Dixie has run across a seemingly straightforward property that has become somewhat vexing.
As part of her job, Dixie routinely employs a computer model to accurately estimate local market value on commercial properties in her jurisdiction. She knows that the model works really well for property types having abundant available market data, and that the model is also uniquely able to predictively measure value fluctuations, even in dynamic markets. But she also knows that modeling cannot be relied upon in circumstances where demand is explosive enough to change highest and best use.
Dixie’s challenge is a property in Any Municipality County, specifically situated in a hot-hot-hot market segment. This district is very popular with engineers and others working in the information technology and computer industries. Tech firms and venture capitalists are now grabbing any foothold they can to access the talent pool.
The particular building is one story, of less than average quality construction and condition, formerly used as a bike shop. At only 2,000 square feet, this property is dwarfed by large office space users; however, a recent lease signed, at $117 per square foot rent, matched the highest office rents surrounding it!
The property has a front courtyard that was used for outdoor display, which worked out great for the former bike shop. This courtyard could also be used for outdoor seating. Squeezed in among office buildings and near a sports stadium, use of this property by a retail and/or restaurant tenant cries for recognition… only to be drowned out by a tech company with a higher need.
There is a point where dynamic really could be termed dynamite!