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stabilized value

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stabilized value

The value of a property after it reaches stabilized occupancy.Most appraisals of property to be developed include one value for the day the project opens its doors and then a separate stabilized value.



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This method involves capitalizing the stabilized net operating income (NOI) by an appropriate capitalization rate (Ro) in order to estimate the stabilized value of the project.
Some of these relationships are as follows: * NOI per square foot and price per square foot (all property types) * NOI per unit/room and price per unit/room (apartment or hotel) * Percent office finish-out and price per square foot (industrial) * Effective gross income multipliers and expense ratios (all property types) Once the comparable sales have been reconciled to the subject property on a stabilized basis, the appraiser can infer a stabilized value opinion for the subject property.
Property 50,000 square feet (sf) multitenant office building - 5 years old 95% Stabilized occupancy 0% Actual occupancy 1 year Forecasted lease-up time to reach stabilized occupancy $10 psf Estimated Tenant Improvement (TI) costs per square foot 6% Total annual leasing commission cost 5 years Typical lease term $15 Gross rent per square foot (PSF) $5 Estimated expenses PSF 10% Estimated Overall Rate As Stabilized Value -- $4,750,000 (50,000 sf X 95% occupancy X $10 psf - net rent) divided by .
 
 
 
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