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CABARRUS COUNTY 2012 APPRAISAL MANUAL ESTIMATED GROSS ANNUAL INCOME The primary measure of a commercial property's worth is the amount of income which a property can earn or command in the local market. Therefore, it is important to derive a good understanding of the rental income that the space would command on the open market. The basic question which needs to be answered is, "What is the current market rent of the subject properties ". The gross income is what the property will produce over a period of one year or a term of a lease. It is defined as the total amount of revenue a property is capable of producing prior to the deduction for vacancy and expenses. ESTIMATED GROSS ANNUAL MARKET RENTS BY IMPROVEMENT TYPES Improvement types 60 - 63 Apartments - Generally the market rent for apartment complexes is determined by their monthly rent per unit. The total square feet of a unit included into the monthly rent gives you a monthly square foot rate. To determine the annual rent of the entire complex you simply add up the yearly rent of each unit type. COMMERCIAL/ INDUSTRIAL Improvement types used with Model 07 - Generally your commercial, retail outlets will rent from $3.00 to $28.00 per square foot depending on the location, age and use of the retail outlet. Improvement types used with Model 04 are office buildings and vary from a minimum of $4.50 to $20.00 per square foot per year. Generally high rise office buildings demand a higher rent per square foot, due to the annual expenses running close to $25.00 per square foot per year. Improvement types used with Model 06 are typically industrial, manufacturing, distribution or storage facilities. The market rent for buildings of this nature run from $1.00 to $15.00 per square foot for typical good warehouse construction; however, the range can vary from $1.00 for mostly storage up to $18.00 for a warehouse that has more than 50% office space in a good location. These rates will be developed further throughout the revaluation project and established for the County. IDENTIFY VACANCY AND COLLECTION LOSS The amount of income which can be produced is determined not only by the size of the property but also the degree to which the property is utilized. Commonly, most properties experience some vacancies throughout the year along with collection losses. This amount is usually expressed as a percentage of the possible gross. These measures of losses from vacancies and collections are particularly applicable to multi- tenant properties. There are basically three sources of such information; past experience of the subject, market experience of similar properties, and other published studies and reports. Cabarrus County — 2012 Revaluation INCOME PROPERTY VALUATION 8- 3 05/24/01 Attachment number 9 G -6 Page 274