Managing Office Property Quiz PDF

11: Managing Office Property Chapter 11 Quiz 1. In the first half of the twentieth century, office buildings were heavily concentrated in _____, but that changed with the rise of automobiles and the freeway system. a) central business districts b) edge cities c) mixed-use medium-...

11: Managing Office Property Chapter 11 Quiz 1. In the first half of the twentieth century, office buildings were heavily concentrated in _____, but that changed with the rise of automobiles and the freeway system. a) central business districts b) edge cities c) mixed-use medium-rise buildings d) office parks 2. An example of a Class A office building would be: a) a high-rise building with luxurious appointments near the focus of the central business district b) a mid-rise building in a central business district that is several decades old but well-maintained c) a suburban office park with an attractive landscaped setting and quality interiors, with average rents for the area d) an office building on the periphery of the downtown area, that is comparatively smaller and older and charges lower rents 3. A manager putting together a new management plan for his office building, which has traditionally housed mainly law firms, studies economic data to see whether the legal sector in the city is expanding or shrinking, to decide whether to try to recruit other types of tenants. He is engaged in: a) building analysis b) market analysis c) neighborhood analysis d) regional analysis 4. Property analysis would include all of the following except: a) access to nearby freeway b) amount of on-site parking c) square footage of building d) tenants’ satisfaction with current management policies 5. A manager performing a market analysis finds that a comparable property has a subterranean parking garage, while the property that he manages has only on-street parking. What kind of adjustment would he make? a) Adjust comparable’s rental rate downward b) Adjust comparable’s rental rate upward c) Adjust subject property’s rental rate downward d) Adjust subject property’s rental rate upward 1 © Rockwell Publishing 2021  6. A manager finds that the rental rate indicated by his market analysis still doesn’t cover the property’s expenses. To cover the gap, the manager may do all of the following, except: a) convince the owner to accept lower expectations b) generate additional revenue c) recalculate using different comparables d) reduce operating expenses 7. A building in a suburban office park hopes to attract service professionals like lawyers and accountants. Advertising should stress: a) low utility costs b) prestigious address c) proximity to rapidly growing residential areas d) up-to-date network infrastructure 8. Which method of marketing may be the most cost-effective and persuasive, but only if it is targeted at a specific audience? a) Cold calling b) Internet advertising c) Print media d) Rental centers 9. Even if all indications are that a prospective tenant will be a good financial bet, there are still other considerations in selecting an office tenant. These include all of the following, except: a) service requirements b) space requirements c) tenant mix d) tenant race or ethnicity 10. The amount an office tenant pays as rent may vary from month to month depending on all of the following factors, except: a) changes to R/U ratio b) month-to-month changes in gross sales c) use of an escalation clause d) utilities costs varying 11. A new tenant in an office building takes possession with the space in finished condition, according to her specifications, after contractors hired by the manager have completed their work. What describes the space? a) Mint condition b) Shell space c) Showroom condition d) Turnkey condition 12. Which of the following statements about typical lease terms is false? 2 © Rockwell Publishing 2021  a) Janitorial services are usually provided by management, but the lease will specify what gets cleaned and when b) Office leases usually run five to ten years c) The landlord will most likely pay for heating or air conditioning both during and after business hours d) The lease may require the landlord to pay for electricity costs up to a certain level, but the tenant pays for any overage 13. What level of security is a low-rise office building in a suburban office park likely to have? a) Around-the-clock guards in lobby b) Key card access to elevators c) Occasional patrols of parking lots by security contractor d) Video surveillance observers 14. A small office building with little foot traffic from tenants’ customers is likely to: a) have a chief engineer on-site b) have several janitorial shifts and a janitorial supervisor c) have the janitorial staff clean common areas several times daily d) require individual tenants to provide their own janitorial services 15. When a manager prepares a rent roll for an office building owner, it will typically include all of the following as separate items, except: a) amounts paid under rent escalation provisions b) CAM charges c) comparable property’s rents d) pass-through charges 16. A company that needs to combine office space and a warehouse facility in one place would be most likely to locate in: a) a central business district b) a loft space c) a mixed-use building d) an office park 17. Janet notes that her building does not have sufficient electrical outlets or internet connectivity for tech firm tenants, which are a growing part of the local economy and which she would like to recruit. This would fall under the heading of: a) property analysis b) market analysis c) neighborhood analysis d) regional analysis 18. Having determined that her building’s telecommunications infrastructure isn’t sufficient to attract high-tech tenants, Janet begins a cost-benefit analysis to determine whether upgrading the building would attract better tenants and increase revenues enough to make the improvements worthwhile. She is performing: 3 © Rockwell Publishing 2021  a) analysis of alternatives b) market analysis c) neighborhood analysis d) regional analysis 19. An online resource called “Income/Expense IQ,” which details features and rents for thousands of buildings nationwide, is available from: a) BOMA b) IREM c) the Census Bureau d) the U.S. Chamber of Commerce 20. A building’s owner agrees to contribute $25 per square foot to a new tenant’s build-out costs. If the build-out costs exceed that amount, the tenant is responsible for additional expenses. This is known as a: a) build-out maximum b) rent roll c) tenant improvement allowance d) work letter Answer Key 1. a) A city’s central business district is its downtown core; until the freeway system led to suburban sprawl, most office buildings were concentrated here. 2. a) A Class A building is a prestigious and usually centrally-located building “competing for premium office users with rents above average for the area.” 3. d) Regional analysis looks at the entire metropolitan area where the property is located, and considers the supply of and demand for office space within it. 4. a) Freeway access and other transportation issues fall under the scope of neighborhood analysis. Parking, square footage, and management practices are all property analysis issues. 5. a) If a comparable has a feature that the subject property lacks, the comparable’s rental rate is adjusted downward by an appropriate amount. Never adjust the rates for the subject property. 6. c) Options include reducing operating expenses, generating more revenue, or adjusting owner expectations. Using different comparables, assuming they are properly selected and adjusted, will not likely give different results. 7. c) A location near rapidly growing suburbs would be a strong selling point for a building targeting individual service professionals like lawyers or accountants, because it puts them near a pool of potential clients. 4 © Rockwell Publishing 2021  8. a) Cold calling potential clients, either in person or by phone, can be a useful method of reaching potential tenants. However, it must be targeted to find appropriate prospects, which means research in business journals and newspaper financial sections. 9. d) A manager should never consider a prospective tenant’s race or ethnicity; this would violate antidiscrimination laws. If the tenant would have greater space or service requirements than can be accommodated, though, or if the tenant’s business wouldn’t mesh with other businesses, those would be important considerations. 10. b) Office properties do not use percentage leases; those are more typical in retail spaces. Pass-through charges and escalation clauses may apply, though. 11. d) If an office space has been fully built out according to plans, and management has taken care of all the preparation work, it is known as turnkey condition. 12. c) Most often, management will pay for heating and air conditioning services during business hours but not afterwards. 13. c) A building in a suburban office park is not likely to have around-the-clock security staff, but rather use the services of a security firm. The firm may perform periodic patrols of parking lots. 14. d) Small buildings often have little in the way of common areas to clean; the management may require tenants to provide their own janitorial services for their leased spaces. 15. c) A comparable property’s rent might be part of a market analysis in a management plan, but it’s not included in a regular rent roll. 16. d) An office park consists of low-rise buildings in a suburban setting, and may be zoned to allow light industrial as well as office uses. 17. a) Problems with functional obsolescence within the building, such as an electrical and telecommunications infrastructure that isn’t adequate, would be considered property analysis. 18. a) Analysis of alternatives may consider whether upfront expenditures to improve the building will pay off in the long-term through increased revenues. 19. b) “Income/Expense IQ” is a digital information platform maintained by the Institute for Real Estate Management (IREM). 20. c) A tenant improvement allowance sets a limit on how much a landlord will contribute toward a tenant’s build-out expenses. The work letter, by contrast, details the tenant’s specifications for the build-out project. 5 © Rockwell Publishing 2021