Chapter 13 Quiz - Managing Industrial Property
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Chapter 13 Quiz - Managing Industrial Property

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Questions and Answers

What is the primary characteristic of usable square footage in industrial properties?

  • It is always equal to rentable square footage.
  • It considers space for utilities and transportation needs.
  • It includes corridors and shared spaces in the building.
  • It is the space available for tenant's employees and equipment. (correct)

    • What distinguishes a footloose industry?

  • It does not need to locate near utilities or transportation nodes. (correct)
  • It must be near its customer base to thrive.
  • It relies on resources that are only found in specific locations.
  • It requires heavy machinery located near water sources.

    • In an industrial gross lease, which statement is accurate?

  • The lease includes the costs for utilities separately.
  • The tenant pays a base rent plus all operating expenses. (correct)
  • The tenant pays only for maintenance and repairs.
  • The landlord covers all operating expenses of the property.

    • What is the significance of a sale-leaseback arrangement in industrial properties?

    <p>The tenant sells the property but continues to occupy it under a lease.</p> Signup and view all the answers

    Why are industrial leases often for long terms, such as ten years?

    <p>To accommodate the investment in specialized equipment.</p> Signup and view all the answers

    Which term refers to the amount of space the tenant can occupy, excluding common areas?

    <p>Usable square footage</p> Signup and view all the answers

    What might an industrial tenant be responsible for under their lease agreement in terms of utilities?

    <p>Paying for electricity only if separately metered</p> Signup and view all the answers

    Which type of insurance may NOT be required from an industrial tenant per the lease?

    <p>Errors and omissions</p> Signup and view all the answers

    Which entity is typically responsible for marketing and lease negotiations for an industrial property?

    <p>Industrial broker</p> Signup and view all the answers

    What type of liability is a property owner held under environmental laws for contamination?

    <p>Strict liability</p> Signup and view all the answers

    What component of a tenant's payment may be included in industrial agreements for operating expenses?

    <p>Percentage of the tenant's gross sales</p> Signup and view all the answers

    Which term is used to describe the overall area within an industrial property, including both tenant and shared spaces?

    <p>Gross square footage</p> Signup and view all the answers

    Which characteristic is typically NOT included in a standard listing for industrial property?

    <p>Year built</p> Signup and view all the answers

    What is a common reason for a manager to report to the owner of industrial property?

    <p>Discovery of environmental damage to the property</p> Signup and view all the answers

    Why are industrial leases generally long-term?

    <p>Tenant may install large, expensive equipment</p> Signup and view all the answers

    What is an example of a sale-leaseback transaction in industrial property?

    <p>A firm sells its research building and leases it back</p> Signup and view all the answers

    A market-oriented industry must be located near which of the following?

    <p>Its customers</p> Signup and view all the answers

    Which of the following is a key factor affecting industrial zoning decisions?

    <p>Proximity to major highways</p> Signup and view all the answers

    What is a common reason for property managers to adjust leasing agreements in industrial properties?

    <p>Fluctuations in rental market rates</p> Signup and view all the answers

    Which of the following poses a significant challenge for tenants in industrial properties?

    <p>High insurance costs</p> Signup and view all the answers

    Study Notes

    Chapter 13 Quiz - Managing Industrial Property

    • Industrial Property Management Challenges: Industrial property management is more challenging than other property types because of longer lease terms, tenant environmental concerns and tenants handling maintenance.

    • Warehouse Types: A warehouse occupied by a single company without specialized freight handling features is a general-purpose building.

    • Century Fabrication Lease: Century Fabrication's 99-year lease and specialized machinery building on 10 acres illustrates a ground lease.

    • Sun Vista Industrial Park Organization: The park is organized as a condominium where companies own parcels and contribute to an owners' association for park maintenance.

    • Non-Labor Intensive Industry: Oil refining is an example of an industry that is not labor intensive.

    • Footloose Industry: A footloose industry can locate anywhere with an easy transportation or quality of life location. Lumber company would want to locate near timber.

    • Industry Location Priorities: Boardman Lumber prioritizes their location near timber.

    • Local/State Government Taxes: Personal property and real property taxes are likely to not be waived to attract new development.

    • Foreign Trade Zone (FTZ) Advantage: Merchandise shipped to foreign countries is exempt from duty payments in an FTZ. Environmental regulations may also be relaxed.

    • Medium Industrial Zone Activities: Light assembly, warehousing, and refining activities are likely permissible in a medium industrial zone.

    • Industrial Property Descriptions: A property manager describes an industrial property in terms of its leasable area. It excludes non-tenant areas like stairwells.

    • Industrial Property Marketing: Industrial properties are typically marketed by industrial brokers and leasing agents.

    • Industrial Lease Listing Features: Industrial lease listings typically include ceiling height, loading facilities, and previous tenant information along with square footage.

    • Industrial Lease Length: Industrial lease terms are typically longer because it is harder to find a tenant that is a good fit for the specialized space.

    • Industrial Gross Lease Characteristics: A tenant pays a base rent in the first year as well as operating expenses in subsequent years in an industrial gross lease.

    • Industrial Tenant Insurance Requirements: Industrial tenants typically have to obtain commercial general liability, errors and omissions, pollution, and property and casualty insurance.

    • Environmental Liability Laws: Environmental laws may impose strict liability on property owners for cleanup costs, even if they weren't responsible for contamination.

    • Industrial Property Management Reporting: Property managers must provide regular reports to the property owner, which can include environmental damage, tax procedures changes, and other relevant details.

    • Sale-Leaseback: In a sale-leaseback, a commercial tenant sells a property to an investor but continues to use the property via a long-term lease.

    • Market-Oriented Industry Location: Market-oriented industries locate near their customer base to minimize transportation costs (especially for heavy/bulky items).

    • Xyrogonomix Biotech Firm's Transaction: Xyrogonomix is an example of a sale-leaseback transaction.

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    Chapter 13 Quiz - Managing Industrial Property PDF

    Description

    Test your knowledge on the complexities of managing industrial properties in this Chapter 13 quiz. Explore topics such as lease types, warehouse classifications, and the impact of industry characteristics on location decisions. It's a perfect review for students studying industrial property management.

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