Dixie Keeps Up


Starting her third year as Commercial Real Property Analyst for Any Municipality County, it’s time for Dixie Phair to attend continuing education classes.

As she talks to others in the classroom before the instruction starts, Dixie realizes that many (like her) are relatively new to commercial property valuation.

The instructor begins class by offering an interesting recap of recent history to benefit those new to the subject of commercial valuation:

baton Today, reliance on only the Cost Approach and Sales Approach to keep commercial and industrial (C/I) assessed values current ignores some pretty recent and dramatic history.

baton In 2006 many jurisdictions and their home owning voters realized C/I assessed values were 25% to 35% too low, galvanizing anger toward property taxes like never before.

baton For many years cost analyses didn’t capture increased demand from the previous recession’s development hiatus, and sales were insufficient to offer properly stratified value guidance.

baton After several years and another recession, recurrence of ignoring appreciation from pent up demand is a real risk.

baton While too few properties sell in a given timing window for good stratification, many of these properties rent, which is easily monitored and documented. This is why most commercial property investors rely on the Income Approach to keep up with dynamic markets.

Dixie was reminded how important it is to be cognizant of what’s going on in her market, and how the past impacts the present and the future. Dixie’s intense immersion in the Income Approach will help her to keep up… an ongoing benefit!