A Sarasota shopping center has a gross leasable area of 75,000 square feet with an average rent of $18 per square foot annually. The vacancy rate is 8%, and operating expenses are $675,000 per year. Using a 9% capitalization rate, what is the indicated value?
Correct Answer
B) $6,300,000
GPI = 75,000 × $18 = $1,350,000. EGI = $1,350,000 × 0.92 = $1,242,000. NOI = $1,242,000 − $675,000 = $567,000. Value = $567,000 ÷ 0.09 = $6,300,000.
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