CCIM. 102 (Module 1 & Module 2)
Developer perspective - answer need to know there will be a demand for a building at
the time it is ready for occupancy. They must know existing demand and forecast
demand.
developer must understand factors such as - answer rent levels, absorption,
construction cost, undeserved markets (gaps), cost of capital.
user perspective - answerto make sure that they getting the space at the lowest
possible cost.
users must understand factors such as - answertypical market construction and land
costs, purchase prices and rents (current and forecast). Need to determine whether the
lease terms are sufficiently flexible to meet changing space needs, the share of
expenses.
brokers perspective - answerneed info on the market to be credible with their
customers. Instant access to info about the marketplace is required
investor perspective - answermarket analysis provides the data necessary to calculate
the feasibilty model. For new constructions, info on rents and expenses comes from
market analysis. For existing properties, info on rents and down time when leases
expire comes from market analysis. Can use M.A. to calculate ROI, R (cap rate), cost of
capital.
finacial analyst perspective - answerevaluating debt and equity investments must
understand the risk characteristics of that market. The required rate of return for
determining feasibility must be higher in the riskier market.
government official perspective - answerneed to forecast and estimate future
macroeconomic conditions in order to anticipate and plan for future infrastruction and
staffing.
V (Value of the Property) = - answerNet Operating Income (NOI) / R (cap rate)
Net rents / Net Operating Income (NOI) and values are tied together by ... -
answercapital markets by R (cap rate)
cap rate is - answerthe annual NOI divided by the market value of the property
NOI = Net Operating Income - answerNOI = real estate revenue - operating expenses.
, When property asset value rise above construction cost, developers have an ... -
answerincentive to build
When property asset value falls below construction cost, buildings tend to ... -
answerdecline in value
The 2 most important indicators of a market are ... - answer1. Cap rate
2. The relation between value and replacement cost
In short-run the supply is ... - answerunelactic. It takes time for developers to build new
buildings in response to the increased demand / it takes time for building to depreciate
in response to the decreased demand.
In short-run the increases (decreases) in demand lead to ... - answerincreases
(decreases) in net rents rather then quantity
When cap rate falls, given level of rent gives ... - answerhigher value
When market value of existing stock is equal to replacement cost, - answerno new
constructions take place because there are no profit opportunities for the investors
In long-run if value exceeds replacement cost because of the increase in demand, new
constructions ... - answerwill absorb the changes in demand
In long-run if value falls below replacement cost because of the decrease in demand,
depreciation ... - answerwill allow the stock to filter down the the new demand level
Components of market analysis - answer1. market for space
2. capital market
3. construction market
Financial Feasibility formula - answerNet Present Value = (-Initial Investment) + Cash
Flow for each year + SP (net proceeds from sale)
Cash Flow consists of ... - answer1. Rent
2. Expenses
3. Debt Service Obligations
Net Present Value (NPV) = - answer(-Initial Investment) + Cash Flow for each year +
SP (net proceeds from sale)
Initial Investment is - answera function of the purchase price, which is influenced by
market conditions
Developer perspective - answer need to know there will be a demand for a building at
the time it is ready for occupancy. They must know existing demand and forecast
demand.
developer must understand factors such as - answer rent levels, absorption,
construction cost, undeserved markets (gaps), cost of capital.
user perspective - answerto make sure that they getting the space at the lowest
possible cost.
users must understand factors such as - answertypical market construction and land
costs, purchase prices and rents (current and forecast). Need to determine whether the
lease terms are sufficiently flexible to meet changing space needs, the share of
expenses.
brokers perspective - answerneed info on the market to be credible with their
customers. Instant access to info about the marketplace is required
investor perspective - answermarket analysis provides the data necessary to calculate
the feasibilty model. For new constructions, info on rents and expenses comes from
market analysis. For existing properties, info on rents and down time when leases
expire comes from market analysis. Can use M.A. to calculate ROI, R (cap rate), cost of
capital.
finacial analyst perspective - answerevaluating debt and equity investments must
understand the risk characteristics of that market. The required rate of return for
determining feasibility must be higher in the riskier market.
government official perspective - answerneed to forecast and estimate future
macroeconomic conditions in order to anticipate and plan for future infrastruction and
staffing.
V (Value of the Property) = - answerNet Operating Income (NOI) / R (cap rate)
Net rents / Net Operating Income (NOI) and values are tied together by ... -
answercapital markets by R (cap rate)
cap rate is - answerthe annual NOI divided by the market value of the property
NOI = Net Operating Income - answerNOI = real estate revenue - operating expenses.
, When property asset value rise above construction cost, developers have an ... -
answerincentive to build
When property asset value falls below construction cost, buildings tend to ... -
answerdecline in value
The 2 most important indicators of a market are ... - answer1. Cap rate
2. The relation between value and replacement cost
In short-run the supply is ... - answerunelactic. It takes time for developers to build new
buildings in response to the increased demand / it takes time for building to depreciate
in response to the decreased demand.
In short-run the increases (decreases) in demand lead to ... - answerincreases
(decreases) in net rents rather then quantity
When cap rate falls, given level of rent gives ... - answerhigher value
When market value of existing stock is equal to replacement cost, - answerno new
constructions take place because there are no profit opportunities for the investors
In long-run if value exceeds replacement cost because of the increase in demand, new
constructions ... - answerwill absorb the changes in demand
In long-run if value falls below replacement cost because of the decrease in demand,
depreciation ... - answerwill allow the stock to filter down the the new demand level
Components of market analysis - answer1. market for space
2. capital market
3. construction market
Financial Feasibility formula - answerNet Present Value = (-Initial Investment) + Cash
Flow for each year + SP (net proceeds from sale)
Cash Flow consists of ... - answer1. Rent
2. Expenses
3. Debt Service Obligations
Net Present Value (NPV) = - answer(-Initial Investment) + Cash Flow for each year +
SP (net proceeds from sale)
Initial Investment is - answera function of the purchase price, which is influenced by
market conditions
