Specialty Properties: The Thrill and the Traps of Niche Market Appraising

By Appraisal Institute

What’s more thrilling than driving a Formula 1 race car through the streets of Midwest City, USA?

“Well, several things—but since this is an article about commercial appraisals, I feel pretty confident no answer I give will be what you have in mind.”

That’s right: specialty properties. In the commercial real estate sector, these assets offer a different kind of thrill for appraisers willing to leave the comfort of familiar property types. Much like taking a race car off the track and onto city streets, stepping into niche markets can be exciting—but it also introduces new risks, unfamiliar conditions, and far less room for error.

That mix of excitement and risk is exactly what will be explored during the 2026 Annual Conference session, “Specialty Properties: The Thrill and the Traps of Niche Market Appraising.” Stephen F. Fanning, MAI, AI-GRS, AICP, SGA; Bradley Carter, MAI, CRE, CCIM; and R. Christian Sonne, CRE, MAI, FRICS will draw on decades of experience across a range of specialty property types to examine how appraisers can approach niche markets with discipline, defensible methodology, and confidence.

“The key to appraising a specialty property is determining if sufficient space user demand exists for the proposed use, as stronger demand directly supports higher value,” Fanning says, emphasizing that specialty properties require appraisers to slow down, question assumptions, and rely on sound market and highest-and-best-use analysis when traditional data sources fall short.

When one thinks about commercial real estate, the first examples that come to mind are typically office buildings, multifamily properties, and retail centers. These property types tend to be plentiful across markets, which means most commercial appraisers — regardless of location — are likely to focus their practice there. But looking beyond these familiar categories reveals a wide range of specialty properties where transaction volume is low, comparable data is scarce, and specialized analytical skills are essential. 

“There are sometimes fundamental differences in how core property types and special-purpose properties should be analyzed and valued,” Carter says. “In niche markets, the biggest mistakes often come from applying familiar valuation approaches to properties that operate under entirely different economic and business realities.”

Every town has that one storefront that never lasts long: first it was a clothing store, then an Italian restaurant, and then a dentist’s office. What may have started as a common retail location can quickly become a specialty property, where value depends less on recent sales and more on demand for use, market support, and highest-and-best-use conclusions. Larger assets such as car washes or self-storage facilities present similar challenges, particularly when limited market data requires appraisers to rely on sound market research and defensible demand analysis.

 “When valuation conclusions hinge on demand, income characteristics, and operating performance, disciplined market research is what allows the appraisal to stand up to investor and lender scrutiny,” Sonne says. 

So why should appraisers consider branching out into specialty markets? Because these assignments demand a different level of analytical rigor — and reward those who develop it. In this session, panelists will explore how to approach niche properties where traditional valuation shortcuts do not apply, including strategies for market research, demand modeling, and highest-and-best-use analysis when sales data is limited or nonexistent.

Specialty properties demand more from appraisers, but they also reward those who approach them with rigor and preparation. In “Specialty Properties: The Thrill and the Traps of Niche Market Appraising,” panelists will share practical strategies for researching markets, analyzing demand, and forming defensible conclusions when traditional data is limited. For appraisers ready to move beyond familiar property types, this session offers a grounded roadmap for doing so with confidence.

*This session is expected to count towards CE credit.