THE VALUATION OF RETAIL STORES

The paper describes the various types of retail stores found in shopping centres and states that rental valuations are made by reference to rents paid for comparable premises. The paper describes the alternative methods of rental valuation which may be employed. The ‘zoning’ method and the ‘overall’ method are described and commented upon with references to relevant case law and examples of each method of valuation. The alternative methods are compared and it is concluded that one or other method may be preferred in particular circumstances. It is concluded that either method may be employed but that the preferred method will be that which best facilitates comparison between rents of stores which differ in location and other relevant characteristics. The paper also deals with capital valuations on an ‘existing use’ basis and concludes that that method of valuation should be by way of capitalisation of actual rents or estimated net rental values.