Exam 2: Real Estate System

Use the information in the following table to answer the subsequent questions: State \& Federal Government 50,000 10,000,000 Legal Services 13,000 2,000,000 Computer Manufacturing \& Repair 4,000 2,500,000 Total All Employment 200,000 120,000,000 -What is the Location Quotient for state and federal government activities in this city?

"Over the long run, the change in location value provides a theoretical ceiling to the average capital gain of the unlevered investor in already-built property…" This summarizes:

Use the information in the following table to answer the subsequent questions: State \& Federal Government 50,000 10,000,000 Legal Services 13,000 2,000,000 Computer Manufacturing \& Repair 4,000 2,500,000 Total All Employment 200,000 120,000,000 -Which of the three industries in the above table is not in the export sector of this locality?

Use the following information to answer the subsequent questions. At site "A" the best current construction project is a retail plaza that would cost $3,000,000 to build exclusive of land cost) and would then generate net rents of $400,000/yr, expected to grow at 2% per year indefinitely. At site "B" the best current construction project is an office building that would generate net rents of $500,000 per year, expected to remain constant. Construction of the office building would cost $4,000,000 exclusive of land cost). Suppose investors require a cap rate current net income as percent of investment) equal to 10% minus the expected annual growth rate in the net income. -Based on the current best projects described above, which site is most valuable?

The magnitude of the transportation costs in a production process of a given land use and the relative sensitivity of these transportation costs to distance from the city center determine:

Use the information in the following table to answer the subsequent questions: State \& Federal Government 50,000 10,000,000 Legal Services 13,000 2,000,000 Computer Manufacturing \& Repair 4,000 2,500,000 Total All Employment 200,000 120,000,000 -Suppose the most productive use of a particular site is as a manufacturing plant that will generate revenues of $12,000,000 per year with raw material costs and operating expenses other than net rent) of $7,000,000 per year, and construction costs for the plant and equipment) that can be paid for with a perpetual loan with interest of $3,000,000 per year. According to the residual theory, how much is this site worth in terms of annual land rent?

Silicon Valley is an example of:

Use the following information to answer the subsequent questions. A simple monocentric city Roundville) has a population of 3,000,000 with a homogeneous density of 5 inhabitants per acre, and one person per household. Agricultural rents are $500/acre/yr, housing construction costs including developer profit) can be paid for with a perpetual loan charging interest of $5000/house/yr, and transportation costs are $250/person/yr per mile of distance from the center of the city. Recall that there are 640 acres per Mi².) -What is the annual location premium rent per household in the center of Roundville?

One major cause for the natural vacancy rate to be greater than zero in a stable market is:

Congestion, pollution, crime, and high transportation costs are all examples of:

Which of the following types of activity centers would you expect might have the highest land rent location premium in a polycentric city?

Which are examples of incompatible adjacent land uses that display negative locational externalities?

A certain market has 1,000,000 SF of vacant space, 500,000 SF under construction, and annual absorption of 750,000 SF. What is the "months supply" in this market?

The asking rent is $10/SF/yr. The landlord agrees to give the first year rent-free in a five-year lease, in return for a step-up in the rent to $12/SF/yr in the third year. What is the effective rent?