What does "excess land" indicate in a commercial appraisal?

In a commercial appraisal, the term "excess land" refers to land that is not necessary for the highest and best use of the property. This concept is significant in real estate valuation because it identifies portions of a property's land that do not contribute to its overall value in its current use.

For example, if a commercial property is utilizing only part of its land for operations and the rest is either not needed for the business's functional requirements or is not suitable for development given its current zoning and use, that unutilized portion is considered excess land. Understanding the concept of excess land is crucial for appraisers as it impacts the valuation and marketability of a property, determining what portion of the land can be deemed as contributing to value and what portion does not enhance the utility of the property.

In contrast, options involving land that can be developed or that is specifically needed for the property suggest a different valuation consideration. The focus on land that is entirely necessary for the highest and best use or land that is simply undeveloped neglects the definition of excess land, which centers on identifying surplus parcels relative to the operational needs of the property.