In Defense of the Land Residual Theory and the Absence of a Business Value Component for Retail Property

Norman G. Miller (), Steven T. Jones and Stephen E. Roulac
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Norman G. Miller: Department of Finance University of Cincinnati Cincinnati, Ohio 45221-0195, http://www.cba.uc.edu/dept/fin/
Steven T. Jones: University of Cincinnati Lindner Hall Cincinnati, Ohio 45221-0195, http://www.cba.uc.edu/dept/fin/
Stephen E. Roulac: The Roulac Group Larkspur Landing Circle, Suite 125 Larkspur, California 94939, http://www.roulac.com/

Journal of Real Estate Research, 1995, vol. 10, issue 2, 203-216

Abstract: The temptation is strong for arguing that property values can be broken down into land, improvements, and business value, as only land and improvements are subject to property tax. As sympathetic as the authors are to this motivation, the notion of a long-run business value component for retail property is refuted and the land residual value theory reasserted, while at the same time admitting the possibility of first owner entrepreneurial or development-based value creation. It is argued that any excess property productivity will eventually become attached to the land, and last that option values are an important aspect of land values that would be affected when suggesting that the appropriate value of a given property is the cost of substituting adjacent property.

JEL-codes: L85 (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (3)

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