Focus on Real Estate Analysis: Comments on the Probability of Rezoning (Insider's PERSPECTIVE‪)‬

IN THE SPRING 2007 EDITION OF REAL ESTATE ISSUES, THE concept and definition of highest and best use was discussed in the article, "Comments on the Concept and Definition of Highest and Best Use." which can be accessed online at www.cre.org/publications. Several conclusions regarding highest and best use (HBU) were discussed, including the definition of market value and legal permissibility's impact on HBUs. The definition of market value is based on the economist's perfectly competitive market in which there are no barriers or obstacles to the entry of new firms or the exit of existing firms. Legal permissibility in the HBU process often is a barrier to entry. Because legal permissibility contains an element of manipulation, it could negatively influence the HBU, thus retarding the highest present value to the land or return on improved property. HBU determination and analysis can be flawed if legal permissibility is contrary to the economics of the property market. THE PROBABILITY OF REZONING