Stabilization Calculations Table

This table provides a basic set of calculations for adjusting As Stabilized value estimates to reflect As Is value estimates when a property suffers rent loss from a higher than market vacancy and/or below market contract rents.

Example: Assume most properties of the subject type and market segment have 10% vacancy, but the subject has 25% vacancy. The As Stabilized value estimate would assume a 10% vacancy.

The As Is value estimate would then be adjusted downward from the As Stabilized value because of the subject's higher than market vacancy factor.

In this case, the downward adjustment would consider the present value of the lost income over the lease-up period, leasing commissions associated with lease-up, and perhaps, tenant fit-up and additional operating expenses associated with the vacant space over the lease-up period. 

This is just one example, and many other stabilization scenarios exist. The Stabilization Calculations table in Report Writer is intended to address basic, straight-forward adjustments, but not complex situations. For example, this table does not address below-market contract rents.

A. % Leased reflects the amount of vacant space absorbed at the year's end. Ensure that the percents in this row total 100%.

B. $ Vacant is the remaining vacant space. This is carried onto the next year. The assumption is that absorption will take place over the course of the year, and, on average, only the percent of Show of Rent will be captured.