Estimate the market value of the following small office building. The property has $10,500$ square foot of leasable space that was leased to a single tenant on January $1,$ four years ago. Terms of the lease call for rent payments of $$9,525$ per month for the first five years, and rent payments of $$11,325$ per month for the next five years. The tenant must pay all operating expenses.

During the remaining term of the lease, there will be no vacancy and collection losses; however, upon termination of the lease it is expected that the property will be vacant for three months. When the property is released under short$-$term leases, with new tenants paying all operating expenses, a vacancy and collection loss allowance of $8$ percent per year is anticipated.

The current market rental for properties of this type is $$11$ per square foot when tenants pay all operating expenses, and this rate has been increasing at a rate of $3$ percent per year. The market discount rate for similar properties is about $11$ percent, the $$going$-$in$$ cap rate is about $9$ percent, and terminal cap rates are typically $1$ percentage point above going$-$in cap rates.

Required:

Prepare a multiyear pro forma $($perhaps using Excel$)$ showing the annual rental income, NOIs, and net proceeds from sale of the property at the end of an eight$-$year holding period. Then use the information provided to estimate the market value of the property.

Note: Round your final answers to nearest whole dollar amount. Do not round intermediate calculations.