The site-to-building ratio
A neighbourhood retail center typically devotes two to three times more site area to parking and drives than to building footprint. Zoning parking ratios guarantee it.
Every bit of that pavement — asphalt, base course, sealcoat, striping, concrete curbing, sidewalks, ADA ramps, wheel stops, storm inlets and detention, pole lighting, pylon sign foundations, landscape islands and irrigation, trash enclosures, cart corrals and bollards — is a 15-year land improvement.
Tenant finishes
Storefront glazing serving tenant space, decorative and display lighting, floor coverings, display fixtures and counters, dedicated power for coolers, POS, kitchen or salon equipment, tenant signage and awnings, security systems and specialty plumbing.
Qualified improvement property
Landlords who fund build-outs for incoming tenants generate QIP continuously — interior improvements to a nonresidential building placed in service after the building itself, at a 15-year life with full bonus eligibility.
This is the most commonly missed item on retail schedules. A landlord who spent $180,000 re-tenanting a bay in 2022 and put it on a 39-year schedule has a correctable method, fixable on Form 3115 with the catch-up in the current year.
Partial dispositions on re-tenanting
When a space is stripped and rebuilt, the previous improvements are gone but usually remain on the schedule. An election to write off their remaining basis is available — if you can establish what they cost.
Typical range
20% to 32%. Centers with pad sites, drive-throughs, heavy landscaping and detention infrastructure sit at the top.
Single-tenant net lease
NNN investors sometimes assume a study is pointless because the tenant maintains everything. Maintenance responsibility does not change ownership. You own the building and the site improvements, and you depreciate them.
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