The Highest and Best Use of an Office Conversion

The highest and best-use concept in the CRE industry is one of the key economic/investment principles in the sector. It posits the idea of maximum productivity and profit for a given parcel of land. In the CRE appraisal process, the appraiser first determines the highest and best use of the land and building. The appraiser then determines how the highest value for a property is arrived at and how it produces the greatest value, regardless of its actual current use. 

A piece of land and related property may be considered to be its highest and best use when it provides the maximum return to its owner or user. The return may be measured in monetary terms, or intangible and social ways, or a combination of such values. However, the value of a piece of land is not static and can change over time. The highest and best use of a property at any point in time is derived from four qualities as follows: