Question
You own a single tenant office building with 5,500 rentable square feet. The current tenant's lease ends December 31 of this year and you are
You own a single tenant office building with 5,500 rentable square feet. The current tenant's lease ends December 31 of this year and you are trying to project your vacancy for next year. You believe there is a 75% chance the current tenant will renew their lease. If a new tenant were to move into the space, the base rental rate would be $22.00/SF per year and if the current tenant renews their lease, the base rental rate would be $19.00/SF per year. You believe that if the current tenant vacates, you will experience 8 months of vacancy and 0 months of vacancy if the current tenant renews. In your pro forma for next year, how much would you calculate as total revenue lost for next year due to vacancy - said differently, what would your projected vacancy (in dollars) be for next year? Round your final answer to the nearest penny.
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