Current Use is Key Factor for Retail Valuation in the Age of Amazon: The Appraisal Journal

TAJ_Fall18_Cover11Appraisers should use financial statements when appraising retail properties to determine the “durability of the current use” as e-commerce giants such as Amazon continue to threaten brick and mortar retail sales, according to an article from the Fall 2018 issue of The Appraisal Journal.

Appraising Retail Properties in the ‘Amazon Jungle’,” by Franz H. Ross, MAI, and Sergio S. Lo Presti, MAI, suggests retail properties are among the riskiest property types, and appraisers cannot assume an ongoing income stream in today’s market.

The authors advise valuation professionals to analyze a store’s financial statements and historical revenues to improve the reliability of the highest and best use analysis. This information can be used to forecast the likelihood of vacancy of the property and its potential for re-leasing.

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