Foundations of Real Estate Management BOMA International ® Module 1: Real Estate Administration Leasing and Marketing ®

Foundations of Real Estate Management Module 1: Real Estate Administration 2 ® Objectives  Identify the following characteristics as they relate to commercial properties:  Product Type  Market  Submarket  Class  ENERGY STAR®  Green building certifications

Foundations of Real Estate Management Module 1: Real Estate Administration 3 ® Objectives  Explain the value of optimizing energy and environmental performance, and describe the benefits that an ENERGY STAR®, BOMA 360®, LEED®, or other certification delivers to a building owner  Understand the various BOMA measurement standards, including how to identify which standard to apply to different product types and leasing circumstances

Foundations of Real Estate Management Module 1: Real Estate Administration 4 ® Objectives  Define and relate the following terms from the BOMA Office Standard to one another: Exterior Gross Area, Interior Gross Area, Rentable Area, Occupant Area, Service and Amenity Areas, the Load Factor; and understand distinctions between Methods A & B

Foundations of Real Estate Management Module 1: Real Estate Administration 5 ® The Brokerage Firm  Brokers v. agents  Broker owns business relationship  Agent works for broker  Leasing transactions  Landlord representative  Tenant representative  Dual agency

Foundations of Real Estate Management Module 1: Real Estate Administration 6 ® Broker Compensation  Almost always commissions  May also be equity in the assignment

Foundations of Real Estate Management Module 1: Real Estate Administration 7 ® Agent Compensation  Agent compensation is a fraction of the broker’s commission  Commission only  Salary plus commission  Salary  Equity  Needs to cover “desk costs”

Foundations of Real Estate Management Module 1: Real Estate Administration 8 ® Real Estate Markets  Markets  Submarkets

Foundations of Real Estate Management Module 1: Real Estate Administration 9 ® Supply and Demand Factors impacting rents  Relationship to rental rates  Absorption  Calculating absorption  Vacancy  Elasticity  New construction

Foundations of Real Estate Management Module 1: Real Estate Administration 10 ® Product Type  Office Buildings  Retail  Industrial  Residential  Medical Office  Mixed Use

Foundations of Real Estate Management Module 1: Real Estate Administration 11 ® Classes Factors that determine class  Building finishes  Physical attributes  Amenities  Location, accessibility  Market perception  Security  On-site management

Foundations of Real Estate Management Module 1: Real Estate Administration 12 ® Classes  Metropolitan  Trophy  Class A  Class B  Class C  International  Investment grade  Institutional grade  Speculative grade

Foundations of Real Estate Management Module 1: Real Estate Administration 13 ® Putting it Into Practice Work with your instructor to complete the workbook assignment

Foundations of Real Estate Management Module 1: Real Estate Administration 14 ® Sustainability Measures  ENERGY STAR ®  BOMA Energy Efficiency Program (BEEP ® )  Leadership in Energy and Environmental Design (LEED ® )  BOMA 360 ® Performance Program  Green Globes  BOMA BEst(Canada)

Foundations of Real Estate Management Module 1: Real Estate Administration 15 ® Putting it into Practice How would you describe your building?  Product type  Market  Submarket  Class  ENERGY STAR ® ?  LEED ®, BOMA 360 ®, other?

Foundations of Real Estate Management Module 1: Real Estate Administration 16 ® Benchmarking Financial Performance BOMA’s Experience Exchange Report (EER)  Building demographics  Income data  Expense data

Foundations of Real Estate Management Module 1: Real Estate Administration 17 ® Measurement Standards  BOMA’s Floor Measurement Standards  Office Buildings: Standard Methods of Measurement (2010)  Industrial Buildings: Standard Methods of Measurement (2009)  Mixed-Use Properties: Standard Methods of Measurement (2012)  Multi-Unit Residential Buildings: Standard Methods of Measurement (2010)  Retail Buildings: Standard Methods of Measurement (2010)  The Gross Areas of a Building: Methods of Measurement (2009)  All are ANSI approved

Foundations of Real Estate Management Module 1: Real Estate Administration 18 ® Measurement Standards BOMA’s Office Buildings: Standard Methods of Measurement (2010)  Tenant spaces v. common spaces  Occupant Area  Area occupied by tenant  Service and Amenity Areas (Common Areas)  Areas shared by tenants  Rentable Area  Occupant Area + Service and Amenity Areas  Number that appears in lease  Exterior Gross Area (EGA)  Interior Gross Area (IGA)

Foundations of Real Estate Management Module 1: Real Estate Administration 19 ® Measurement Standards BOMA’s Office Buildings: Standard Methods of Measurement (2010)  Load Factor  Ratio between rentable area and occupant area of a floor  Method A – Legacy Method  Calculates load factor uniquely for each floor  Method B – Single Load Factor Method  Calculates rentable area for each floor using a single load factor  Must choose either Method A or Method B for the entire building; can’t mix the two

Foundations of Real Estate Management Module 1: Real Estate Administration 20 ® Components of a Lease  Letter of intent (LOI)  Lease agreement  Rental Rate  Gross lease  Net lease  Percentage rent  Ground rent

Foundations of Real Estate Management Module 1: Real Estate Administration 21 ® Components of a Lease  Tenant improvement (TI)  Turn key v. allowance  Who will manage?  Drawings  Space plans  Construction drawings

Foundations of Real Estate Management Module 1: Real Estate Administration 22 ® Real Estate Manager’s Role on Leasing Team  Keep space ready for lease at all times  Selective demolition and minor improvements  Your business card may say “Real Estate Manager,” but you play an important role in the leasing process