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Appraising Auto Service Properties

by Administrator on Oct 4, 2016 Special-Purpose Appraisal 574 Views

Many real properties like retail and office buildings have a relatively uniform build-out.  Some buildings are older than others and some have a higher quality of construction or finish, but most (at least in Las Vegas and Henderson Nevada) could have been built by the same construction company.  They have wood frame or concrete walls, some have an office area and overhead garage doors are usually on one or both sides.

Depending on their original intended use some have below ground access pits, built in lifts, above ground lifts, overhead cranes, compressed air lines or other specialized equipment.   Some were constructed to work only on cars while others were built for trucks.  Most auto service building are relatively narrow, but some are accessible from both sides and have double bays.

Auto service buildings are special-use or special-purpose in nature in that they are not easily adaptable to another use.  The garage door access industrial style build-out used for auto service can't be easily used by most without a complete renovation.  Thus auto service building value is tied to neighborhood supply and demand factors.  You may have a perfect auto service building with great visibility but if there are a number of them in close proximity there may be no demand for yours. 

Auto service buildings are usually rented by lube centers, muffler shops, tire centers, auto body and auto repair shops.  There are other auto building users like auto a/c, window tint, transmission and painting shops that don't like paying a hefty premium for retail access and visibility.  There are times when I have found that tenants in auto service buildings are paying higher rental rates than their retail neighbors who have invested considerably more in build-out.

So the analysis of a market area / neighborhood / submarket to determine where current auto service rental rates are and then consider the existing lease terms, if any, is an important step in an auto service building appraisal.  Some tenants are of course better than others.  If you have 10-year lease with a national franchise tenant your building value is likely to be worth more than if your lease expires in a year or two and is with a local body shop.  For appraisers, like buyer / investors, the strength and durability of the future income stream is an important consideration.

Older auto service buildings suffer from physical depreciation, functional obsolescence and yes even at times negative external factors.  Auto service buildings can often exist in areas that are not well suited to retail or office development in an industrial area or in an area with no visibility.  Individuals will seek out auto repair and auto body shops, they don't need to see them every day like a fast food restaurant.

Auto service buildings are usually cheaper to build than office and retail buildings and that is reflected in the cost approach section of an appraisal report.  I have however seen situations where uses like an auto painting company pay more for rent than a retail auto parts store or a motorcycle sales center in the same building.

Comparable sales are sometimes difficult for an appraiser to find when analyzing auto service buildings.  Sometimes there are several sales to choose from and other times there are none to be found and you have to widen your search area.  It depends on the size of the market area and whether a number of auto service building were built and then sold within it.

When you do find comparable auto service building sales you may have to make a number of adjustments, as discussed, for factors like; location, accessibility, construction, office build-out, number of bays, lifts, wall height and building size. 

Auto service center buildings are best appraised by those who have had some experience completing appraisals on them.  Appraisers must be able to identify the fact that they are special-use buildings and thus have limited marketability.

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at

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