Economic base
Those economic activities or sectors in a local or regional economy that account for a certain share of the area’s income that is generated from exports of goods and services.
Economic base analysis
Inquiries that focus on the extent to which changes in basic employment (export-oriented activities and associated wage-income) affect the economic, employment, and population growth of a local or regional economy.
Economic base multiplier
A measure that provides a rough estimate of how changes in basic employment will affect total employment in a given region (all other things being equal); defined as the ratio of total employment to basic employment.
Economic characteristics
Attributes of the workforce, including production and employment activities.
Economic obsolescence
The reduction in a property’s value due to external circumstances such as legislation or changes in nearby property use.
Economic sectors
Branches or divisions of a local or regional economy in which particular activities take place.
Effective
An amount after a base amount has been adjusted for concessions, allowances, and costs.
Efficiency
A measure of the capacity or effectiveness of space to produce the desired results with a minimum expenditure of time, money, energy, and materials.
Efficiency percentage
The relationship of useable area to rentable area on a given property. Also see add-on factor, load factor, and rentable-to-useable ratio. Formula:
Efficiency % = Useable square feet / Rentable square feet
Employment ratios
The percentage of total employees (at the firm or industry level) that are office space users.
Environmental conditions
Features or state of the physical environment and the surroundings, factors, or forces which influence or modify that environment.
Environmental hazards
Any physical or natural condition or event which possesses a risk to humans.
Environmental impacts
The repercussions of an activity or specific land use on the physical/social environment as a consequence of emissions, waste disposal, water and power usage, etc.
Equilibrium point
The price at which the quantity supplied equals the quantity demanded.
Equity lease
A type of joint venture arrangement in which an owner enters into a contract with a user who agrees to occupy a space and pay rent as a tenant, but at the same time, receives a share of the ownership benefits such as periodic cash flows, interest and cost recovery deductions, and perhaps a share of the sales proceeds.
Equity yield rate
The return on the portion of an investment financed by equity capital.
Exchange
Under Section 1031 of the Internal Revenue Code, like-kind property used in a trade or business or held as an investment can be exchanged tax-deferred. Under a fully qualified Section 1031 exchange, real estate is traded for other like-kind property. All capital gains taxes are deferred until the newly acquired real estate is disposed of in a taxable transaction. The underlying philosophy behind the deferral of capital gains taxes is that
taxation should not occur as long as the original investment remains intact in the form of (like-kind) real estate (like-kind refers to real property as such, rather than the quality or quantity of property).
Expansion
A phase of the real estate or business cycle characterized by the dramatic short-term increase in the supply of available units in a given market (due to economic growth and increasing construction activity) as a response to increasing and/or pent-up demand and rising price levels.
Expected value (EV)
The sum of the weighted averages of all possible outcomes of a probability distribution. Probability distribution is the collection of all possible outcomes for an event and their corresponding probabilities of occurrence. The probabilities of occurrence for each possible outcome are used as the weights. The sum of each possible value multiplied by its probability of occurrence equals the EV of the outcome. EVs can be calculated for any type
of outcome the investor chooses to analyze: net operating incomes, after-tax cash flows, and rates of return (IRRs). An example of calculating the EV of the IRR for an investment follows:
Expected value (EV)
Scenario IRR% Probability Weighted Average
Best-case 17.0 0.10 1.70
Most-likely case 14.6 0.80 11.68
Worst-case 13.2 0.10 1.32
Sum = 1.00 EV = 14.70
Expenditure patterns
The tendencies or propensities of individuals/households to spend disposable income on a given good or service in comparison to other goods and services (typically defined as a percentage of disposable income) in relation to income level or range and/or other demographic or socio-economic characteristics.
Expense stop
The level (or maximum amount) up to which the landlord will pay certain operating expenses. Amounts above the stop are the responsibility of the tenant.
External economies
Savings or cost-cutting allowances realized by firms or industries within a given city that are primarily due to the advantages of sharing production inputs, information, and infrastructure and/or possibly linked to a city’s comparative advantage to support a given activity.
External obsolescence
A form or source of accrued depreciation considered in the cost approach to market value. The loss of value is because of external forces and change. For example, a new mall causes traffic and congestion, negatively affecting residential property values nearby, or a motel is no longer viable because a highway is rerouted, or another example would be depressed market conditions.