off the initial purchase?
Calculated by making the NPV = 0. So whatever discount rate will apply and make the NPV = 0 will be the IRR.
When is a DCF used as a method of valuation?
Mainly with shopping centres or multi tenanted office buildingsW
What outgoings rate would you typically expect for an office space?
It depends but typically $50-100/sqm - often smaller spaces, strata fees etc - outgoings high