What is the formula for calculating the default Free Rent in ARGUS Enterprise?

The formula for calculating the default Free Rent in ARGUS Enterprise is typically derived from the elements involved in setting rental rates and adjustments. In the context of commercial real estate modeling using ARGUS Enterprise, the correct option, which suggests adding Base Rent, Fixed Steps, and CPI, highlights the components that contribute to the effective rent of a property.

Base Rent represents the standard rental amount agreed upon for leasing the property. Fixed Steps are predetermined increases in rent over time, often stipulated in the lease agreement. CPI, or Consumer Price Index, is used to account for inflation-adjusted rent increases, reflecting changes in the purchasing power of the currency over time.

When you consider all these factors combined—Base Rent, Fixed Steps, and CPI—you arrive at the total effective rent. This total helps in determining how much free rent can be offered to tenants as an incentive while still aligning with the income projections for the property. Free Rent essentially acts as a discount off the total effective rent.

Thus, the formula for default Free Rent needs to incorporate these elements, which is accurately represented by adding Base Rent to Fixed Steps and CPI. This method ensures that the calculations reflect the full picture of rental income while also considering potential concessions given to tenants.