- CFA Exams
- CFA Level I Exam
- Study Session 15. Alternative Investments
- Reading 39. Private Real Estate Investments
- Subject 2. Characteristics and classifications
CFA Practice Question
In times of prosperity, which type of commercial properties will likely to perform the best?
A. Office buildings.
B. Warehouses.
C. Shopping malls.
Explanation: Demand for space causes rental rates to increase and an extended time period is required to build an office tower to relieve the pressure on the market and rents.
User Contributed Comments 3
User | Comment |
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pires100 | I think the same thing can be said about retail properties. True, maybe not the the extent of office properties but retail properties also have percentage rent clauses which would allow the owner to benefit from much higher income during prosperous times. |
BradRoss | agree with pires. Two good choices |
paynito1 | Maybe something about the anchor tenants like Sears/JCPenney's/Dillards having super-long term leases like 25 years, so it keeps you from jacking up your AvgPricePerFoot as much in retail, but you the rates adjust upward for office space more quickly. |