In Defense of the Land Residual Theory and the Absence of a Business Value Component for Retail Property
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.
Volume (Year): 10 (1995)
Issue (Month): 2 ()
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- Kerry D. Vandell, 1995.
"Business versus Real Estate Value in Shopping Mall Valuation: A Critical Examination,"
Wisconsin-Madison CULER working papers
95-10, University of Wisconsin Center for Urban Land Economic Research.
- Kerry D. Vandell, 1991. "Business versus Real Estate Value in Shopping Mall Valuation: A Critical Examination," Wisconsin-Madison CULER working papers 91-03, University of Wisconsin Center for Urban Land Economic Research.
- Capozza, Dennis & Li, Yuming, 1994. "The Intensity and Timing of Investment: The Case of Land," American Economic Review, American Economic Association, vol. 84(4), pages 889-904, September.
- Jeffrey D. Fisher & George H. Lentz, 1990. "Business Enterprise Value in Shopping Malls: An Empirical Test," Journal of Real Estate Research, American Real Estate Society, vol. 5(1), pages 167-175.
- Titman, Sheridan, 1985. "Urban Land Prices under Uncertainty," American Economic Review, American Economic Association, vol. 75(3), pages 505-14, June.
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