1) Assume you have a client with a requirement for a building with 114,000 SF located in the Lehigh Valley of PA. Total hard and soft costs are $69/SF. You are trying to achieve an unleveraged yield of 5.4%. The client is willing to pay a rental rate of $4.55/SF/Yr. Assume a building to land coverage ratio of 50%. What is the most you will pay for the land in terms of $/SF of Land Area?

Answer: $8.00

2) You conduct market research. If land is being offered to you for $7.80/SF. Should you take it?

Answer: Yes. The lower the development cost, the higher your yield.

3) Assume you have a client with a requirement for a building with 114,000 SF located in the Lehigh Valley of PA. Total hard and soft costs are $69/SF. Assume a building to land coverage ratio of 50%. Land is being offered to you at $8.00/SF of Land Area. You are trying to achieve an unleveraged yield of 5.4%. What is the min. rent that you need to achieve your target yield?

Answer: $4.55/SF/Yr.

*Need work shown on how to get these answers, thank you!

A B D E F G H 3 4 5 2 Urban 6 7 8 Type of Facility Prior Use of Land Submarket Distance to NYC Location 1 3 4 5 5 Multi Market Distribution Gateway Distribution City Distribution Last Touch Multi-Story Farm Land Farm Land Prior Commercial Urban Lehigh Valley, PA Exit 8A, NJ Turnpike, NJ Elizabeth, NJ Maspeth, NYC Gowanus, NYC 1-day drive to market 1-day drive to market 1-day shipping Delivery in hours Delivery in hours Key transportation hubs Access to major ports Periphery of urban areas Infill, similar to retail Infill, similar to retail Environmental Remediation Proximity to Final Customer Proximity to Labor Transportation Low Low Low Semis Likely Medium Medium Semis Likely High Medium Intermodal High Immediate High Trucks/Vans High Immediate High Trucks/Vans Year Built Clear Height in Feet Building SF 2010 40 114,000 2000 29 108,000 1993 25 173,000 1985 23 138,000 2021 30 138,000 22 Rent SF/Yr Annual Rent 4.55 518,700 7.5 810,000 10 1,730,000 3,036,000 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 4,830,000 Land $/SF Land SF Land Cost $ 50% 8.00 228,000 1,824,000 15.00 216,000 3,240,000 30.00 346,000 10,380,000 140.00 276,000 38,640,000 210.00 276,000 57,960,000 15% Hard Costs S/SF Soft Costs S/SF Total Hard and Soft Costs S/SF Total Hard and Soft Costs S/SF 60.00 9.00 69.00 7,866,000 75.00 11.25 86.25 9,315,000 90.00 13.50 103.50 17,905,500 120.00 18.00 138.00 19,044,000 210.00 31.50 241.50 33,327,000 Total Costs $ 9,690,000 12,555,000 28,285,500 57,684,000 91,287,000 Unleveraged Return on Total Cost 5.4% 6.5% 6.1% 5.3% 5.3% A B D E F G H 3 4 5 2 Urban 6 7 8 Type of Facility Prior Use of Land Submarket Distance to NYC Location 1 3 4 5 5 Multi Market Distribution Gateway Distribution City Distribution Last Touch Multi-Story Farm Land Farm Land Prior Commercial Urban Lehigh Valley, PA Exit 8A, NJ Turnpike, NJ Elizabeth, NJ Maspeth, NYC Gowanus, NYC 1-day drive to market 1-day drive to market 1-day shipping Delivery in hours Delivery in hours Key transportation hubs Access to major ports Periphery of urban areas Infill, similar to retail Infill, similar to retail Environmental Remediation Proximity to Final Customer Proximity to Labor Transportation Low Low Low Semis Likely Medium Medium Semis Likely High Medium Intermodal High Immediate High Trucks/Vans High Immediate High Trucks/Vans Year Built Clear Height in Feet Building SF 2010 40 114,000 2000 29 108,000 1993 25 173,000 1985 23 138,000 2021 30 138,000 22 Rent SF/Yr Annual Rent 4.55 518,700 7.5 810,000 10 1,730,000 3,036,000 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 4,830,000 Land $/SF Land SF Land Cost $ 50% 8.00 228,000 1,824,000 15.00 216,000 3,240,000 30.00 346,000 10,380,000 140.00 276,000 38,640,000 210.00 276,000 57,960,000 15% Hard Costs S/SF Soft Costs S/SF Total Hard and Soft Costs S/SF Total Hard and Soft Costs S/SF 60.00 9.00 69.00 7,866,000 75.00 11.25 86.25 9,315,000 90.00 13.50 103.50 17,905,500 120.00 18.00 138.00 19,044,000 210.00 31.50 241.50 33,327,000 Total Costs $ 9,690,000 12,555,000 28,285,500 57,684,000 91,287,000 Unleveraged Return on Total Cost 5.4% 6.5% 6.1% 5.3% 5.3%