Dr. Tom Hamilton, MAI, CCIM, CRE, FRICS, Gerald Fogelson Distinguished Chair in Real Estate, Chicago School of Real Estate, Roosevelt University participated on the International Association of Assessing Officers (IAAO) Big Box Task Force from which the following Big-Box position paper was developed. The results were presented at the IAAO annual conference in fall 2017.
This IAAO position paper provides guidance for the valuation of big-box retail properties. Over the last several years, issues involving these properties and theories about how to value them, such as the dark store theory, have resulted in great debate within both the appraisal and legal communities. Even though this paper concentrates on arriving at the market value of the fee simple interest of these properties, it provides guidance regardless of the specific law of a jurisdiction.
This analysis focuses on big-box retail stores from 50,000 to 200,000-plus square feet; however, the market trend for big-box retail is shifting to both smaller and larger stores. For example, one major retailer has six different prototype stores varying from 15,000 to 260,000 square feet, depending on the characteristics of the trade area. The concepts discussed in this paper apply to single-tenant retail stores of any size and also to other property types.
This paper does not explain how to mass appraise; rather, it describes the process that will help an appraiser support a market value estimate for big-box retail properties. The theories and methodologies discussed in this paper reflect market behavior. The paper identifies recurring issues in this controversy, clarifies the fundamental concepts used in appraisal practice, and explains the methodologies developed in arriving at the appropriate value required by the jurisdiction for assessment purposes.
Read the full paper here: Big-Box_Paper_Sept 2017