Rent Loss

[GroundSwell]

Here's the scenario: you've already concluded an "as stabilized" value for the subject and you're using a residual technique to back into your "as is" value. One of the items you need to consider is rent loss.

If you’ve determined that “as stabilized” occupancy is 90% for an office building, and you’re calculating rent loss over an absorption period – do you calculate the rent loss up till the subject is 90% occupied or until it’s 100% full?

Would you be "double dipping" if you calculated it up to the 90% since the "as stabilized" value already incorporates the 10% vacancy?

 

[PropertyEconomics]

You would calculate the rent loss up to stabilized occupancy. Vacancy is a normal rent loss while lease up is rent loss over and above that of normal vacancy.

 

[Pittsburgh Pete]

What PE said!!!

P.S. You're lucky Webbed Foot isn't a CG

 

[Financially Feasible]

What PE said!!!

P.S. You're lucky Webbed Foot isn't a CG

You're right, Pete... but he might get on you for stating that he has two different kind of feet. :icon_mrgreen:

 

[Pittsburgh Pete]

You're right, Pete... but he might get on you for stating that he has two different kind of feet. :icon_mrgreen:

My bad--that would be "Webbed Feet"--not one but both!!!

 

[BobfromSalem]

I say account for rent loss to get you up to market stabilized occupancy levels (not necessarily 100%, but what the market shows as stabilized occupancy).