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Income Approach -- continued <br />Reported Subject Vacancy and Market <br />Subject Vacancy: The subject is currently 100% vacant. Historically, the building has been owner <br />occupied. <br />Market Vacancy: <br />Vacancy Rates <br />Area <br />Use <br />Date <br />Source <br />Rate <br />Twin Cities Metro <br />Retail <br />Q2 2018 <br />Northmarq <br />8.30% <br />Twin Cities Metro <br />Retail <br />Q4 2018 <br />Colliers <br />6.21% <br />Twin Cities Metro <br />Retail <br />Q2 2018 <br />CBRE <br />8.14% <br />The subject is a single -user highway commercial building that is currently vacant. The site also has <br />outdoor storage potential (although small). Historical vacancy for commercial in the Ramsey market has <br />ranged from 8% to 20%. Based on the market surveys, local data, and typical buyer/investor <br />expectations, a rate near the mid -range is appropriate; a stabilized vacancy rate of 8% is logical. <br />Market Operating Expenses <br />The comparable expenses reported the following (from adjustment grid): <br />Expense Summary <br />Minimum <br />Maximum <br />Average <br />Median <br />per SF <br />$3.00 <br />$8.75 <br />$5.29 <br />$4.75 <br />28% <br />44% <br />37% <br />37% <br />Operating expense ratio for this property type are typically around 35% - 60%+ of the effective gross <br />income, or about $4.75 - $8.15+ per SF. See Income Statement for subject reported and estimated <br />expenses. <br />Nagel) Appraisal Incorporated 1952.544.8966 <br />