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Current Use is Key Factor for Retail Valuation in the Age of Amazon: The Appraisal Journal

December 13, 2018 08:00 AM

CHICAGO (Dec. 13, 2018) – Financial statements should be used when appraising retail properties to determine the “durability of the current use” as Amazon and e-commerce threaten brick and mortar retail sales, according to a study published this week in The Appraisal Journal.

The Appraisal Journal is the quarterly technical and academic publication of the Appraisal Institute, the nation’s largest professional association of real estate appraisers. The materials presented in the publication represent the opinions and views of the authors and not necessarily those of the Appraisal Institute.

“Appraising Retail Properties in the ‘Amazon Jungle’,” by Franz H. Ross, MAI, and Sergio S. Lo Presti, MAI, suggests retail properties are among the riskiest property types, and appraisers cannot assume an ongoing income stream in today’s market. The authors advise valuation professionals to analyze a store’s financial statements and historical revenues to improve the reliability of the highest and best use analysis. This information can be used to forecast the likelihood of vacancy of the property and its potential for re-leasing.

Read “Appraising Retail Properties in the ‘Amazon Jungle’” in the Fall 2018 issue of The Appraisal Journal.

Also in The Appraisal Journal’s Fall 2018 issue:

“Compensation for Leasehold Takings and Apportionment of Awards,” by Tony Sevelka, MAI, SRA, AI-GRS, describes and analyzes how compensation is determined for a taking of commercial real property encumbered by a lease and presents examples to show how the courts divide compensation between a property owner and a tenant.

“Liability Risks for Appraisers in Condemnation,” by Peter Christensen, JD, examines the liability risks and types of claims faced by appraisers in often-contentious condemnation assignments and suggests approaches for mitigating liability exposure.

 

 

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The Appraisal Institute is a global professional association of real estate appraisers, with more than 18,000 professionals in nearly 50 countries throughout the world. Its mission is to advance professionalism and ethics, global standards, methodologies, and practices through the professional development of property economics worldwide. Organized in 1932, the Appraisal Institute advocates equal opportunity and nondiscrimination in the appraisal profession and conducts its activities in accordance with applicable federal, state and local laws. Individuals of the Appraisal Institute benefit from an array of professional education and advocacy programs, and may hold the prestigious MAI, SRPA, SRA, AI-GRS and AI-RRS designations. Learn more at www.appraisalinstitute.org.

 

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