Property Valuation
A Wisconsin commercial property's market rent is $25/sq ft but the tenant currently pays $20/sq ft under a long-term lease. The difference is called:
AFunctional obsolescence
BBelow-market lease discount (leasehold value)✓ Correct
CEconomic rent
DEffective gross income shortfall
Explanation
The gap between market rent and contract rent creates leasehold value (the tenant benefits from below-market rent) and reduces the fee simple market value of the property compared to a market-rate lease.
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