Practice Question Solved: 7 Highest and Best Use (HBU) Analysis Imagine you are trying to determine HBU and the subject property has 3 different uses: Industrial. Retail and Office The ideal improvement for a small industrial complex is 100.000 saft and it would cost to build $12.500.000. The buildina's cap rate is 7.5%, the vacancy rate in this market for this type of property is 4% and the operating expenses The ideal improvement for a small retail complex is 20,000 sqft and it would cost to build $2,500,000. The building's cap rate is 6.5%, the vacancy rate in this market for this type of property is 5% and the operating expenses include The ideal improvement for a small office building is 15,000 saft and it would cost to build $3.500.000. The buildina's cap rate is 8.0%, the vacancy rate in this market for this type of property is 10% and the operating expenses includ Consider that the lot is vacant and the cap rate for land is the same independent of the use. Current market caprates for land are 10%. (Price for land = NOI/CapRate. Consider NO as the rent allocated to land using the rent feasib Which use is the highest and best use for the subject property and the rent allocated to the land: -Retail and the rent allocated to the land is 5.76 $/Sqft -Industrial and the rent allocated to the land is 1.63 $/Sqft -Office and the rent allocated to the land is 6.93 S/Sqft -Industrial and the rent allocated to the land is 7.04 $/Sqft O Retail and the rent allocated to the land is 18 $/Sqft O Office and the rent allocated to the land is 4.81 $/Sqft

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 1P: Reynolds Construction (RC) needs a piece of equipment that costs 200. RC can either lease the...