How to Determine the Highest and Best Price when Selling Commercial Real Estate

How is the Highest and Best Use price determined? What isn’t relevant is what the seller had previously paid for the property. Commercial Real Estate (CRE) is all valued by how much income it can produce. There are numerous examples of how this drives the highest price for a piece of property.

When you see a Walgreens Store get replaced by a WAWA, what that really means is that the property can make more money with the WAWA and can command a higher sale and/or lease price. In representing the seller,the pricing strategy should be based on being a WAWA like buyer.

Another example is when a property happens to be in a Community Redevelopment Area (CRA) or a Planned Commercial Development zone,careful review of the Zoning Ordinance is required to determine the Highest and Best use. This is an example when a former shopping center is replaced by Multi-Family or Condominium developments.

Yet another example of this is when golf courses and farmland have been repurposed for any number of uses including multi/single familyhomes or even Industrial Uses.

Working with a local CRE Professional and utilizing their Market Knowledge will help sellers understand the best pricing potential for their properties.