A building offers 60,000 square feet of rentable space and it currently occupied by two tenants, A and B. If tenant A occupies 35,000 square feet of space and tenant B occupies 13,000 square feet. Required:
a. What is the buildingís current occupancy rate?
b. If the annual expense for utilities is $2.15/sf and utilities are 30% fixed, what is the utility expense based on the occupancy rate?

a. 80% b. $30960

Explanation:

a. What is the buildingís current occupancy rate?

Occupancy rate can be calculated as:

= (Area of the space occupied / total area of the space) × 100

We.need to calculate the area of the space occupied which will be:

= 35,000+13,000

= 48,000 Sq.Ft

Therefore, Occupancy Rate:

= (48,000 / 60,000) × 100

= 80%

b. If the annual expense for utilities is $2.15/sf and utilities are 30% fixed, what is the utility expense based on the occupancy rate?

Total area of utilities will be:

= 30% × 48,000

= 0.3 × 48,000

= 14,400 Sq.Ft

Annual utility expense per Sq.Ft = $2.15

Therefore, total annual expense of utility will be:

= 2.15 × 14,400

= $30,960

answer; normative economics;