1.5.4.1. Market Rent. The income that is to be capitalized in the income approach is the market or economic rent for the subject property. These Standards use the following definition of market rental value:69

Definition of Market Rental Value 

Market rental value is the rental price in cash or its equivalent that the leasehold would have brought on the date of value on the open market, at or near the location of the property acquired, assuming reasonable time to find a tenant.

The appraiser should not consider the fact that a property may be under lease to a third party, except to the extent that the rent specified in the lease may be indicative of the property’s market rental value. The value to be appraised is the market value of the property as a whole, not the value of the various interests into which it may have been carved.70

69 See Section 4.7 for the legal basis for this definition.
70 See Section 4.2.2 concerning the Unit Rule.