What Is a Retail Shopping Center?
A retail shopping center is a cluster of businesses that sell consumer goods and/or services to customers through multiple channels of distribution to earn a profit. Demand is created through diverse target markets and promotional tactics, satisfying consumers’ wants and needs through a lean supply chain.
Valentine Appraisal & Associates are experts at retail shopping center appraisals.(661)288-0198 Email: email@example.com
Various types of retail shopping centers including neighborhood, community, regional, and super-regional, dot the American landscape and play a major role in the everyday life of the American people. As important as retail shopping centers are to the way we live, we cannot forget their original purpose, to create profits for retail owners and provide goods and services to consumers. Retail shopping centers have the following characteristics:
Retail Shopping Center Appraisal Characteristics
- Size of the shopping center. This is measured in gross leasable area.
- Anchor tenant
- Type of product sold
- Site size
- Distance of travel time
- Customer base
The traditional types of retail shopping centers include super-regional, which requires a population of 300,000 or more, 12-mile radius, and 30-minute drive; regional shopping centers require 150,000 or more population, 8-mile radius, and 20-minute driving time; community centers are supported by a population of between 40,000 and 150,000, 3 to 5-mile radius, and 10 to 20-minute drive. The smallest centers are neighborhood retail centers, which require 2,500 to 40,000 population, 1.5-mile radius, and 5 to 10-minute drive.
Shopping centers in general, and regional and super-regional malls in particular, have traditionally been considered very desirable investments. Their desirability is due in part to the discipline and stability that an anchor tenant brings to a shopping center.
There are three general categories of economic analysis that need to be considered when appraising such properties: local economic analysis, market analysis, and marketability analysis.
The site and building characteristics of a shopping center include the analysis of various site attributes.
Retail Shopping Center Appraisal May Include:
- Footprint of the building
- Customer parking
- Parking lot circulation
- Parking lot lighting and security
- Parking in relation to building entrances
- Employee parking
- Shape of site
- Access to site area
- Site’s relationship to street pattern
- Ease of access
- Topography and drainage
Exterior building characteristics that should be analyzed include the building area, building configuration or shape, and building elevation materials.
Significant interior building characteristics that should be noted include storefronts, store size, building flexibility, multiple levels, food courts, and interior signage.
Highest and Best Use Analysis
In the highest and best use analysis, the shopping centre appraiser integrates the site’s specific analysis undertaken with the three approaches of value with each other and with the general marketability analysis described earlier. The appraiser of the retail shopping center needs to identify the highest and best use of the land as though vacant and as improved. This helps to maintain the best shopping center appraisal.
The Sales Comparison Approach studies and simulates the thinking of buyers, sellers and intermediaries who make up the market for the subject and comparable retail shopping center properties to forecast a behavior in future transactions.
The Cost Approach may establish an effective upper limit from the market value of retail shopping center property. To apply the approach, the appraiser estimates the replacement cost of the improvements minus accrued depreciation plus the market value of the site for the type of center.
Income Forecast of the Retail Shopping Center
The following information should be obtained from the existing leases encumbering the retail shopping center:
- Dates and parties of the lease
- Identification of the premises
- Term of lease
- Rental payment
- Alterations clause
- Insurance clause
- Eminent domain clause
- Tenant’s right to signage
- Fixtures clause
- Destruction clause
- Estoppel clause
- Default clause
- Use and exclusive use clause
Percentage or Overage Rents
The appraiser reviews the lease clauses that require the retailer to pay a certain percentage of its sales to the landlord and analyzes the history of these payments to forecast future percentage rental payments. Then the three traditional approaches of value are analyzed against each other in arriving at a reconciliation of value.
Expert Retail Shopping Center Advice
Valentine Appraisal & Associates has the expert knowledge and experience to thoroughly appraise retail shopping centers; so to get the best retail shopping center appraisal possible, contact us at (661) 288-0198.
About Valentine Appraisal & Associates
Gary Valentine is the owner of Valentine Appraisal & Associates and has been appraising real estate and closely-held businesses since 1983. His appraisal experience includes reviewing and appraising residential, commercial, industrial, agricultural, transportation corridors, and other special use properties in California and other parts of the United States and Mexico. Prior experience includes four years with Marshall and Stevens in Los Angeles, the second largest appraisal firm in the United States; five years with Southern Pacific Transportation Company’s appraisal departments in San Francisco and Los Angeles; and two years with a private valuation firm in Fresno, California. He has also taught appraisal classes at the College of the Canyons in Santa Clarita, California. Gary holds a B.S. in Business Management from Brigham Young University and has completed numerous courses and seminars sponsored by the American Society of Appraisers and the Appraisal Institute.
Gary Valentine Bio: http://valentineappraisal.com/new/valentine-appraisal-team/gary-valentine/