A retail lease for 10,000 square feet of rentable space is being negotiated for a five-year term. The lease calls for a base rent of $32 per square foot for the coming year with step-ups of $1 per year each year thereafter. CAM charges are expected to be $3 for the coming year and are forecasted to increase by 6 percent at the end of each year thereafter. Additionally, the tenant must pay overage rents based on a percentage lease clause. The clause specifies that the tenant must pay 8 percent on gross sales over a breakpoint level of $900,000 per year. The owner believes that the tenant's gross sales will be $859,000 during the first year but should increase at a rate of 10 percent per year each year thereafter. Calculate the effective rent (per SF) for this lease.
A retail lease for 10,000 square feet of rentable space is being negotiated for a five-year term. The lease calls for a base rent of $32 per square foot for the coming year with step-ups of $1 per year each year thereafter. CAM charges are expected to be $3 for the coming year and are forecasted to increase by 6 percent at the end of each year thereafter. Additionally, the tenant must pay overage rents based on a percentage lease clause. The clause specifies that the tenant must pay 8 percent on gross sales over a breakpoint level of $900,000 per year. The owner believes that the tenant's gross sales will be $859,000 during the first year but should increase at a rate of 10 percent per year each year thereafter. Calculate the effective rent (per SF) for this lease.
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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Transcribed Image Text:A retail lease for 10,000 square feet of rentable space is being negotiated for a five-year term. The lease calls for a base rent of $32 per square foot for the coming year with step-ups of $1 per year each year thereafter. CAM
charges are expected to be $3 for the coming year and are forecasted to increase by 6 percent at the end of each year thereafter. Additionally, the tenant must pay overage rents based on a percentage lease clause. The
clause specifies that the tenant must pay 8 percent on gross sales over a breakpoint level of $900,000 per year. The owner believes that the tenant's gross sales will be $859,000 during the first year but should increase at a
rate of 10 percent per year each year thereafter. Calculate the effective rent (per SF) for this lease.
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