What type of rent is utilized when estimating the value of a fee simple estate?

Market rent is defined as the rent that a property would likely command in the open market under typical conditions, where both the landlord and tenant are acting in their own best interests, and the property is being leased for its highest and best use. It reflects current market conditions, demographics, and economic factors impacting rental prices.

In estimating the value of a fee simple estate, which represents full ownership of a property including the rights to use, lease, and sell it, market rent provides the most accurate reflection of a property's income-generating potential. This is essential for investors or appraisers assessing the value because it anchors the projected income to realistic, current expectations in the marketplace.

The other types of rent—tenant rent, fixed rent, and contingent rent—do not provide this broad, market-based perspective. Tenant rent typically refers to what a specific tenant pays under their lease, which may not reflect the broader market dynamics. Fixed rent describes a lease structure where rental payments remain constant, regardless of market changes, making it less relevant for dynamic valuation processes. Contingent rent is often tied to the performance of the property or an event, adding variability that does not accurately represent the property's consistent income potential in a fee simple context. Thus, market rent is the appropriate