What best describes the situation when a heating system in an apartment does not meet current tenant needs even though it is in good condition?

Functional obsolescence refers to a situation where a property's features are outdated or no longer suitable for current market demands, even if they are in good working condition. In this case, the heating system in the apartment may be fully operational but does not meet the current needs of the tenant, such as providing adequate heating for modern lifestyles or energy efficiency. This disconnect between the property's physical attributes and what is expected or desired in the market leads to a perception of reduced value.

This concept is critical in real estate appraisal and property management, as it highlights the importance of aligning property features with tenant expectations and contemporary standards. It underscores the necessity for property owners to stay attuned to advancements in technology and preferences in living conditions to maintain competitiveness in the rental market.