1. Understanding Real Estate Markets Regional and Community Analysis Community Growth Patterns Neighborhoods Housing markets Commercial and Industrial markets Rural and Recreational markets

2. Regional and Community Analysis Community location factors are a function of reasons for community formation. Size and Growth of a community are also a function of reasons for community formation. Geography and Topography are constraints that affect land use and community development decisions.

3. Location Theory: Opportunity Costs Agrarian Economies (1800s): Land rents, although related to location, derive from the fertility of the land. (David Ricardo, English economist and philosopher). Von Thunen (1890) later argued that rent results from accessibility of land to market centers. Thus transportation costs are essential.

4. Location Theory: Factor Substitution As price of land becomes excessive in terms of what the market demands at the location, CAPITAL IMPROVEMENTS are introduced to alter the economic cost structure of the supply of space. This factor substitution leads to differentials in # of stories of structures built.

5. Space markets Allocate the existing space among those who currently demand the space (short run). Expand or contract the space to meet changing conditions (long run). Determine new uses for available land (long run). Account for vacancy (transition/inventory).

6. The space market equation Rents*(1-VR) = OE + DEP + ROI VR = vacancy rate OE = Operating expenses DEP = Fixture Depreciation + Land Filtering ROI = Return on Income

7. Housing Markets Demand Factors New households Age composition Income Mortgage/Credit Price of substitutes Ownership costs Expectations Seasonality Supply Factors Costs of factors of construction Productivity of factors of production Technology Builders and their expectations Demolitions and Permits Credit Conditions

8. Retail markets Demand Factors Number of consumers Consumer Income Consumer tastes and preferences Price of substitutes Credit conditions and payment facilitations Supply Factors Prices of production factors Productivity of production factors Developers and their expectations Demolitions, Conversions and Permits Credit conditions Investor outlook

9. Office Market Demand Factors: Number of firms Types of firms Size and profitability of firms Economic growth New firms Firms closing/merging Space density Supply Factors Prices of production factors Productivity of production factors Developers and their expectations Demolitions, Conversions and Permits Credit conditions Investor outlook

10. Economic Fundamentals The Space market rents and changes in rents are tied to the market values of the properties. Events in the capital markets that affect interest rates and the opportunity costs of ALL assets also affect real estate markets.