IntroLecture_fa10

IntroLecture_fa10 - Course Introduction Course Introduction...

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Unformatted text preview: Course Introduction Course Introduction Real Estate Space and Asset Markets What is a market? What is a market? A mechanism for the voluntary exchange of goods and services among owners . Two types of markets relevant Two types of markets relevant to commercial property: to commercial property: 1. The Space Market . . . For the usage (or right to use ) real property . AKA usage market , or rental market . (e.g., tenants & landlords exchange money for leases.) 2. The Asset Market . . . For the ownership of real property . AKA property market . (e.g., TIAA-CREF exchanges my pension $ for an office bldg.) 1. The Space Market 1. The Space Market Supply: Property Owners ( Landlords ) Demand: Property Users ( Tenants ) MARKET Resulting equilibria: Rents (e.g.$/SF) Occupancy Concept: Concept: Segmentation Segmentation in in the Space Market the Space Market A market is segmented if it breaks up into sub-markets , or market segments . Within each sub-market or segment, the same good may have a different equilibrium price . The real estate space market is highly segmented. Why? Demand side: Demand side: Users require specific types of space. Users require specific locations (or types of locations) Users desire specific levels of building quality for their operations Supply side: Supply side: Buildings are of specific physical types (warehouses high-rise offices). Buildings of a specific type may be of varying quality (Class A, Class B) Buildings are in specific locations (and they cant move!). Property type: Property type: Residential (apartment) Office Industrial (warehouse)...
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IntroLecture_fa10 - Course Introduction Course Introduction...

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