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office space. Because it was unfinished at the time, Carneghi
estimated a lower market rent of $.80 per square foot for the
Third floor office space. After subtracting operating expenses,
which he estimated at $.35 per square foot, Carneghi determined
the triple net equivalent rent of $.75 per square foot for the
Second floor office space, and triple net equivalent rent of $.45
per square foot for the Third floor office space.
For the ground floor of the East retail space, Carneghi
estimated a triple net rental rate of $1.20 per square foot. For
the mezzanine floor, he estimated a lower rental rate, triple
net, of $.60 per square foot.
Using the net rentable square footage determined by
Ingram/Ewing for the different areas, Carneghi estimated the
monthly gross potential income for the property. From this
figure, he subtracted a “vacancy and credit loss” for both the
space covered under the Jacobs lease and the eastern retail
space. Carneghi stated that a vacancy and credit loss estimate
“is often utilized in the market to account for eventual vacancy
and credit loss over an investment period.” For the space
covered under the Jacobs lease, Carneghi estimated that a zero
vacancy deduction was appropriate, and that for the East retail
space, a “standard” vacancy and credit loss allowance of 5
percent was appropriate.
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