Which of the following is an example of external depreciation?

External depreciation refers to a reduction in property value due to negative influences that are external to the property itself. This includes factors such as changes in the surrounding area, economic downturns, or shifts in demographic trends that affect the desirability of the location.

In this context, a decline in neighborhood property values is an example of external depreciation because it arises from external factors affecting the broader area, such as increased crime rates, the closing of local businesses, or poor city services. These are external influences that can lower the appeal and market value of properties within that neighborhood, regardless of the condition or appeal of the individual property.

The other options represent different concepts related to depreciation. Wear and tear from tenant use relates to physical deterioration from usage, which is internal to the property. The age of the building pertains to general physical depreciation and could capture the notion of physical obsolescence but does not specifically account for external factors. Lastly, obsolescence due to outdated features refers to functional obsolescence, which is typically internally focused, addressing the inadequacies of the property itself rather than external market conditions.