Retail Appraisals – Vanguard Retail Valuation Services

Retail is the most diverse of the commercial property types. It varies from a small storefront building to a large regional mall. We have performed retail valuations on auto repair/auto service buildings, auto dealerships, banks, bars/lounges, drugstores, restaurants, fast food restaurants, convenience stores/C-Stores, gas stations, child care/day care buildings, health clubs, freestanding buildings, storefront buildings, movie theatres, car washes, supermarkets/grocery stores, big box retail buildings, NNN/Single-Tenant NNN (STNL)/Net leased properties, shopping centers, retail strip centers, neighborhood centers, power centers, community centers, lifestyle centers, regional centers, outlets centers and more.

We know the complexities of appraising the various types of retail properties. There are many factors that a commercial real estate appraiser must deal with when performing a retail appraisal assignment. The following is a sampling of some of the major questions and factors we consider when appraising a retail property.

What is the building type? Freestanding Retail Building? Older Storefront Building? Restaurant? Shopping Center? Fast Food? Drugstore? Community Center? Supermarket? Gas station? Bar/Lounge? Convenience Store? Strip Center? Build-To-Suit NNN properties?
Is the property anchored?
What is the tenancy of the subject? Does the property have national recognized tenants? Local tenants?
In-line rents? End-cap rents? Anchor space rents? Junior anchor rents? Pad retail rents?
What is the Highest & Best Use of the property?
How does the location of the subject property compare to other retail properties?
Is there pedestrian foot traffic?
What is the parking ratio? Is there adequate parking?
If the subject property is leased? Is the contract rent below market or above market?
Is the property a single-tenant or multi-tenant property?
Condition of the building? (subject property vs. other retail properties)
Is the property leased? Vacant? Owner-Occupied?
Is there excess/surplus land?
Are there any easements/encroachments?
Is the property in a flood plain?
Is there deferred maintenance? If so, how much will it cost to cure?
Appeal? (subject property vs. other retail properties)
What do the local brokers say about the current retail market conditions?
What are cap rates for retail properties in the market?
What are the NNN charges?
Interior build-out?
What are the most recent sale transactions of comparable properties in the neighborhood?
What is the NOI PSF of the subject property compared to other similar retail properties?
What are the neighborhood demographics? Household income levels? Population density?
How do the store sales on a PSF basis compare to other properties?
What is the most probable buyer of the subject property? Owner-User? Partial Owner-User? Investor?
What concessions or tenant improvements allowances are typical in the market?
What is the common lease structure for the market? (NNN, Full Service Gross, Gross + Utilities)
What is the historical occupancy of the subject?
What is the scope of the assignment?
Year built and effective age? (subject property vs. other retail properties)
What is the remaining economic life of the property?
Construction quality? (Steel, Concrete Tilt-up, Masonry, Brick, Wood-Frame)
What are the marketing and exposure times for retail properties?
Building and Site Size? (subject property vs. other retail properties
What is the zoning? Allowed uses? Parking requirements?
Do the current improvements conform to zoning?
Topography? Shape of the site?
Traffic exposure?
What is the sales and ownership history of the subject property?
What are the property taxes? Is it over assessed? Mello-Roos?
Restrooms? Plumbing adequate?
Do the tenants have long-term leases? Are the leases corporately guaranteed by credit tenants?
What are the supply of demand characteristics of the retail market and submarket
What are asking rents, vacancy, net absorption of the submarket and market?
Are they any proposed or projects under construction that will compete with the subject?
What are the operating expenses of the subject property? How does it comparable with other retail properties?
As you can see, appraising retail properties can be extremely difficult. It is extremely important that you use a qualified and competent commercial appraiser for all retail appraisal assignments. Please contact Vanguard Realty Advisors for all retail appraisal assignments.

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