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a full service expense structure, would be $1.00 per square foot
per month for the retail/office portion of the Redwood City Fox.
Mansbach assigned 50 percent of this value, or $.50, to the 876
square feet of the Third Floor office space. For the 4,701
square feet of mezzanine space, Mansbach assigned a "storage
rent" of $.25 per square foot per month.
Mansbach estimated total potential gross income from the
property as of the valuation date, based on the above market
rents, to be $149,031. From this figure, Mansbach deducted a
vacancy and collection loss of 5 percent to arrive at effective
gross income of $141,579.
Mansbach's market rent estimates were stated on a full
service basis, whereby the landlord is responsible for all
associated expenses. Based on the actual expenses incurred by
Jacobs' lease of the property from 1987 through 1992, as well as
average reported expenses from the BOMA survey, Mansbach
estimated expenses for the retail/office component at $4.95 per
square foot, per month. Included in his estimated expenses were
a "management and administration" expense of 3 percent of
effective gross income, and a "reserves" expense of 2 percent of
effective gross income.
Mansbach chose a capitalization rate of 9 percent. In
estimating this rate, Mansbach analyzed a survey reported in the
January 1987 issue of the Appraisal Journal which identified
institutional investors' criteria for investment, as of the
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