Retail property assessments
What is a retail property?
Retail properties are a specific commercial property type that caters to a wide variety of uses, primarily to market and sell consumer goods and services.
These properties range in size and form of structure type depending on the intended use of the spaces on location (for more information please see this property type’s glossary. The overall quality of retail spaces are typically predicated on (but not limited to) the property’s:
- Year of construction.
- Materials used in structural and finishing elements.
- Space functionality and exposure to potential customers.
- Multi-modal access to the property as well as vehicle parking.
On occasion, retail properties are constructed in combination with other property types or uses in a broad comprehensive development. For example, this may take the form of a mixed-use development whereby retail spaces could exist in conjunction with living spaces, offices, hotels, and recreational amenities.
Where can this be found? There should be a link to the glossary so the customer doesn’t have to look for it.
To learn more about real estate market trends, our valuation methodology, and retail sales transactions, please download the Retail Market Trend Report.
Types of retail properties
Retail properties are further grouped into the following subproperty types:
|Retail Subproperty Type||Description|
|Automotive Retail||Automotive retail properties used for various purpose built automotive-related uses. Types include dealerships, car washes, gas bars, automotive repair, and automotive quick service stations.|
|Beltline Retail||Properties located within the Beltline Region that are predominantly designed for retail use. The Beltline Region is located directly south of the Downtown Region and is bordered by 10th Avenue S to the north, the Elbow River on the East, the community of Mission to the south, and the community of Sunalta to the west.|
|Downtown Retail||Properties located within the Downtown Region that are predominantly designed for retail use. The Downtown Region includes the communities of Chinatown, Downtown Commercial Core, Downtown East Village, Downtown West End, and Eau Claire.|
|Kensington Retail||Properties located within the Kensington Region that are predominantly designed for retail use. The Kensington Region is located directly northwest of the Downtown Region and is focused mainly on the 10th Street NW and Kensington Road corridors. It is generally bordered by 4th Avenue NW to the north, 9A Street NW on the east, Memorial Drive to the south, and 14th Street to the west.|
|Inglewood Retail||Properties located within the Inglewood Region that are predominantly designed for retail use. The Inglewood Region is located directly east of the Downtown Region and is focused mainly on the 9th Avenue SE corridor. It is generally bordered by the Bow River to the north, Blackfoot Trail to the east, 11th Avenue SE to the south, and the Elbow River to the west.|
|Marda Loop Retail||Properties located within the Marda Loop Region that are predominantly designed for retail use. The Marda Loop Region is located west of the Downtown Region and is focused mainly on the 33 Avenue SW corridor. It is generally bordered by Crowchild Trial to the west, 34th Avenue SW to the south, 18th Street to the east, and 32nd Avenue SW to the north.|
|Freestanding Retail||Freestanding retail typically containing three or fewer units, these structures can vary greatly in size, construction, and layout. Freestanding buildings can be located near other retail properties but are not located within a larger planned shopping centre. These assets can be typically found on major commercial corridors such as Centre Street N, 16 Avenue N, Kensington Road NW, 17 Avenue S, and Macleod Trail S.|
|Strip Centre||Strip centres are typically an attached row of at least four retail tenants, managed as a coherent retail entity, often with on-site parking. Open canopies may connect the store- fronts, but a strip centre does not have enclosed walkways or halls linking the stores. Strip centres lack unit configuration to house large scale tenants.|
|Neighbourhood Shopping Centre||Neighbourhood shopping centres are designed to provide convenience shopping for day-to-day needs for consumers in the immediate area. Such properties contain spaces which can accommodate larger tenants unlike strip centres. These properties do not have enclosed walkways or halls linking the stores.|
|Regional Mall||As premiere shopping destinations, regional malls are designed with an inward facing orientation with the majority of stores connected by enclosed pedestrian promenades. May contain a multilevel parkade and or a large parking lot that surrounds the outside perimeter. Regional malls contain a variety of spaces to house different tenant types, from anchor spaces to interior food court areas, kiosks and pad sites.|
|Enclosed Neighbourhood||A retail centre that typically has inward facing stores connected by enclosed pedestrian promenades. May contain a multilevel parkade and or a large parking lot that surrounds the outside perimeter. Often contains an interior food court area, kiosks and pad sites. Enclosed neighborhoods are generally smaller in overall size than regional malls.|
|Power Centre||Power centres are characterized as a group of commercial, primarily retail, properties situated in large planned districts. Buildings may contain single, or multiple tenants and are connected by large parking lots and common roadways. Power centres also contain multiple big box and anchor spaces.|
|Retail Condominium||Retail condominiums are separately titled units held under a single condominium plan. These units resemble strip centres but can be sold independently.|
How are retail properties assessed?
Income approach to value
Retail properties are typically assessed using the income approach to value, which estimates the value of a property based on the income it generates. This is because most retail properties are developed and operated based on their income generating capabilities relative to prevailing macro-economic trends and positioning within their respective geographic trade area.
The income approach involves developing typical market rents, vacancy rates, operating costs, and capitalization rates to arrive at an estimate of value concerning the fee simple estate of similar property types.
The City of Calgary reviews retail sales and leasing activity to determine the market value (annual assessment). This information is analyzed in aggregate to derive various income parameters that are used to calculate the fee-simple net operating income of retail properties.
In addition, there are many sub-market areas which exist as their own distinct retailing districts. These regions are assessed separately from the general retail market and instead reflect the retail market within their own borders.
Sales comparison approach to value
Retail condominiums are usually assessed using the sales comparison approach to value (also known as the direct comparison approach to value). This approach compares the characteristics of each property to similar retail properties that have sold.
Retail properties may be assessed based on their underlying land value if the value of the vacant land exceeds the value of the improved property. As a result, the land value more accurately represents market value. Land values are derived using the sales comparison approach.
Typically, there are two instances where income generating properties tend to be valued in this manner:
This occurs when a property contains a small improvement (building or structure) relative to the overall building potential of the lot. Alternatively, the land use of the site may allow for greater development potential. The Assessment & Tax department routinely evaluates the contributory value of excess or additional land associated with retail property.
Highly Depreciated Improvement:
This occurs when an improvement is nearing the end of its economic life. As an asset ages, it tends to generate less income and higher operating costs over time and thus contributes little to no value.
Cost approach to value
In some cases, retail properties will be valued using the cost approach to value. This approach adds the cost of the land to the cost of construction and subtracts the depreciated value to equal the final assessed value. It is used for retail properties that are unique, purpose-built, or have limited market data to lend comparability (e.g. an automotive dealership).
|Anchor||Large format spaces designed to house major retail anchors. For neighbourhood centres anchor spaces are greater than 14,000 square feet. In enclosed shopping centres, these spaces are typically greater than 85,000 square feet|
|ATM||Stand-alone automated teller machine.|
|Automotive Dealership||Retail properties that are purpose built for motor vehicle sales and service.|
|Automotive Quick Service||Retail space that is designed and improved to provide quick servicing of motor vehicles. These buildings are typically designed with work pits, drainage, and overhead doors which allow for drive through service.|
|Automotive Repair||Retail space that is designed and improved to provide full servicing and repairs of motor vehicles. These buildings typically lack the level of improvements found in automotive quick services facilities.|
|Banks||Retail space that typically contains a vault, increased security measures, and is usually occupied by a licensed financial institution.|
|Big Box||Retail units greater than 14,000 square feet.|
|Carwash||Isolated carwash facility not associated with a gas station.|
|Casino||Large format space designed for entertainment and gambling, with enhanced security.|
|Commercial Retail Unit (CRU)||Main floor space that is designed and improved for typical retail use. In suburban locations these spaces are less than or equal to 14,000 square feet.|
|Food Court||common and contiguous area in a shopping centre designed for the purchase and consumption of food.|
|Gas Bar||Gas bar with convenience store less than 1,000 square feet.|
|Gas Bar with Convenience Store||Gas bar with convenience store greater than or equal to 1,000 square feet.|
|Gas Bar with Convenience Store and Carwash||Gas bar with a carwash, and a convenience store greater than 1,000 square feet.|
|Grocery Store||Retail space that primarily sells food and household items. Grocery stores are smaller in size than supermarkets ranging from 6,001 to 21,000 square feet.|
|Kiosk||A small open-fronted hut or cubicle located within a shopping centre that is typically affixed to the ground.|
|Mezzanine||Space above the main floor which is open and shares the same ceiling.|
|Mini Retail Unit (MRU)||Moveable retail spaces that are typically smaller than kiosks and are located in the common area of enclosed shopping centres.|
|Office||Improved space within a retail building in the Centre City designed for professional work but not intended for the storage and sale of consumer products. In suburban retail, office is located within enclosed centre towers or second floor plus.|
|Pad||Suburban retail space typically in a freestanding building that operates as a component of a larger economic unit.|
|Pad Restaurant Dining Lounge||Suburban retail space that is typically in a freestanding building, designed and improved for the preparation and distribution of food while providing table service.|
|Pad Restaurant Fast Food||Suburban retail space that is typically in a freestanding building, designed and improved for the preparation and distribution of fast food and operates as a component of a larger economic unit (these units typically have drive-through facilities).|
|Residential Living||Upper floor residential living units in retail properties.|
|Restaurant||Retail space located on the main floor designed and improved for the preparation and distribution of food and operates as a restaurant or fast food business. This classification is specific to the Beltline, Kensington, Inglewood, and Marda Loop areas of Calgary.|
|Below Grade||Retail space that is below main level. These units typically exhibit less utility or desirability than main floor retail space because of inferior access and exposure.|
|Retail Parking||Retail parking located on the ground level or above which typically generates additional income.|
|Retail Parking Below Grade||Parking located below ground level that typically generates additional income.|
|Retail Upper||Suburban retail space above the main level that is contiguous to the main floor. In Centre City areas retail upper is considered any retail space above the main floor.|
|Second Floor Plus||Suburban retail space above first floor retail that has independent exterior access.|
|Storage||Space equipped with less tenant improvements than a typical retail space and designed for storage of product. In suburban retail, these spaces are located below grade or are located in a separate unit from the main retail unit.|
|Supermarkets||Retail space that primarily sells food and household items. Supermarkets are larger in size than grocery stores and typically range from 21,001 to 85,000 square feet.|
|Theatres||Retail space that is built for the purpose of large on-screen visual entertainment.|