Parcel Size, Location and Commercial Land Values

Karl Guntermann and Gareth Thomas

Journal of Real Estate Research, 2005, vol. 27, issue 3, 343-354

Abstract: The concept of a peak in value or a “100% location’” is so well established in real estate that there is no reference to the term in recent real estate principles and appraisal texts. However, the land value section in appraisals of a regional shopping center did not apply the concept when adjusting comparables for location, which resulted in a substantial underestimation of site value. A regression model that included a distance variable to control for location produced a value estimate that was more than double the values in the appraisals. The empirical results illustrate that the subject site represented a distinct peak in land value as well as reemphasizing the importance of making careful location adjustments in situations where there is a distinct peak in land value.

Date: 2005
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DOI: 10.1080/10835547.2005.12091159

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