ou have a prospective lessee for your office property and have the following options (assume a 7-year window and 2% discount rate). Which one will provide you with the highest effective rent? a. Option A: Rent is $98 per rentable square foot with the lessor paying operating expenses up to $40, lessee responsible for remainder. Operating expenses are $39 in first year and increase by $3 each year b. Option B: Rent is $90 per rentable square foot and will increase by $3 each year. Operating expenses are $40 during the first year and will increase by $1 every year. c. Option C: Rent is $91 per rentable square foot per year and will increase by $2.50 each year. Operating expenses are $45 for the first year and will increase by $3 every year, with lessor covering up to $48.
You have a prospective lessee for your office property and have the following options
(assume a 7-year window and 2% discount rate). Which one will provide you with the
highest effective rent?
a. Option A: Rent is $98 per rentable square foot with the lessor paying operating
expenses up to $40, lessee responsible for remainder. Operating expenses are $39
in first year and increase by $3 each year
b. Option B: Rent is $90 per rentable square foot and will increase by $3 each year.
Operating expenses are $40 during the first year and will increase by $1 every year.
c. Option C: Rent is $91 per rentable square foot per year and will increase by $2.50
each year. Operating expenses are $45 for the first year and will increase by $3
every year, with lessor covering up to $48.
Step by step
Solved in 5 steps
