Consider two undeveloped land sites. At site $1,$ the highest and best use $($HBU$)$ is a warehouse that would cost $$1$MM to build $($exclusive of land cost$)$ and would then generate annual net rents of $$150,000,$ which are expected to grow at $3\%$ per year. At site $2,$ the HBU is an apartment building that can generate net rents of $$800,000,$ projected to grow at $1\%$ per year, with a construction cost of $$5$MM$.$ Suppose investors buying built properties require an initial annual return of $12\%$ minus the expected annual growth rate in the net income, as a percent of the investment cost. For example, they would want an initial yield or cap rate of $9\%$ for the warehouse. Suppose the land value for site $1$ is $$1$MM$,$ and the land value for site $2$ is $$2$MM$.$ On which of these sites is currently profitable to undertake construction?