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Student looking for help/constructive criticism on a thesis topic idea

Discussion in 'Commercial/Industrial Appraisals' started by foodstamps, Oct 2, 2011.

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  1. foodstamps

    foodstamps New Member

    0
    Oct 2, 2011
    Professional Status:
    General Public
    State:
    Illinois
    Hey there, I'm currently pursuing an MA in Geography & Environmental Studies, and am at that stage where I must decide a thesis topic. The topic that I am most interested in studying thus far is comparing the resale value of buildings designed for corporate branding purposes (in the form of "logo buildings" like those seen occupied by Mcdonald's, Pizza Huts, IHOPs, White Castle's, etc.) to nearby available commercial property. My impression is that these buildings are likely less desirable for reuse (lower property value [adjusted for size], longer time unoccupied) than the other forms of available commercial property nearby. I have a couple of questions regarding this topic:
    Do any of you have any idea of the feasibility of conducting such a study? For the purposes of a comparative study, I would need to find information on at least two sets of sold property that exist within close proximity to each other, with both properties being located in the same area relative to the block it sits on, and with both sold roughly around the same time of each other. Do any of you think that finding such information is easily obtainable, taking into account that I am limiting the study to purchases of "logo buildings" for new purposes? Do any of you have any additional suggestions as to what other variables may be needed to take into account for the study?
    The second question is in regards to past studies: I have not been able to find ANY past research on the topic. Can anyone lead me to some good sources? I don't even know how to search for similar papers, because I'm not sure what the exact term for these buildings are. If anyone would be willing to help, it would be greatly appreciated.
    Thanks
     
  2. Terrel L. Shields

    Terrel L. Shields Elite Member
    Gold Supporting Member

    316
    May 2, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Arkansas
  3. Sid Holderly

    Sid Holderly Member

    1
    Jun 16, 2005
    Professional Status:
    Certified Residential Appraiser
    State:
    Indiana
    You will have to look at traffic count. As roads change the flow of clients changes. On many small buildings it's value sitting on top of the land is nil. did they dell with or without equipment?, a big variable for a similar future use. A big city commercial appraiser's personal knowledge of a area is needed.
     
  4. Mountain Man

    Mountain Man Elite Member

    25
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    Never mind... George makes more sense. But in order to find data in the same block or immediate area, you'll need to look at major arterial roads in major metro areas.
     
    Last edited: Oct 3, 2011
  5. George Hatch

    George Hatch Elite Member

    124
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    I've appraised many such properties. Data is relatively easy to find in a metro area.

    What I think you'll find with the "branded" buildings that were built or modified to have a distinctive look for the brand is that the original branded operation doesn't always stay in perpetuity and these buildings commonly get sold to generic users.

    Sometimes they even get converted to a different type of occupancy altogether. I've seen convenience stores converted into small meeting rooms for religious users or into general or medical/dental offices. I've seen gas stations converted into used car sales lots or equipment rental yards or other commercial yard operations. I've seen lots of bank branch buildings converted into general or professional office space or even retail space.

    I think what you'll find in pricing is that if a branded operation is being staying with the building there's usually going to be a lease involved for the occupant. The terms of the lease will usually drive the value unless the brand itself is in real trouble and the tenant's ability to survive to pay the lease rate is in question, or if the remaining term on the lease is real limited.

    Once the branded building get sold to a generic user most market participants treat it just like any other space unless the original layout is so specific that it doesn't function well for other operations. If the new tenant can't adapt their operation to fit the layout of the building and they have to reconfigure or remodel that cuts into the prices they can pay for rent or purchase. Unit sizes can be an issue too - it's tough to make a 3,000 sf building pay off when the typical generic tenant only needs 1,500 or 2,000 sf.

    In my experience I've found that prices and marketability are more tied to functionality of the structure and the location attributes than to whether or not the building is readily recognizable as a former McDonalds or Bank of America branch. .

    As I say, in the region I work in such data is usually readily available, but these properties aren't always marketed as "former Burger King restaurant" or the like. It's usually up to the buyer or appraiser to recognize these designs on their own. That's where looking at a lot of these transactions over the years comes in handy.
     
  6. Kali the Boston Terrier

    Kali the Boston Terrier Senior Member

    1
    Jul 7, 2003
    Professional Status:
    Certified General Appraiser
    State:
    Michigan
    I agree with George, data is plentiful. Recently many Wendy's have shuttered, leaving a fairly good chunk of data. But I think the most obvious, and the brand with most data are going to be Old Taco Bell locations, especially the ones with the terra cotta roofs.

    The place you are likely going to get most of your sold data will be CoStar and/or LoopNet, but you can do free search at your local assessor's office. Also you could type "Former Taco Bell Building" in google and likely a few listings on LoopNet will pop up, start there.

    Also in regards to places for literature, the Lum Library with the Appraisal Institute will have many articles for what you are looking for.

    One thing as it might relate to your research, is that many of these restaurants will ground lease the land for a long term. Essentially they lease the land from the owner, build the restaurant themselves, and pay the lease for 20-40 years. At the end of the lease the building reverts back to the land owner. Generally those leases give you a good idea on the economic life of those buildings.

    Feel free to private message me if you need any help.
     
  7. Mountain Man

    Mountain Man Elite Member

    25
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Georgia
    Don't forget Hardee's... they used to be a power house that could compete directly with Wendy's, but went down with bad management. I see a lot of old Hardies in prime locations just sitting vacant or being used as a title pawn biz.

    Maybe a southern thing, but also see some old KFC as they have worked to re-brand and build in new locations.
     
  8. George Hatch

    George Hatch Elite Member

    124
    Jan 15, 2002
    Professional Status:
    Certified General Appraiser
    State:
    California
    In my region there have also been a lot of Jack-in-the-Box, Der Wienerschnitzel, Del Taco, Kentucky Fried Chicken and other regional chains that have sold off units. Lots of bank branches that carried a specific design that have sold off units. Lots of the 7-11, Circle K convenience store units. There's all sorts of data like this out there. You can often find a sale of a franchise or company store unit and directly compare it to a similar unit built to the same specs for the same original brand but which were resold to a non-branded user.

    You can run these comparisons without regard for when the sales occurred. Unlike with an appraisal aimed at coming up with a current value it doesn't make much difference how dated the sales are so long as any comparisons are made based on similar time frames. Market conditions change, and a 5-yr old sale is best compared to another sale from the same time period. I would argue that tracking the comparisons over a period of at least several years would result in a better analysis.

    To do that you could comb through the sales histories of these properties to see any prior sales and track them that way.

    As someone mentioned earlier, I'd be careful about comparing the branded units with the primo locations to the non-branded units with inferior locations. It's not unusual for one of these brands (including the oil companies) to pay steep premiums for their favorite locations, on occasion as much as double or triple the prevailing rate. There are often lots of strings attached to some of these site sales, like really long escrow times to obtain building approvals and other required permits and such. This is one reason the lease rates on some of these branded units is sometimes way high in relation to other generic units down the street.
     
  9. Michael S

    Michael S Senior Member

    16
    Mar 18, 2009
    Professional Status:
    Certified General Appraiser
    State:
    New Mexico
    A lot of times with the appraisal of net leased properties the client is interested in the fee simple value. Most of the value of these properties is the guranteed income stream from a long term lease to a national credit tenant. Once that lease is gone the value of just the "sticks and bricks" is usually just a fraction of the leased fee value. We appraised a Taco Bell recently and a block away was an older fast food restaurant that was sold to a nonprofit for a thirft goods store. Even after accounting for the difference in condition and location the Taco Bell with the long term lease was worth more than twice as much as a similar fast food restaurant.

    Another property we appraised was an old Taco Bell that had been vacant for years. It was purchased for conversion into a dentists office. Essentially all they kept was the frame of the building and they built a addition to more than double the size of the building. It was basically just a land sale that happened to have some improvements with virtually no value.

    Some of these buildings are readily identifiable as the former brand. Others have undergone a renovation that makes it nearly impossible to tell if it was originally a McDonald's, Taco Bell, or a mom and pop operation.
     
  10. CBBoston

    CBBoston Member

    1
    Jan 27, 2008
    Professional Status:
    General Public
    State:
    Massachusetts
    Data is plentiful. Good to know but doen't help the average student a whole lot. I don't know what school you're attending but if they have a real estate program, you might want to go talk to the the profs over there. They may have access to CoStar Loopnet, or other major data bases. If they don't have direct access to these data sources, they may know of alums who are in the real estate business that do have access and will help you. If that fails you might want to contact CoStar or others directly and beg for help. Also could try that with major commecial brokers in your area. The worst they can say is no. Access to MLS may or may not very useful depending on the area your in. Also in many areas there is a commercial MLS (of which CoStar and loopnet are examples) that is completely seperate from the residential stuff.

    Students frequently come up with all kinds of interesting research ideas but can't get the data Sometimes its easier to find a data base and then come up with a question.

    Where have you tried to do your literature seaches? Your library should be helpful with the academic journals in that regard. How you construct your search terms is important too. You may have to search more broadly and then narrow it down. Also try the real estate lit, as mentioned, along with urban planning and geography lit. Not all the journals from these areas may be found in a single lit data base. Research librarians are a great place to start. Good luck
     
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