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$62,128/3,600 sq. ft.).2 These rental rates, which were reached
by the parties to the lease following their informed review, are
slightly higher than the square footage rates that the
Schwalbachs charged the tenants of the Hudson building. Given
the additional fact that the Hudson building is unimproved
property, and that the River Falls building is an established
dental clinic, we believe that the market adequately supports the
rental rates that the Schwalbachs charged petitioner for the
River Falls building.
Respondent looks to the $7 rate charged to Dr. Nelson and
argues that this rate represents the fair rental rate of space in
the River Falls building. We do not agree. The $7 rate charged
Dr. Nelson is not an adequate measure of fair rental value.
Dr. Schwalbach was prompted to let the premises to Dr. Nelson in
order to secure his presence in the building 1 day a week. We do
not believe that Dr. Nelson let the premises at the price that a
lessee would have paid an unrelated lessor to use the premises
daily seeing that Dr. Nelson used the premises only 1 day a week,
and petitioner was entitled to use the space on other days. Such
a compulsion on the part of the lessor, and such a limitation on
the part of the lessee, is contrary to the test of fair rental
2 We are unable to determine the exact rental rate for the
3,600 square feet of building space because the record does not
reveal the amount of rent that was attributable to petitioner's
lease of the parking lot.
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Last modified: May 25, 2011