Is Traffic Count Important to Appraisers?

Traffic count is one of the most important factors to consider when valuing some property types like; fast food facilities, pharmacy buildings and convenience stores with or without gas.  For other property types like office buildings, industrial buildings and healthcare facilities traffic count is not as important, but automobile and pedestrian traffic count are the lifeblood the most popular and branded retail businesses.

Many corporate real property departments can predict with a relatively high degree of certainty what sales volume will be for a product based on traffic count.  Of course the product and the brand of the product are just as compelling but if you have the number one top selling burgers or the top grossing c-store chain you will ultimately fail at a location if you have insufficient traffic.  

The real estate adage "location, location, location" implies that a retail site has "traffic, traffic, traffic" and changing traffic is often responsible for the waning and mass exodus from areas and the boom of others, sometime the boom and bust areas are just a mile or two away from one another. 

A local example of a dramatic traffic shift and corresponding commercial business shift that affected an area is the stark and obvious transition in the City of Henderson, NV, that has been away from Sunset Road (between Green Valley Pkwy. and Mountain Vista Road) to the I-215 Beltway (the Outer Loop) and to the Galleria Mall area that adjoins US-95 Highway at Sunset Road.  The transition started with just a few well know fast food franchises but it has progressed and transitioned other well-known businesses. 

As appraisers know, many businesses will pay a hefty premium for a site or for a building lease that places them out in front of a high traffic count arterial roadway or roadways because they understand that as expensive as the land or space may be to acquire they will make the money back.  Most people would be shocked to hear how much money businesses are paying for rental space in Las Vegas tourist areas like the one that adjoin the “High Roller” observation wheel, but if you have 5 times the normal traffic would you be willing to pay 5 times more rent?

Traffic counts in Las Vegas and Henderson Nevada are published annually by the Nevada Department of Transportation and the annual traffic studies are available with corresponding maps that can be download from the Internet and the studies have been done for several years so it is not difficult to track traffic trends of roadways based on past reports.

So the answer to the question "is the traffic count important to appraisers?" is yes very important as it affects many properties and not so much for other properties.

Bill Rigdon, ASA is a real estate appraiser located in Henderson Nevada doing business as W Rigdon Appraisal Service, he can be contacted at wrigdon@cox.net and his website is http://www.appraiserslasvegas.com

Article source: http://www.appraisalarticles.com/Narrative-Report-Writing/4572-Is-Traffic-Count-Important-to-Appraisers.html