This article originally appeared in the International Right of Way Association Sunshine Chapter No. 26 Florida in December 2022 and was written by Peter D. Waldman.
In my last Blog I discussed the importance of fully considering access, as part of analyzing properties to be acquired for proposed Right of Way projects. There are other variables that also should be considered when determining how acquisitions may impact certain properties. Failure to consider these variables may result in much higher acquisition costs and potential business damages.
Too often when analyzing the cost of Right of Way to be acquired for a certain project what we see is not actually the true value of what is being acquired. In this time of changing demand for retail property “Post Covid”, and recertification requirements for certain residential properties “Post Surfside Building Collapse” the improvements that exist on a particular piece of property may not represent the true value of a property. In determining what the market dictates the Highest and Best Use to be for a particular piece of property all of the market valuation evidence (sales of improved property and vacant land) must be considered.
A great example of how the value of improved properties has changed is in regard to retail centers. As the manner in which consumers purchased property changed during Covid some “Brick and Mortar” retail centers no longer met the demand of the market. When those properties become “functionally obsolete” the value of those properties as improved may no longer exceed the value of property as vacant. This same change in market demand has also occurred in regard to high rise residential buildings both due to the implementation of new building recertification requirements following the collapse of the residential tower in Surfside, Florida, and because the market for various types of residential improvements has changed.
Failure to consider these changes may result in an incorrect valuation of property that you are seeking to acquire for a particular project. It is important to analyze property not just as currently improved, but also as vacant land. This complete approach to valuing real property is the only true way of understanding the value of property. Remember to not let the improvements fool you.
To read the original blog post in the International Right of Way Association Sunshine Chapter No. 26 Florida, click here.