Chapter 13 Quiz - Managing Industrial Property PDF

Chapter 13: Managing Industrial Property Chapter 13 Quiz 1. In which way is industrial property manage- 5. A type of industry that is not labor-intensive is: ment more challenging than other forms of a) clothing manufacturing property management?...

Chapter 13: Managing Industrial Property Chapter 13 Quiz 1. In which way is industrial property manage- 5. A type of industry that is not labor-intensive is: ment more challenging than other forms of a) clothing manufacturing property management? b) electronics assembly a) Lease terms are longer, meaning less turn- over b) Little build-out work is required at the start of a lease 6. A footloose industry is one that: c) Tenants are likelier to create environmental problems a) is under few constraints about its location, d) Tenants handle maintenance and repairs on and tends to locate based on quality of life their own b) must locate in an area with cheap, plentiful unskilled labor c) must locate near sources of raw materials 2. A warehouse that is occupied by only one d) must locate near transportation arteries company and does not have any specialized features for handling particular kinds of freight would be considered a: 7. Boardman Lumber is planning to develop a new lumber mill. Its main priority is to locate a) general purpose building in a town that’s near large, accessible stands of b) multi-tenant building timber, to save on the costs of transporting raw c) single purpose building logs to the mill. What kind of industry does this d) special purpose building describe? a) Energy oriented 3. Century Fabrication leases 10 acres in the New b) Labor oriented Town Industrial Park for a 99-year term, and c) Market oriented builds its own specialized building, accom- d) Resource oriented modating its heavy and unique machinery, on the land. This describes a: 8. Which of the following taxes is a local or state a) general purpose building government not likely to waive or reduce, in b) ground lease order to attract new industrial development and c) sale-leaseback the jobs that go with it? d) tax-deferred exchange a) Inventory tax b) Personal property tax, such as on industrial 4. The Sun Vista Industrial Park is organized in equipment a manner where companies will own parcels c) Real property taxes within the park. They also are members of an d) Worker’s compensation tax owners association and pay dues to the asso- ciation, which employs a manager to oversee upkeep of the park’s streets, grounds, and other 9. The advantage of a foreign trade zone (FTZ) common areas. The park is organized as a: is that: a) condominium a) employers can pay employees less than the b) cooperative legal minimum wage c) joint venture b) environmental regulations may be relaxed d) municipality c) merchandise shipped to foreign countries is exempt from duty payments d) non-citizens may be employed 13  Property Management Instructor Materials 10. An area is zoned “medium industrial.” Which 15. Which of the following is a characteristic of an of the following activities would be allowed in industrial gross lease? this zone? a) It includes a percentage of the tenant’s gross a) Light assembly only sales b) Light assembly, warehousing but pays for increases in operating expenses in subsequent years c) The tenant will not pay any of the landlord’s operating expenses at any point 11. A property manager describes an industrial d) The tenant will pay for electricity, but only property in terms of the amount of space the if the tenant’s space is separately metered tenant can actually occupy in the building. It does not include common building areas, or stairwells, elevators shafts, or equipment 16. An industrial tenant will probably be required rooms. This is the building’s: by the lease to obtain all of these forms of a) gross leasable area insurance, except: b) rentable square footage a) commercial general liability c) total square footage b) errors and omissions d) usable square footage c) pollution liability d) property and casualty 12. Marketing and lease negotiations for an indus- trial property are typically handled by a/an: 17. Many environmental laws are _____ laws, a) industrial broker meaning that a property owner may be liable b) leasing agent for cleanup costs even if he didn’t cause the c) property manager contamination himself. d) Both A and B a) in personam b) post facto c) strict liability 13. A typical listing for a general purpose indus- d) vicarious liability trial property will include all of the following, except: a) ceiling height 18. The most common reason for special report- b) information on loading facilities ing by a manager of industrial property to the c) previous tenant’s business owner is: d) square footage a) changes in property tax rates or procedures b) discovery of environmental damage to the property 14. All of the following are reasons that industrial c) new pass-through charges for maintenance leases are typically very long-term, except: and utilities - d) theft or other crime on the property can be hard for a tenant c) owner is likely to make serious upgrades to property d) tenant is likely to install large, expensive equipment 14  Chapter 13: Managing Industrial Property own research facility, but needs to raise a lot of capital quickly to meet legal expenses. It de- cides to sell the research building to an investor, but then lease it back from the investor so they don’t need to move. This is an example of a: a) ground lease b) sale-leaseback c) straw-man transaction d) 1031 exchange 20. A market oriented industry is one that must locate near: a) inexpensive utilities b) its customers c) natural resources d) transportation infrastructure 15  Property Management Instructor Materials Answer Key 1. c) Industrial tenants are likelier than other 7. d) A resource oriented industry is one types of commercial tenants to create that needs to locate near the source of environmental problems through their raw materials because of transporta- manufacturing processes or the types tion costs. For instance, a lumber mill of materials they handle. The other op- needs to be near a source of timber. tions all are ways in which industrial property management can be less com- 8. d) Property taxes, either on real property plicated. or personal property, may be lowered or eliminated for targeted industrial 2. a) A general purpose building can be employers. used for a variety of warehousing or light manufacturing activities, without 9. c) Foreign trade zones are not subject having specialized systems or struc- to U.S. Customs controls, so goods tures. shipped to foreign countries from them are not subject to duty payments; in 3. b) When a special purpose building is addition, goods may be stored there needed, a ground lease is often used, without being subject to inventory where the tenant simply leases the taxes. ground and constructs its own building according to its needs. 10. b) Clean assembly and warehousing would be allowed in a district zoned 4. a) The industrial park is organized as a condominium: companies based in the not. Areas zoned for heavy industry park own individual lots but also own will also allow lighter industries within shared interests in the park’s common the zone, so both clean assembly and areas, for which they pay maintenance warehousing would be allowed. fees to an owners’ association. 11. d) Usable square footage is the amount of space a tenant can actually occupy with its people and equipment; it is taken up by processing equipment, less than the rentable square footage, with few people present to monitor in the same building. it. Clothing and electronics manufac- turing, and food processing, are all 12. a) An industrial broker—a type of leas- hands-on jobs requiring a lot of em- ing agent who specializes in industrial ployees working closely together. property—is usually used to lease in- dustrial property, rather than having the 6. a) A footloose industry doesn’t need property manager do it (who probably to locate near utilities, resources, or doesn’t have the nationwide connec- transportation nodes; hypothetically, it tions to look for the right tenant). could locate wherever it chose. 16  Chapter 13: Managing Industrial Property 13. c) The use to which the previous tenant 19. b) In a sale-leaseback, a commercial ten- put an industrial property is not likely ant sells a property to an investor, but to be discussed in the property listing; continues to use the property, paying since it’s general purpose, the tenant rent to that investor under a long-term will take possession of a stripped- lease. down building that can be put to many 20. b) A market oriented industry is one where production facilities should be 14. a) One reason that industrial leases tend located near the customer base, in or- to be for long terms, of ten years or der to reduce transportation costs for heavy or bulky items. purpose building, where the pool of useful is very small. 15. b) In an industrial gross lease, the lease with the tenant paying just a base rent. In following years, the tenant pays increases in the owner’s operating ex- penses beyond the amount established in the base year. 16. b) Errors and omissions insurance is relevant for service professionals, protecting them against claims of pro- fessional malpractice. That would not be relevant for an industrial tenant, however. 17. c) Some environmental laws (like CER- CLA) are strict liability laws, meaning that a landowner who didn’t cause any pollution may still be responsible for costs of cleaning up pollution. 18. b) Environmental laws have cleanup pro- cedures that must be followed closely, and strict reporting requirements. It would be best to keep an owner fre- quently apprised, if a manager of an industrial property must get involved in that process. 17