The lease for a tenant occupying 18,000 square feet is expiring next year and you're not sure if they plan to renew or not. If they renew, you will offer them $12/sf for tenant improvements. If the tenant leaves, you expect that you will have to offer a new tenant $20/sf. You expect to receive market rent of $35/sf for the space next year, regardless of whether your existing tenant renews or not. The brokerage fee for a new tenant is 20% of the first year's rent and 10% for a renewing tenant.

STEP 1: If you estimate the likelihood of your tenant's renewal to be 90%, what is the expected TI expense?

STEP 2: What is the expected brokerage fee?

****NO PYTHON ANSWER IS ALLOWED. *** PLEASE SPECIFY EACH STEP THOROUGHLY! WE ALL HERE TO LEARN. THANKS!!