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New Construction User Retail - Sales Comps

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PS111222333444

Sophomore Member
Joined
Sep 2, 2010
Professional Status
Certified General Appraiser
State
Washington
Appraising a standalone retail building newly constructed by user (Bakery). The client has requested the single most applicable approach (Cost) – but would normally include the Sales Comparison Approach as a check. Having a very tough time finding recent sales of properties similar to the subject. Plenty of retail strip sales. Limited smaller restaurants but substantially older than subject. Lots of fast food sales. Any input appreciated!
 

Michael S

Senior Member
Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
Maybe look at industrial showroom type facilities. Some are almost indistinguishable from regular retail buildings except that they may have more unfinished warehouse space whereas a retail store might have a relatively small unfinished stockroom.

Cost can be a good indicator but sales are always useful as a check against external obsolescence. Just because it cost $100/SF to build doesn't mean it won't then turn around and only sell for $85/SF. Market extraction of depreciation for any newer owner-user buildings might reflect primarily functional and external obsolescence as physical depreciation is relatively minimal for the first five year or so. That will incorporate the sales comparison approach without requiring you to find truly comparable sales that may not exist.
 

leasedfee

Member
Joined
Oct 14, 2007
Professional Status
Certified General Appraiser
State
Colorado
standalone retail building
You don't say enough about the subject. Size; age; access; parking; acres; condition; configuration; materials; etc. etc. . . . . . Remember, we are not appraising a business, we are appraising a building -- If on the market today, who would use it with minimal TI/reconfiguration cost?
 

NachoPerito

Senior Member
Joined
Jul 25, 2012
Professional Status
Certified General Appraiser
State
Washington
I would switch over to the income approach if you can't find sales. plentry of build to suit leases and plenty of cap rates. I wouldn't use fast food sales if you aren't doing fast food.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
I agree with everyone's post here thus far, but only thing to add is that when I appraised a bakery last year, I was lucky enough to have a couple sales that had no indoor seating. Not sure if that is the same type of layout for your property, but if it has a full kitchen that can support restaurant operations, would the most likely purchaser be a restaurant user, with or without indoor seating?
 
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