Property values can be lost through the following forms of depreciation:
Deferred maintenance – the easiest form to spot and to estimate – it is the deterioration of the physical aspects of a property including structure and mechanical.
Functional obsolescence – outdated facilities, poor lay out or inadequate parking can cause a building value to decline
Economic obsolescence – deteriorating neighborhood conditions, traffic, adjacent nuisances such as an airport.
By properly maintaining physical conditions of a property including structure, roof, plumbing and HVAC as well as regular updating of corridors, bathrooms, and lobbies, building values can be maintained and improved. Economic factors can be more difficult to address but can be just as important in curbing value depreciation. Involving local municipal representatives can help in this area. Applying basic practices to maintain and update property in itself can also assist in preventing economic obsolescence.
Over the past 40 years property value in the United States has increased at an average rate of 5.4% annually. In the past eleven years the property value in New Orleans has increased by nearly 51%. Preventative maintenance and updates to keep property contemporary prove to be valuable practices for property owners and to have significant influence on perspective buyers.