A site is zoned for a 10-story mixed-use tower, and the parcel can physically support that design. However, market rents are too low to cover development costs, while a 3-story retail project would earn a profit. What is the best highest and best use conclusion as of the appraisal date?
Correct Answer
B) The 3-story retail project, because it is the feasible and productive option
A legal and physically possible use still fails highest and best use if it is not financially feasible. Because the tower does not support its cost while the smaller project would produce a profit, the feasible and more productive retail project is the stronger conclusion.
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