VIPSolutionsAs CFO for Everything.Com, you are shopping for 5,000 square feet of usable office space for 25 of your employees in Center City, USA. A leasing broker shows you space in Apex Atrium, a 10-story multitenant office building. This building contains 255,000 square feet of rentable area. 30,000 square feet of common area is the lobby area usable by all tenants. The 5,000 square feet of usable area that you are looking for is on the seventh floor, which contains 28,000 square feet of rentable area and 2,000 square feet of common area. The leasing broker indicated that base rents will be $30 per square foot of rentable area. What is the annual rent for the 5,000 square feet of useable area? i need step by step solution
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As CFO for Everything.Com, you are shopping for 5,000 square feet of usable office space for 25 of your employees in Center City, USA. A leasing broker shows you space in Apex Atrium, a 10-story multitenant office building. This building contains 255,000 square feet of rentable area. 30,000 square feet of common area is the lobby area usable by all tenants. The 5,000 square feet of usable area that you are looking for is on the seventh floor, which contains 28,000 square feet of rentable area and 2,000 square feet of common area. The leasing broker indicated that base rents will be $30 per square foot of rentable area. What is the annual rent for the 5,000 square feet of useable area? i need step by step solution
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Asked by: Rohit Vaghela
Created at: 2026-01-20 02:03:15
Asked by: Rohit Vaghela
Created at: 2026-01-20 02:03:15
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# Step-by-Step Solution: Annual Rent Calculation
## 1. **Key Definitions**
- **Usable Area (UA):** Space exclusive to the tenant.
- **Rentable Area (RA):** Usable area **plus** a proportionate share of building common areas.
- **Common Area Factor (Load Factor):** The ratio used to convert usable area to rentable area.
## 2. **Given Data**
- **Desired Usable Area:** 5,000 sq ft
- **Seventh Floor Rentable Area:** 28,000 sq ft
- **Seventh Floor Common Area:** 2,000 sq ft
- **Base Rent:** $30/sq ft (of rentable area)
- **Building Usable Area:** Not directly given, but can be calculated.
## 3. **Calculate the Load Factor**
### For the Seventh Floor
- **Usable Area on 7th Floor:**
Usable = Rentable - Common Area
Usable = 28,000 - 2,000 = **26,000 sq ft**
- **Load Factor Formula:**
\[
\text{Load Factor} = \frac{\text{Rentable Area}}{\text{Usable Area}}
\]
\[
\text{Load Factor (7th floor)} = \frac{28,000}{26,000} = 1.0769
\]
## 4. **Calculate Rentable Area for Your Lease**
- **Your Rentable Area:**
\[
\text{Rentable Area} = \text{Usable Area} \times \text{Load Factor}
\]
\[
= 5,000 \times 1.0769 = 5,384.6 \text{ sq ft}
\]
Usually rounded to the nearest whole number:
\[
\approx 5,385 \text{ sq ft}
\]
## 5. **Calculate Annual Rent**
- **Annual Rent Formula:**
\[
\text{Annual Rent} = \text{Rentable Area} \times \text{Base Rent}
\]
\[
= 5,385 \times \$30 = \$161,550
\]
## 6. **Final Answer**
> **Annual rent for 5,000 sq ft of usable area:**
> **$161,550**
---
## **Summary Table**
| Usable Area | Load Factor | Rentable Area | Base Rent | Annual Rent |
|-------------|-------------|---------------|-----------|-------------|
| 5,000 sq ft | 1.0769 | 5,385 sq ft | $30/sq ft | $161,550 |
---
## **Formulas Used**
- **Load Factor:** \(\text{Rentable Area} / \text{Usable Area}\)
- **Rentable Area:** \(\text{Usable Area} \times \text{Load Factor}\)
- **Annual Rent:** \(\text{Rentable Area} \times \text{Base Rent}\)
---
**Note:** Always verify with the landlord/broker how the building calculates the load factor (sometimes building load factor is used instead of floor load factor). This solution uses the floor's numbers as given.
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