Question

An office building with storefront retail is located in central Portland.

Determine the value of the building with a 5.75% cap rate given the following information.

Floors 2, 3, and 4 each contain 9,200 SF of office space rented for $21.50/SF per year, gross

The 8,500 SF of ground floor retail space is leased for $29.00/SF per year

The basement has 2,000 SF of storage which Batman rents for $1.50/SF per year

There are 15 parking spaces for $180 per space per month

PGI

Vacancy & Credit Loss (5%)

EGI

Operating Expenses ($9.50/SF, Excluding Basement)

NOI (Io)

Market VALUE:

Answer 1

Particulars	Working	Amount
PGI (Potential Gross Income)	See Note 1	875300
Less: Vacancy & Credit Loss (5%)	=5% of 875300	-43765
EGI (Effective Gross Income)		831535
Operating Expenses ($9.50/SF, Excluding Basement)	=9.5*((9200*3)+8500)	-342950
NOI (A)		488585
Cap Rate(B)		5.75%
Market Value = NOI/Cap Rate	=488585/5.75%	$8,497,130
Working
Note 1 : Potential Gross Income
Office Space(3 floor each 9200 SF @21.50/SF) = 9200*3*21.5 = 593400
Retail Space( 8500 SF @29/SF) = 8500*29 = 246500
Basement( 2000 SF @1.5/SF) = 2000*1.5 = 3000
Parking Spaces (15 for 180 each per month) = 15*180*12 = 32400
Total PGI = 593400+246500+3000+32400 = 875300