What is Phantom Space in Multifamily Real Estate?

What is Phantom Space?

Phantom space refers to the discrepancy between the actual usable square footage of a rental property and the amount that is reported or listed. This term can come into play in various contexts, such as during the leasing or sale of a property, where the reported square footage may include areas that are not actually usable or livable according to industry standards or local regulations.

For example, phantom space could include areas within a building that are inaccessible, poorly configured, or not compliant with local building codes, yet are still included in the total square footage used to calculate rent or property value. This could lead to potential tenants or buyers paying more than what the space is truly worth based on its usable area.

Understanding and identifying phantom space helps investors, appraisers, and tenants in multifamily real estate ensure fair pricing and avoid discrepancies in property valuation.

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