USP 151 flashcards

Land

A fixed, immobile resource in supply, whose economic value is largely determined by its location

Urban Economics

The study of how location, land use, and economic activities interact in urban areas

Bid-Rent Theory

An economic theory explaining how land users are willing to pay different amounts (rents) for locations closer to a central point to maximize accessibility.

Central Business District (CBD)

The focal point in a city where commercial activities cluster and land values are typically highest

Accessibility

The ease of reaching desired goods, services, activities, or destinations, which greatly influences land value and use.

Bid-Rent Curve

A graph showing the inverse relationship between distance from the CBD and the amount different land users are willing to pay for land.

Land Use Patterns

The arrangement or distribution of different land uses (commercial, industrial, residential) in an urban area.

Concentric Zone Model

A spatial model of urban land use that depicts cities as a series of circular rings surrounding the CBD.

Commuting Costs

Expenses (time, money, energy) incurred by individuals or firms to travel to the CBD, affecting location decisions

Spatial Structure

The way different types of land uses and populations are arranged in an urban space

Marginal Utility

The added satisfaction gained from using one more unit of a good or service — in this case, land closer to the center.

Urban Sprawl

The outward spread of a city and its suburbs over more and more rural land, often driven by lower transport costs

Zoning

Legal regulations that control how land in certain areas can be used (residential, commercial, industrial).

Suburbanization

The process of population movement from within cities to the outskirts, facilitated by improved transportation

Monocentric City Model

A model of urban structure that assumes a single central point (CBD) where all economic activity is focused

What is an entitlement in real estate development?

Legal permission to develop property, including zoning, use, and density approvals.

What are the two main types of permit processes?

Ministerial (By Right) and Discretionary

What is a ministerial permit?

A permit that is granted automatically if standards are met, no discretion or public hearing

What is a discretionary permit?

A permit subject to staff review, public hearings, and appeals

What does CEQA stand for?

California Environmental Quality Act

What does CEQA require developers to do?

Analyze and disclose environmental impacts and mitigate them where feasible

What are the three CEQA outcomes?

No impact, mitigated impact, or unmitigated significant impact

What is the Coastal Height Limit in San Diego?

30 feet for developments west of I-5

What is the land use policy hierarchy in California?

State law, General Plan, Community Plan. Zoning

What is SB 9?

A law allowing lot splits and duplexes in single-family zones without discretionary review

What is SB 10?

A law allowing up to 10-unit developments in transit-rich areas.

What is the role of the Coastal Commission in development?

Oversees coastal zone permitting and environmental protection

What does By Right mean in zoning?

The project complies with existing zoning and doesn’t need special approval

What is the key starting point of any development project?

Site selection

What physical features should be considered in site analysis?

Slope, soil, flood zones, seismic risk

What legal aspects are assessed in site analysis?

Zoning, easements, overlays and title

What is contextual site analysis?

Evolution of neighborhood trends, land uses, and adjacent developments.

What does PMA stand for?

Primary Market Area

What does a PMA define?

The geographic area where most project users or residents will come from.

What are the steps in conducting a market study?

Define PMA, assess demand, analyze competition, identify gaps.

What is a competitive set?

A group of comparable properties used to assess a property's value and performance in the market

What is a gap analysis in real estate?

A comparison of market demand and current supply to find unmet needs

What is SWOT analysis used for in development?

To ID Strengths, Weaknesses, Opportunities, and Threats of a site

Why is demographic data important in site analysis?

IT reveals population size, income, and lifestyles trends that affect demand

What is the relevance of community feedback in site analysis?

It can reveal local concerns and influence project feasibility and approvals

What is a pro forma in real estate?

A financial model projecting project revenue, expenses and returns

What does NOI stand for?

Net Operating Income

How is NOI calculated?

Gross income minus operating expenses and vacancy loss

What is the land residual method?

A method to estimate how much a developer can afford to pay for land

What are the main components of a pro forma

Revenue, expenses, financing, developer fee, profit / return metrics

What is included in operating expenses?

Property taxes, insurance, maintenance, management

What is the purpose of a sensitivity analysis?

To test how changes in key variables affect profitability

Why does time = money in development?

Delay increases holding costs and reduce returns

What is a typical range for construction loan interest rates?

Typically around 7% to 8% but varies based on risk and market conditions

What is a developer fee?

Compensation to the developer for managing the project, often a % of total costs

What return metrics are used to evaluate a deal?

Return on Cost, Internal Rate of Return (IRR), Return on Equity

What is Return on Cost?

NOI divided by total development cost

What does a feasibility study determine?

Whether a project will likely be profitable under current assumptions

What is the importance of comparable ("comps")?

They help estimate realistic rents or sales prices