Gross potential income is best described as what?

• A. The actual collected rent after concessions.
• B. Income after vacancy.
• C. Total operating expenses.
• D. The total potential rent if all space is leased at market rents.

Answer: (D)

Potential gross income represents the maximum amount of rent the property could generate if every rentable space were occupied and rented at current market rates. It ignores vacancies, concessions, and bad debts, focusing on the ideal scenario where all space is leased at market rents. This is why it’s described as the total potential rent if all space is leased at market rents—it reflects the upper bound of income from rent alone, before vacancy losses or incentives are considered. It differs from actual rent collected (which would be lower due to vacancies and concessions) and from operating expenses (which are costs, not income). For example, if a building has space that could rent at $20 per square foot and is 100,000 square feet, the gross potential income would be $2,000,000, assuming full occupancy at market rent.