RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
Commercial real estate assets have a number of attributes that
make them unique relative to other types of investments. These
attributes include the following: (x10) -
correct answer ✅1. They involve land
2.Transaction time frames are long
3. Transaction costs are high
4. they are expensive
5. They are long lasting
6. Highly regulated
7. have a long production cycle
8. are management intensive
9. are heterogeneous
10. Involve measuring return on investment
1. Long-lasting, Durable Goods
2. Expensive, High-valued (left for well capitalized investors)
3. Transaction Costs: Due diligence and commissions alone
comprise about three to five percent of transaction costs.
,RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
4. Transaction Time Frame
5. Land
6. Heterogeneous: every parcel of land is unique so every
commercial real estate asset is unique. However, improvements are
rarely identical as unique site characteristics, land use regulations,
and the market often require different solutions from developers.
7. Return Measures
8. Management Intensive
9. Long Production Cycle: it takes time to develop and construct
new commercial real estate assets to meet the needs of the
expanding population. This results in the real estate supply being
relatively slow to respond to changes in demand (i.e. inelastic
supply).
10. Highly Regulated
Inelastic supply -
correct answer ✅there is a limited supply. To illustrate, many cities
are geographically constrained and have a Land Use Bylaw that
limits the ability to change the use of a parcel of land. This results in
a relatively inelastic supply of land for commercial purposes.
Inelastic supply means the supply cannot readily adjust to changes
in demand or price.
,RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
four major commercial real estate asset product types according to
Real Capital Analytics -
correct answer ✅Office: Refers to real estate primarily used for
office space
Retail: Refers to retail properties, such as strip centres or
neighbourhood, community, regional and super-regional shopping
malls
Industrial: Refers to real estate for industrial use, such as
distribution, manufacturing, or warehouse facilities and data
centres
Apartment: Refers to multi-family rental properties.
Other miscellaneous product types include hotels, leisure (e.g golf
courses), and special use (e.g. casinos)
3 miscellaneous product types -
correct answer ✅hotel, leisure (e.g. golf courses), and special use
(e.g. casinos).
, RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
Categorization by Building Class -
correct answer ✅For example, office properties are often
categorized as Class A, B, or C.
Categorization by Number of Storeys -
correct answer ✅For example, apartment properties are classified
as either garden complexes (one or more low-rise buildings
consisting of four storeys or less) or mid/high-rise projects (one or
more buildings consisting of four storeys or greater).
Categorization by building's Property Location -
correct answer ✅For example, in addition to building class, office
properties are often categorized based on their location as either
central business district (CBD) or suburban.
Categorization by building's Type -
correct answer ✅For example, the International Council of
Shopping Centres (ICSC) defines different types of shopping centres
according to size (gross leasable area and land area), types of
tenants, and trade area.
Questions & Answers (Grade A+)
Commercial real estate assets have a number of attributes that
make them unique relative to other types of investments. These
attributes include the following: (x10) -
correct answer ✅1. They involve land
2.Transaction time frames are long
3. Transaction costs are high
4. they are expensive
5. They are long lasting
6. Highly regulated
7. have a long production cycle
8. are management intensive
9. are heterogeneous
10. Involve measuring return on investment
1. Long-lasting, Durable Goods
2. Expensive, High-valued (left for well capitalized investors)
3. Transaction Costs: Due diligence and commissions alone
comprise about three to five percent of transaction costs.
,RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
4. Transaction Time Frame
5. Land
6. Heterogeneous: every parcel of land is unique so every
commercial real estate asset is unique. However, improvements are
rarely identical as unique site characteristics, land use regulations,
and the market often require different solutions from developers.
7. Return Measures
8. Management Intensive
9. Long Production Cycle: it takes time to develop and construct
new commercial real estate assets to meet the needs of the
expanding population. This results in the real estate supply being
relatively slow to respond to changes in demand (i.e. inelastic
supply).
10. Highly Regulated
Inelastic supply -
correct answer ✅there is a limited supply. To illustrate, many cities
are geographically constrained and have a Land Use Bylaw that
limits the ability to change the use of a parcel of land. This results in
a relatively inelastic supply of land for commercial purposes.
Inelastic supply means the supply cannot readily adjust to changes
in demand or price.
,RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
four major commercial real estate asset product types according to
Real Capital Analytics -
correct answer ✅Office: Refers to real estate primarily used for
office space
Retail: Refers to retail properties, such as strip centres or
neighbourhood, community, regional and super-regional shopping
malls
Industrial: Refers to real estate for industrial use, such as
distribution, manufacturing, or warehouse facilities and data
centres
Apartment: Refers to multi-family rental properties.
Other miscellaneous product types include hotels, leisure (e.g golf
courses), and special use (e.g. casinos)
3 miscellaneous product types -
correct answer ✅hotel, leisure (e.g. golf courses), and special use
(e.g. casinos).
, RECA Commercial Unit2 Exam
Questions & Answers (Grade A+)
Categorization by Building Class -
correct answer ✅For example, office properties are often
categorized as Class A, B, or C.
Categorization by Number of Storeys -
correct answer ✅For example, apartment properties are classified
as either garden complexes (one or more low-rise buildings
consisting of four storeys or less) or mid/high-rise projects (one or
more buildings consisting of four storeys or greater).
Categorization by building's Property Location -
correct answer ✅For example, in addition to building class, office
properties are often categorized based on their location as either
central business district (CBD) or suburban.
Categorization by building's Type -
correct answer ✅For example, the International Council of
Shopping Centres (ICSC) defines different types of shopping centres
according to size (gross leasable area and land area), types of
tenants, and trade area.
