Chapter 10 Valuation of Income Properties: Appraisal and the Market for Capital 335 3. Acme Investors is considering the purchase of the undeveloped Baker Tract of land. It is currently zoned for agricultural use. If purchased, however, Acme must decide how to have the property rezoned for commercial use and then how to develop the site. Based on its market study, Acme has made estimates for the two uses that it deems possible, that is, office or retail. Based on its estimates, the land could be developed as follows: Office Retall Rentable square feet Rents per square foot Operating expense ratio Avg. growth in NOI per annum Required return () Total construction cost per square foot 100,000 $24.00 40% 3% 13% $100 80,000 $30.00 50% 39 14% $100 Which would be the highest and best use of this site