IRR
See internal rate of return.
IRR of the differential
The internal rate of return on the difference between the cash flows for any two investment alternatives. Also see internal rate of return method and differential cash flow
Imbalances
Unstable or non-sustainable conditions which arise out of a market disequilibrium or the lack of balance between the forces of supply and demand in any or all subcategories of commercial properties in one or more geographic submarkets over a given time period.
Imperfect market
A market in which product differentiation exists, there is a lack of important product information, and certain buyers or sellers may influence the market. Commercial real estate is bought and sold in an imperfect market.
In-migration
The process by which a given geographic area absorbs new individuals/households from locations outside that area (an influx of individuals/households to a given area).
In-the-door approach
An approach to estimating the trade area (and sales/revenue potential) for a given retail establishment or center based on observed flow patterns or traffic counts, where estimates are obtained for both the percentage of traffic that stops or patronizes that establishment/center and the percentage of people coming in-the-door who make a purchase.
Income capitalization approach
A method to estimate the value of an income-producing property by converting net operating income into a value. The cap rate is divided into the net operating income to obtain the estimated value. Value = net operating income ÷ capitalization rate
Index lease
A lease in which the rental amount adjusts accordingly to changes and/or movements in a price index, commonly the consumer price index.
Industrial gap
The difference between the demand for an industrial property and the supply of that property in a given market or area.
Industrial location decision-making
A decision-making process that involves the examination and evaluation of alternative locations or sites for a particular industrial activity based on location/site feasibility characteristics; great importance is placed on the national or regional location decision (usually narrowing the location decision to a handful of cities or localities), with less importance given to the local site selection process.
Industrial property
Commercial properties that are used for the purposes of production, manufacturing, or distribution.
Industrial service area
The geographic area within a market that contains either an acceptable number of employees (and meets necessary labor requirements), or the necessary service and resources needed to support a given industrial activity or facility.
Initial investment
The outlay of cash needed to acquire an investment.
Input-output modeling
A mathematical approach to the description of a local or national economy, which takes explicit account of the flows and linkages within and between economic sectors. Recognizing that output (products and services) from one sector may require production inputs for other sectors, used to estimate sector- and region-specific multipliers for the purpose of analyzing the direct and indirect impacts of a given change in a particular sector
or region.
Insurable value
The value of the portions of the property that are physically destructible.
Intangible characteristics
Attributes that are not directly measurable or quantifiable, and therefore must be expressed in a qualitative or abstract manner.
Interest-only loan
A method of loan amortization in which interest is paid periodically over the term of the loan and the entire original loan amount is paid at maturity.
Internal growth
The rate at which a base population or the number of new households is changing due to natural increase (births less deaths) and time (the aging and maturation of that population), as children are born, grow up, and form families and households of their own.
Internal rate of return (IRR)
The percentage rate earned on each dollar that remains in an investment each year. The IRR of an investment is the discount rate at which the sum of the present value of future cash flows equals the initial capital investment.
Internal rate of return method
A comparison method that calculates the internal rate of return of the differential cash flow between any two investment alternatives, then compares that rate with the user’s opportunity cost. Also see internal rate of return.
Inventory
The supply or stock of a given commodity or a listing thereof.
Investing
Limiting current consumption in favor of future consumption.
Investment value
The value to a specific investor, based on that investor’s requirements, tax rate, or financing.