Dixie Exposes Expense Mixing

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Dixie Phair (Any Municipality County’s Commercial Real Property Analyst) and Luke Warm (ownership tax representative) are mixing it up (having a discussion)…

Dixie: This is a well located property.

Luke: Well, it is and it isn’t.

Dixie: Why do you say that? The traffic count there is the highest in Any Municipality County, and the site has three drive cuts.

Luke: One cut is sort of smallish, and sometimes too much traffic is counterproductive. My client’s customers are busy people, and would avoid the area if they could.

Dixie: But actual store sale figures you provide prove that at least some of them keep coming back.

Luke: Doesn’t mean it’s not annoying to them. They have to buy stuff somewhere.

Dixie: So you are alleging 50% obsolescence to site and improvements for traffic congestion?

Luke: Should probably be more, but we’ll settle for 50% I guess.

Dixie: The new power center is just half a block away, and 90% of the outlots in that immediate area have national credit rated tenants. Do they suffer this same obsolescence from high traffic?

Luke: My client’s product sells itself. In fact, they probably could sell out with only an online presence.

Dixie: So why doesn’t he simply market online, then?

Luke: Expenses. He needs the expense of a bricks & mortar facility to offset his high income from sales.

Dixie: Great! What they claim to the IRS is their business, equitable real estate taxes included. But we will assign a triple net market rent to the real estate for assessment valuation. Those neighbors needing the exposure are our rent comparables!