The Student Room Group

Real Estate

You own a 6,000 sf office building that is fully occupied except for one 1,000 sf suite. You recently signed a 5 year lease for this suite. The lease is for $12 PSF but you have to provide the tenant with $5 PSF of tenant improvements and 6 months free rent. You also owe the leasing broker a 5.0% commission. With the new lease in place, you expect the property to produce $100,000 of NOI next year after accounting for the free rent. Someone has offered to buy the property from you for a 5.0% cap rate and the potential buyer believes that the sale price should be $2,000,000.

What is the dollar amount of Leasing Commissions due?

$600
$2,700
$3,000
$5,000
Reply 1
So what do you think is the answer, instead of asking other people to do your homework?
Reply 2
Original post by Elenashenkar
You own a 6,000 sf office building that is fully occupied except for one 1,000 sf suite. You recently signed a 5 year lease for this suite. The lease is for $12 PSF but you have to provide the tenant with $5 PSF of tenant improvements and 6 months free rent. You also owe the leasing broker a 5.0% commission. With the new lease in place, you expect the property to produce $100,000 of NOI next year after accounting for the free rent. Someone has offered to buy the property from you for a 5.0% cap rate and the potential buyer believes that the sale price should be $2,000,000.

What is the dollar amount of Leasing Commissions due?

$600
$2,700
$3,000
$5,000


Give up, what's the punchline?
Firstly the terminology looks very American rather than UK based, secondly you shouldn't be asking random websites.

Nevertheless I think we can do a little bit - it seems a very convoluted and confusingly written question, but it basically boils down to the 'leasing broker' being entitled to 5% of something - you just need to determine what that something is - is it the $100,000 NOI or something else?

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