Office Property Management Chapter 11

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Questions and Answers

Match the following lease terms with their descriptions:

Escalation clause = Allows for periodic rent increases to offset inflation R/U ratio = Ratio of rentable area to usable area Tenant improvement allowance = Amount per square foot the owner pays for build-out Shell space = Space awaiting a tenant's improvements

Match the following types of office space with their characteristics:

Turnkey condition = Space that is fully improved and ready for occupancy Build-out = Finishing office space to a tenant's specifications Uniform finish quality = Specification for finish quality throughout the building Work letter = Tenant's specifications for improvements to the leased space

Match the following responsibilities of landlords with their examples:

Utility services = Stating which services the landlord will provide Common area terms = Outlining usage terms for shared facilities Security personnel = Help keep tenants and possessions safe from crime Lease terms = Specifying the duration of the lease

Match the following reasons for retaining tenants with their explanations:

Good relationships = Maintain positive interactions with tenants Market rate renewals = Renew leases at current market rates Offering concessions = Provide incentives during lease negotiations Tenant selection = Choosing the right tenant for long-term leases Signup and view all the answers

Match the following terms with their definitions in property management:

Janitorial services = Cleaning services provided to maintain shared areas Security guards = Personnel tasked with maintaining safety in buildings Office lease = Contract defining rental agreements for office spaces Vacancy rate = Percentage of unoccupied office spaces in a building Signup and view all the answers

Match the following building features with their descriptions:

Functional obsolescence = Inadequate electrical and telecommunications infrastructure Small buildings = Little in common areas, requiring tenant janitorial services Office park = Low-rise buildings in a suburban setting Tenant improvement allowance = Landlord's contribution limit for build-out expenses Signup and view all the answers

Match the following terms with their meanings:

Comparable property = Used in market analysis but excluded from rent roll Security firm = Provide periodic patrols instead of on-site staff Heating and air conditioning services = Required during business hours for comfort Income/Expense IQ = Digital information platform by IREM Signup and view all the answers

Match the following concepts with their applications:

Market analysis = Involves rent comparison of similar properties Long-term revenue improvements = Considered in analysis of alternatives Service professionals = Targeted by buildings near growing suburbs Janitorial services requirement = Common in small buildings Signup and view all the answers

Match the following assessments with their areas of focus:

Building analysis = Evaluates functional obsolescence Tenant build-out specifications = Outlined in the work letter Management plan = Includes comparable property's rent Security staff = Not typically available around-the-clock Signup and view all the answers

Match the following entities with their roles:

Institute for Real Estate Management = Maintains Income/Expense IQ Tenants = May need to provide janitorial services Security firm = Conducts periodic patrols of properties Landlords = Set limits on tenant improvement allowances Signup and view all the answers

Study Notes

Learning Objectives

Students will be able to discuss locations of common office properties
Students will be able to compare different classifications of office property using BOMA's standards
Students will be able to explain a property manager's considerations when analyzing a property during management planning
Students will be able to identify types of advertising suited for office property marketing
Students will be able to explain how a tenant's space and service needs affect tenant selection
Students will be able to define build-out, shell space, turnkey condition, tenant improvement allowance, and work letter
Students will be able to discuss the security and maintenance needs for office property
Students will be able to contrast an office rent roll report with a residential rent roll report

Suggested Lesson Plan

Students should review the previous chapter on residential property management using Exercise 11.1
Review Chapter 11, "Managing Office Property," including learning objectives

Types of Office Properties

Location:
- Historically, office space was centralized in city centers (CBDs)
- Rise of automobiles and freeways led to growth in suburban areas and office parks
- Mixed-use developments (retail on ground floor, offices above) are common in cities
Ownership:
- Small to medium office buildings in suburbs are often owned by individuals or small businesses
- Large multi-story buildings are often owned by investment syndicates
- Office condominiums allow individual ownership of units with shared areas
Classification (BOMA):
- Class A: Most desirable, prestigious, high rents, in the top tier of office buildings
- Class B: Compete for a range of users, average rents
- Class C: Below-average rents, functional space, older buildings, may have obsolete amenities

Management Planning

Regional Analysis:
- Market of office space
- Employment rates in the area
- Technological advancements may affect office needs
Neighborhood Analysis:
- Location of utilities
- Proximity to public transportation
Property Analysis:
- Inspect the site and building
- Evaluate building maintenance

Marketing Office Space

Media Types:
- Internet (websites, virtual tours)
- Print media
- Public relations
- Rental centers

Leasing Office Space

Tenant Selection:
- Consider individual tenant needs (space and services)
- Balance tenant mix within the building
Lease Provisions:
- Rent (negotiated, rent escalation clause, base rent, percentage rent)
- Build-out (shell space, tenant improvement allowance, turnkey condition, work letter)
- Utilities
- Lease term (length of agreement)

Operations and Reporting:

Security:
- Security guards
- Alarm systems
- Surveillance cameras
Maintenance:
- Janitorial and/or other service personnel
- Building maintenance based on the buildings size
Tenant Relations:
- Communicating with tenants
- Promptly respond to tenant requests and complaints
Reports to Owner:
- Rent roll (list of past due/ current rental payments)
- Delinquency Reports (identify delinquent tenants; identify overdue pass-through costs)

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Description

This quiz focuses on the key concepts from Chapter 11 of office property management. Students will explore classifications of office properties, the role of property managers, and marketing strategies. Additionally, understanding tenant needs and property maintenance requirements will be emphasized.