A potential office building development costs $110 per square foot to construct, excluding land costs. The developer
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A potential office building development costs $110 per square foot to construct, excluding land costs. The developer now holds an option to purchase the land for $20,000,000; the operating expense ratio is expected to be 40 percent, the stabilized occupancy level for the market is 90 percent, and the market capitalization rate is 8 percent. The building proposed by the developer contains 400,000 square feet of space and gross rents for the building are expected to be $26 per square foot. According to the front door approach to financial feasibility, should the developer move ahead with the project?
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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