Carson Equity was recently given the opportunity to bid on an attractive development site in downtown Wichita Falls. The executives at Carson Equitybelieve there is a growing demand for highend office towers due to the growing demand by home health firms in the area. The investors at Carson Equity expect to achieve an 11% return on development projects and do not wish to begin developments if such return cannot be achieved. Jackie is the Head of Development at the firm who was given the task of assessing the feasibility of the Carson EquityOffice Tower project. Below are the cost and income data Jackie has collected for the project.

Below are the cost and income data Jackie has collected for the project:

Land cost $37 per GSF

Hard costs $73 per GSF

Soft costs $35 per GSF

Total development cost $145 per GSF

Rent $38 per leasable square foot

Operating costs $12 per GSF

Stabilized occupancy 94% of leasable square foot

Loss factor 30% of GSF

1. Calculate the expected return on cost (build to return/yield on cost/going in cap rate) for the Carson Equity Office Tower development project.

2. Does the expected return meet the investors threshold of 11% return on cost?

3. What is the minimum replacement rent per gross SF and per leasable SF that Jackiemust expect for the development to meet the investors expected return?

4. Given that FAR for this site is 5, how much should Jackiebe willing to pay per acreof land and still meet the return threshold set by the investors of Carson Equity?

5. How can Jackie increase the expected return on the site? Give 3 ideas.

SHOW EXCEL WORK PLEASE :)