7.7.9 Occupancy

A. When the occupancy rate in a comparable project is significantly less than the long-term occupancy rate estimated for the subject, a downward adjustment should be made to the comparable’s rent. If other factors such as condition have an effect on occupancy, care should be taken to avoid excessive and duplicative adjustments for interdependent factors. The appraiser must note the actual market-derived commercial vacancy/occupancy rate in the appraisal report. However, the appraised value of the commercial space component for acquisition/refinance, or the underwritten net operating income for new construction/substantial rehabilitation projects, must assume either the lesser of what is indicated by the market or the occupancy limitations of the specific program.