Todd Lindsey & Associates, a commercial real estate company located in Boston, owns six office buildings in the Boston area that it leases to businesses. The lease price per square foot differs by building due to location and building amenities. Currently, all six buildings are fully leased at the prices shown here.

Price per Square Foot Number of Square Feet
Building 1 $75 125,000
Building 2 $85 37,500
Building 3 $90 77,500
Building 4 $45 35,000
Building 5 $55 60,000
Building 6 $110 130,000

Compute the weighted average (mean) price per square foot for these buildings.

Question

Todd Lindsey & Associates, a commercial real estate company located in Boston, owns six office buildings in the Boston area that it leases to businesses. The lease price per square foot differs by building due to location and building amenities. Currently, all six buildings are fully leased at the prices shown here.

Price per Square Foot	Number of Square Feet
Building 1	$75	125,000
Building 2	$85	37,500
Building 3	$90	77,500
Building 4	$45	35,000
Building 5	$55	60,000
Building 6	$110	130,000

Compute the weighted average (mean) price per square foot for these buildings.

BlackTom AI · Accepted Answer

To determine the weighted average price per square foot, we must consider both the price per square foot and the size of each building, summing the total value and dividing by the total area.
- First, compute the total square footage across all buildings: 125,000 + 37,500 + 77,500 + 35,000 + 60,000 + 130,000 = 465,000 square feet.
- Next, compute the total annual value by multiplying price per square foot by square footage for each building:
  • Building 1: 75 * 125,000 = 9,375,000
  • Building 2: 85 * 37,500 = 3,187,500
  • Building 3: 90 * 77,500 = 6,975,000
  • Building 4: 45 * 35,000 = 1,575,000
  • Building 5: 55 * 60,000 = 3,300,000
  • Building 6: 110 * 130,000 = 14,300,000
- Summing these values gives total value: 9,375,000 + 3,187,500 + 6,975,000 + 1,575,000 + 3,300,000 + 14,300,000 = 38,712,500.
- The weighted average price per square foot is total value divided by total square footage: 38,712,500 / 465,000.
- To approximate, 465,000 * 83 = 38,595,000. The remainder is 117,500, which is about 0.25 times 465,000, so add roughly 0.25 to 83, giving about 83.25. More precisely, 38,712,500 / 465,000 ≈ 83.254, which rounds to 83.25.

Now, evaluate each option:
- 80.15: This is notably lower than the computed value; it would require a much smaller weighted total value or a larger total area, which is inconsistent with the actual sums above. The combined six buildings contribute substantial high-value per SF, especially Building 6 at 110 per SF, pulling the average up, not down.
- 86.25: This is higher than the computed result. Since several buildings have mid-to-high prices and Building 6 is high, some upward pressure exists, but not enough to reach 86.25 given the large share of lower-to-mid price space (e.g., Buildings 4 and 5 at 45 and 55 per SF).
- 83.25: This matches our calculation. The total value divided by total area yields a value just over 83, aligning with the weighted average derived from the mix of prices and sizes.
- 86.15: Like 86.25, this is above the true weighted average. The presence of substantial square footage at the lower prices prevents the average from climbing to the mid-80s level.

In summary, by aggregating total value across all buildings and dividing by the total square footage, the weighted average price per square foot is approximately 83.25, which makes option 83.25 the correct choice among the given options.

OSC 2030-009 Fall 2025 SUBMIT: Graded Homework Module 2 (Chap 3)

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