by Franz H. Ross, MAI and Sergio S. Lo Presti, MAI
Abstract: Changing buying patterns for retail goods and the impact of Amazon and other e-commerce have made retail perhaps the riskiest property type. Predicting which properties will “go dark” necessitates thorough market analysis. For owner-occupied properties, appraisers should ideally analyze the store’s financial statements but at a minimum analyze historical revenues. In appraising hotels, nursing homes, convenience stores, and other property types, revenues are the primary measure of captured demand, and going concern appraisals are the accepted practice. The profession should be consistent in using the financial information of the going concern (at the store level) particularly in analyzing freestanding retail properties, and to the extent possible, all retail properties. This will improve the reliability of the highest and best use analysis and the forecast of
durability of the current use. In this article, the “durability of the current use” relates to the likelihood of vacancy under the current highest and best use of the real estate, not the brand name occupying the space, with vacancy caused by deficiencies in location, functional aspects, or demand.
Have you reviewed your property assessment in recent years? Now is a great time to analyze whether a property is assessed and taxed at an appropriate level. The Tax Appeal deadline is August 1st, 2025 in most counties!