economic obsolescence

economic obsolescence

A factor that reduces the value of an improvement because of something external to the property itself. A well-built and well-maintained house may suffer economic obsolescence because it is located on one acre of land in the middle of a fast-food area on a major suburban road. The improvement—the house—no longer has any value at all. In this example, though, that hardly matters because the land is worth vastly more than the original homeowners ever dreamed.

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The court noted that when using this method, the auditor first estimates the new replacement cost, then makes deductions for depreciation including physical deterioration and functional and economic obsolescence to ultimately arrive at the value of the improvements in their present condition.
The company's philosophy of economic obsolescence posits that it's much more efficient and cost-effective to run trucks until it becomes cheaper to get a new truck than to operate an old one, rather than trying to extend vehicles' working lives by operating trucks until they become functionally obsolete.
Cost Approach is based on the investment required to replace or reproduce the assets of a business using current prices for labor, materials and operating facilities--less depreciation for physical deterioration and functional and economic obsolescence.
The functional and economic obsolescence ratings for WPI's life sciences center were reset to zero in this year's revaluation, which contributed to more than doubling the building's assessed value from just under $8 million last year to $17.
Core investors should consider exiting an investment when they have achieved or outperformed their expected return levels and can lock in performance fees; the capital cost to maintain the "Class A" status is unfeasible due to functional and/or economic obsolescence at the property; and if an opportunity to convert the property to a higher and better use arises, such as converting apartment units to condominiums.
Candidates for an economic obsolescence tax reduction have experienced a reduced demand for their product, increased competition, high inflation or increasing interest rates.
Economic obsolescence can be measured by the location of a building to a city centre or central business district.
Before this change, there was no penalty imposed on UK firms or their valuation consultants for a failure to take account of economic obsolescence when valuing real estate or plant.
Depreciation is defined as the actual loss in value or worth of a property from all causes, including those resulting from physical deterioration, functional obsolescence and economic obsolescence.
Specifically for the developing countries where they are already in the lack of capital, the economic obsolescence of the resources is not appreciated.
In particular, they show via a series of models how access pricing policies, even those that are Ramsey-based, can create takings if they do not properly account for technical progress, economic obsolescence, and the economic depreciation that occurs when a technical innovation occurs.

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