RECA Commercial Unit2 Set Test Exam Questions & Correctly Verified Solutions

RECA Commercial Unit2 Set Test Exam Questions & Correctly Verified Solutions Commercial real estate assets have a number of attributes that make them unique relative to other types of investments. These attributes include the following: (x10) - ANSWER 1. They involve land 2.Transaction time frames are long 3. Transaction costs are high 4. they are expensive 5. They are long lasting 6. Highly regulated 7. have a long production cycle 8. are management intensive 9. are heterogeneous 10. Involve measuring return on investment 1. Long-lasting, Durable Goods 2. Expensive, High-valued (left for well capitalized investors) 3. Transaction Costs: Due diligence and commissions alone comprise about three to five percent of transaction costs. 4. Transaction Time Frame 5. Land 6. Heterogeneous: every parcel of land is unique so every commercial real estate asset is unique. However, improvements are rarely identical as unique site characteristics, land use regulations, and the market often require different solutions from developers. 7. Return Measures 8. Management Intensive 9. Long Production Cycle: it takes time to develop and construct new commercial real estate assets to meet the needs of the expanding population. This results in the real estate supply being relatively slow to respond to changes in demand (i.e. inelastic supply). 10. Highly Regulated Inelastic supply - ANSWER there is a limited supply. To illustrate, many cities are geographically constrained and have a Land Use Bylaw that limits the ability to change the use of a parcel of land. This results in a relatively inelastic supply of land for commercial purposes. Inelastic supply means the supply cannot readily adjust to changes in demand or price. four major commercial real estate asset product types according to Real Capital Analytics - ANSWER Office: Refers to real estate primarily used for office space