Market Analysis and Economics Flashcards
7 cards from real CRECI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Market Analysis and Economics flashcards as text
In a 'triple net' (NNN) lease structure, which party is responsible for taxes, insurance, and maintenance?
Answer: The tenant covers all three expenses
In a triple net lease, the tenant pays base rent plus property taxes, building insurance, and maintenance costs, shifting most operating risk to the tenant.
Which economic concept explains why land values are typically highest at a city's central business district?
Answer: Bid-rent theory, where businesses compete for proximity to the CBD
Bid-rent theory explains that different users bid for land based on its accessibility, with values peaking at the CBD where the most users compete for prime locations.
A market study indicates that a submarket's average asking rent is $45/SF but effective rent (after concessions) is $38/SF. What is the 'concession spread' as a percentage of asking rent?
Answer: 15.6%
The concession spread is ($45 - $38) / $45 = $7 / $45 ≈ 15.6%, meaning landlords are effectively discounting 15.6% through free rent, TI allowances, and other concessions.
Which of the following best describes 'shadow space' in commercial real estate market analysis?
Answer: Sublease space that tenants hold but do not actively market
Shadow space refers to leased space that tenants are not using but have not yet listed for sublease, representing latent supply that can suppress rent growth.
The 'four quadrant model' (DiPasquale-Wheaton model) of real estate markets links which two markets?
Answer: Property (space) market and asset (capital) market
The DiPasquale-Wheaton four quadrant model shows how the property (space) market—where rents and occupancy are determined—interacts with the asset (capital) market—where property values and construction are determined.
When a market analyst observes that new construction starts have declined sharply while vacancy rates remain elevated, this pattern most likely indicates:
Answer: The market is likely to tighten as supply growth pauses while demand absorbs existing space
Declining construction with elevated vacancy often signals a supply correction—as no new inventory is added, existing space gets absorbed and the market tightens over time.
What is 'economic base analysis' used for in commercial real estate market research?
Answer: Identifying industries that drive regional economic growth by exporting goods and services
Economic base analysis categorizes regional employment into 'basic' (export-driven) and 'non-basic' sectors to identify which industries drive a region's growth and demand for space.