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Questions and Answers
What is the primary characteristic of usable square footage in industrial properties?
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?
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?
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?
What is the significance of a sale-leaseback arrangement in industrial properties?
Why are industrial leases often for long terms, such as ten years?
Why are industrial leases often for long terms, such as ten years?
Which term refers to the amount of space the tenant can occupy, excluding common areas?
Which term refers to the amount of space the tenant can occupy, excluding common areas?
What might an industrial tenant be responsible for under their lease agreement in terms of utilities?
What might an industrial tenant be responsible for under their lease agreement in terms of utilities?
Which type of insurance may NOT be required from an industrial tenant per the lease?
Which type of insurance may NOT be required from an industrial tenant per the lease?
Which entity is typically responsible for marketing and lease negotiations for an industrial property?
Which entity is typically responsible for marketing and lease negotiations for an industrial property?
What type of liability is a property owner held under environmental laws for contamination?
What type of liability is a property owner held under environmental laws for contamination?
What component of a tenant's payment may be included in industrial agreements for operating expenses?
What component of a tenant's payment may be included in industrial agreements for operating expenses?
Which term is used to describe the overall area within an industrial property, including both tenant and shared spaces?
Which term is used to describe the overall area within an industrial property, including both tenant and shared spaces?
Which characteristic is typically NOT included in a standard listing for industrial property?
Which characteristic is typically NOT included in a standard listing for industrial property?
What is a common reason for a manager to report to the owner of industrial property?
What is a common reason for a manager to report to the owner of industrial property?
Why are industrial leases generally long-term?
Why are industrial leases generally long-term?
What is an example of a sale-leaseback transaction in industrial property?
What is an example of a sale-leaseback transaction in industrial property?
A market-oriented industry must be located near which of the following?
A market-oriented industry must be located near which of the following?
Which of the following is a key factor affecting industrial zoning decisions?
Which of the following is a key factor affecting industrial zoning decisions?
What is a common reason for property managers to adjust leasing agreements in industrial properties?
What is a common reason for property managers to adjust leasing agreements in industrial properties?
Which of the following poses a significant challenge for tenants in industrial properties?
Which of the following poses a significant challenge for tenants in industrial properties?
Flashcards
Industrial Property Listing Exclusions
Industrial Property Listing Exclusions
A typical industrial property listing does not include information about the previous tenant's business.
Long-term Industrial Leases
Long-term Industrial Leases
Long-term industrial leases are common due to tenant's need for significant investment in the property, which often involves expensive large equipment and making serious property upgrades.
Sale-leaseback Definition
Sale-leaseback Definition
A sale-leaseback is a transaction where a company sells a property but leases it back to continue using it.
Market-Oriented Industry
Market-Oriented Industry
A market-oriented industry needs to be located close to its customers.
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Special Report Reason
Special Report Reason
Environmental damage, theft, or other crimes are the most frequent reasons why a manager of industrial property would make a special report to the property owner.
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Usable square footage
Usable square footage
The actual space a tenant can use, considering equipment and personnel, which is less than rentable square footage.
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Footloose industry
Footloose industry
An industry that doesn't need to locate near utilities, resources, or transportation nodes; it can choose a location.
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Industrial broker
Industrial broker
A leasing agent specializing in industrial property, often having nationwide connections.
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Industrial property use history
Industrial property use history
The past use of an industrial property is often not highlighted in listings.
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Long-term industrial leases
Long-term industrial leases
Industrial leases frequently last for ten years or more.
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Industrial gross lease
Industrial gross lease
A lease where the tenant pays a base rent, and the landlord covers other expenses (e.g., taxes, insurance)
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Sale-leaseback
Sale-leaseback
A commercial tenant sells a property to an investor, but continues using it and paying rent to that investor under a lease.
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Market-oriented industry
Market-oriented industry
An industry in which production facilities are located close to the customer to reduce transport costs for large products.
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Gross Leasable Area
Gross Leasable Area
The total area of a building, including all the space that can be rented to tenants.
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Rentable Square Footage
Rentable Square Footage
The space available for lease to the tenant, excluding common areas like hallways, elevators, and mechanical rooms.
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Usable Square Footage
Usable Square Footage
The actual amount of space that a tenant can use in a building; commonly excludes common areas like hallways, restrooms, lobbies, and other shared areas.
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Industrial Broker
Industrial Broker
A real estate professional who specializes in the marketing and leasing of industrial properties.
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Tenant's Gross Sales Percentage
Tenant's Gross Sales Percentage
A lease payment structure where a portion (percentage) of a tenant's gross sales will be paid to the landlord.
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Operating Expenses
Operating Expenses
Costs associated with running and maintaining a property, such as utilities, repairs, and maintenance.
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Commercial General Liability Insurance
Commercial General Liability Insurance
Protects the property owner from claims of harm or damage to others arising from their business operations.
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Errors and Omissions Insurance
Errors and Omissions Insurance
Protects professionals from claims arising from errors or omissions in their work.
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Pollution Liability Insurance
Pollution Liability Insurance
Covers the costs and liabilities associated with environmental contamination.
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Property and Casualty Insurance
Property and Casualty Insurance
Protects against various types of property damage or losses, such as fire, theft, or natural disasters.
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Strict Liability
Strict Liability
Legal responsibility for harm or damage, regardless of intent or negligence.
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Chapter 13 Quiz - Managing Industrial Property
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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.
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Warehouse Types: A warehouse occupied by a single company without specialized freight handling features is a general-purpose building.
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Century Fabrication Lease: Century Fabrication's 99-year lease and specialized machinery building on 10 acres illustrates a ground lease.
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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.
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Non-Labor Intensive Industry: Oil refining is an example of an industry that is not labor intensive.
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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.
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Industry Location Priorities: Boardman Lumber prioritizes their location near timber.
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Local/State Government Taxes: Personal property and real property taxes are likely to not be waived to attract new development.
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Foreign Trade Zone (FTZ) Advantage: Merchandise shipped to foreign countries is exempt from duty payments in an FTZ. Environmental regulations may also be relaxed.
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Medium Industrial Zone Activities: Light assembly, warehousing, and refining activities are likely permissible in a medium industrial zone.
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Industrial Property Descriptions: A property manager describes an industrial property in terms of its leasable area. It excludes non-tenant areas like stairwells.
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Industrial Property Marketing: Industrial properties are typically marketed by industrial brokers and leasing agents.
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Industrial Lease Listing Features: Industrial lease listings typically include ceiling height, loading facilities, and previous tenant information along with square footage.
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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.
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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.
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Industrial Tenant Insurance Requirements: Industrial tenants typically have to obtain commercial general liability, errors and omissions, pollution, and property and casualty insurance.
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Environmental Liability Laws: Environmental laws may impose strict liability on property owners for cleanup costs, even if they weren't responsible for contamination.
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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.
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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.
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Market-Oriented Industry Location: Market-oriented industries locate near their customer base to minimize transportation costs (especially for heavy/bulky items).
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Xyrogonomix Biotech Firm's Transaction: Xyrogonomix is an example of a sale-leaseback transaction.
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