Real Estate

Real Estate is Property

* Two types of property:

* Tangible

* Physical assets that can be owned

* Can be real or personal property

* Intangible

* Non-physical assets such as stocks, bonds, mortgages, leases.

The Term “Real Estate” Used Three Ways

1. Real estate as a tangible asset:

a. Structures (improvements on the land)

b. Improvements to the land

i. Excavation and fill

ii. Sewers and other utilities

iii. Roads and driveways

c. “Raw” land

2. Real estate as a “Bundle of Rights”

d. Intangible rights to the services and benefits that property provides

e. Exclusive possession of the real property

f. Use or enjoyment

iv. Can use as rental property to generate cash flow

g. Disposition

h. Can be unbundled in many ways

3. Real estate as an industry and profession

i. Brokerage

j. Development

k. Leasing

l. Property management

m. Asset management

n. Real Estate Law

o. Appraisal

p. Market consulting

q. Counseling

Real Estate Markets and Participants

* Real Estate Values are Determined by Interactions in Three Sectors:

* The Real World: User (Space) Markets

* The Financial World: Capital Markets

* Governmental Sector

Space vs. Property vs. Capital Markets

User Market:

* Market for the physical real estate

* “Buyers” receive right to use space

* Sometimes called “space market” or “rental market”

* Where rental rates are determined

* Competition for available space

* On demand side:

* Individuals, households, and firms who require space either for consumption or production purposes

* On supply side:

* Real estate owners/operators who rent space to tenants

Segmentation of user/space markets

* Both demand and supply side of user markets are very specific to location and building...