There have been many discussions on the valuation of big box retail. In fact, the latest volume of the Appraisal Journal contains three notable articles. They dissect some of the recent ad valorem court cases, address what the author sees as some mischaracterizations of the use of “dark store theory” and supplies further clarification of property rights and their impact on value. Not to mention, the latest volume contains recent position and white box papers from the Appraisal Institute, IAAO and others.
Retailing is dynamic and in constant transition. Successful retailers have been adept at anticipating and positioning their companies to take advantage of these changes. Others have gone out of business or are just barely hanging on.
Just think of the changes in the last 30 years. When I first started appraising, my focus was on regional malls across the country and I cut my teeth understanding their value proposition. Then came (and in some cases went) category killers, factory outlet malls, power centers, entertainment centers, outdoor concepts, mixed use developments, etc. Now it’s online shopping.
Retail tenants in malls at one time signed 10-12 year leases with the expectation customer tastes and preferences would evolve. This is still true today.
One of the current controversies resulting from all this change is what impact it has had on big box properties. Each year our firm conducts a survey of the big box stores in our state. Last year, roughly 50% of the big box stores were older than 20 years and this age group represented over 70% of the total vacancies. Some of this is the result of less successful retailers leaving while others result from changes in demographics or other local market shifts.
What should I, and other appraisers like me, make of all of this?
This is why I am excited to join realquantum’s free two-part series on the issues surrounding the valuation of big box retail. Topics include a case study, a discussion of property rights, highest and best use, and more. As valuation professionals, these issues are important. The series intentionally takes both sides of the issue.
Wednesday 6, 2019 @ 10am CST Guest: Mark Hutcheson, CMI, CRE
This webinar guest is an attorney that often argues on behalf of property owners. He has a very clear case study that does a great job of laying out the problem. The guest is Mark Hutcheson. He is an attorney and managing partner at Prop Hutcheson, PLLC, in Austin, Texas. Mark has written and spoken extensively about issues in commercial property tax assessments for years.
November 22, 2019 @ 11am CST Guest: Peter Korpacz, MAI, CRE, FRICS
The second webinar in this series takes a very different view. The definition of “fee simple” is anything but. Fortunately, the guests in this session are Peter Korpacz and Greg McHenry. Peter travels the country working on high-profile retail tax appeal and litigation cases. He will provide everyone attending a very clear, well-defended definition of “fee simple” that notably takes a different view from session one. Joining Peter will be Greg McHenry, AAS. As a long-time county appraiser and leader in the IAAO (International Association of Assessing Officers), he’s guided his county through multiple big box tax appeals.
The sessions are designed to take both views. If you are not sure where you stand on the issue, there’s no better way to get more insight on it in so little time. Alternatively, if you already have a strong opinion one way or the other, I still recommend you attend both. It will definitely give you a more complete understanding. I am positive this will provide you with a better understanding of the issues involved. With hundreds registered already, you won’t want to miss this.
Author: Tim Keller, MAI, President of Keller Craig & Associates, LLC.
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