1.) How you will change your answer if using the load factor for the common area of the whole building. Which one the does owner prefer?

As CFO for Everything.Com, you are shopping for 5,000 square feetof usable office space for 25 of your employees in Center City, USA. A leasing broker shows you space in Apex Atrium, a 10-storymultitenant office building. This building contains 300,000 square feet of gross building area. A total of 45,000 square feet is interiorspace and is nonrentable. The nonrentable space consists of areascontained in the basement, elevator core, and other mechanical andstructural components. An additional 30,000 square feet of commonarea is the lobby area usable by all tenants. The 5,000 square feet ofusable area that you are looking for is on the seventh floor, whichcontains 28,000 square feet of rentable area, and is leased by othertenants who occupy a combined total of 20,000 square feet of usablespace. The leasing broker indicated that base rents will be $30 persquare foot of rentable area.

Use the load factor for the common area on the seventhfloor, how much the total rent per square should be paid? Solution: On 7th floor, rentable space = 28,000 Common area on 7th floor = 30,000/10 = 3,000 Usable area = rentable space - common space = 25,000 Load factor on 7th floor = rentable space/usable space=28,000/25,000=1.12 Total rent = 5,000*$30*1.12=168,000 How you will change your answer if using the load factor for the common area of the whole building? Load factor = (300,000-45,000)/(300,000-45,000-30,000)

2.) Rent is $39/sq ft and increases by CPI index 3% each year thereafter. Operating expenses are $20/sq ft, increasing by $1/year. What is the effective rent?