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Whether you’re acquiring, disposing of, financing, or managing a commercial asset, appraisal reports are essential tools. They influence negotiations, underwriting decisions, tax assessments, and long-term investment strategies.

Choosing the wrong type of appraisal—or misunderstanding its limitations—can delay deals or lead to inaccurate valuations. Here’s a breakdown of the most commonly used types of commercial property appraisals and when each is most appropriate.

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The Two Primary USPAP-Compliant Appraisal Types

According to the Uniform Standards of Professional Appraisal Practice (USPAP), there are two primary report types:

• Appraisal Report

• Restricted Appraisal Report

Both require the appraiser to consider the three approaches to value. The appraiser then chooses the most relevant methods to produce credible results for the specific assignment.

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1. Appraisal Report

The Appraisal Report is the most commonly requested and utilized format. It provides detailed, written narrative analysis and typically includes one or more of the following approaches to value:

Sales Comparison Approach

The Sales Comparison Approach is often the go-to for owner-occupied properties or assets in active markets. It estimates value based on recent sales of similar properties, adjusted for key differences.

Best used when:

• There are multiple recent comps within a defined market
• The subject property is similar in size, age, and use
• There’s low reliance on projected income

This approach is especially useful for small retail buildings, office condos, or flex/industrial spaces in high-volume areas.

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Income Capitalization Approach

The Income Approach is most relevant for properties with consistent income streams, like leased investment assets. It’s grounded in net operating income (NOI) and cap rate analysis to determine present value.

Two common methods:

• Direct Capitalization: Divides NOI by market cap rate
• Discounted Cash Flow (DCF): Projects income over time and discounts future cash flow

Ideal for:

• Multi-tenant office buildings
• Apartment complexes
• Shopping centers
• Hotels

This method reflects how investors view performance and return expectations.

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Cost Approach

The Cost Approach estimates value based on what it would cost to replace the property today, minus depreciation, plus land value. This method is most useful when comps are limited or the structure is new or unique.

Consider using the cost approach for:

• Special-use properties (e.g., hospitals, schools, churches)
• Brand-new construction
• Insurance purposes

It’s less influenced by market trends and focuses more on tangible replacement cost.

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2. Restricted Appraisal Report

A Restricted Appraisal is limited in scope and typically for internal use only. Although the scope of work may be similar to an Appraisal Report, a Restricted Appraisal Report is significantly more abbreviated and much of the analysis is “stated” rather than “summarized”. It includes fewer details than a full narrative or summary report and may not meet lender or investor requirements.

Use when:

• You need a quick internal valuation
• The report will not be shared externally
• You’re early in a planning or feasibility phase

These are cost-effective and time-efficient—but not suited for every purpose.

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3. Desktop Appraisal

A Desktop Appraisal is completed without a physical inspection of the property (neither exterior or interior inspection completed). USPAP does not require an appraiser to personally inspect a property, although many users of appraisals require an inspection.

The appraiser relies on public records, third-party data, maps, and past reports.

Useful for:

• Review or monitoring of stabilized assets
• Properties with known characteristics and minimal recent change
• Low-risk internal reviews

Note: Most lenders and institutional partners still require more in-depth reporting for transactional use.

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4. Drive-By Appraisal (Exterior-Only)

An Exterior-Only Appraisal, also called a drive-by, includes a site visit but no interior inspection. It blends first-hand visual data with market research.

Best for:

• Properties with access limitations
• Low-risk refinance scenarios
• Assets in stable submarkets

While faster and less expensive, this method offers only a partial view of the property’s condition and income potential.

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Ready to Choose the Right Appraisal? We’re Here to Help.

Navigating commercial real estate appraisal options doesn’t have to be complicated. At Lowery Property Advisors, we combine market expertise with a client-first approach to deliver clarity and confidence—whether you’re closing a one-off deal or managing a large portfolio.

You’ve built your business on smart decisions. Let us support that with accurate, timely, and actionable valuation services.

During the 2025 IRWA Region 2 Fall Seminar (https://irwaregion2.org), appraisers, right-of-way professionals, and industry leaders gathered to explore complex valuation challenges across Texas. While we weren’t presenting this time around, we appreciated the deep dives, and highlighted the trends and stories that matter.

Reimagining I-35 in Austin

We heard insights on the I-35 Capital Express Central project—a $4.5 billion initiative on I-35 through downtown Austin, that our ROW market leader Mario Caro, MAI, AI-GRS, SR/WA, is currently working on. The project will include removing upper decks of I-35 and building two lowered non-tolled high occupancy lanes in each direction, constructing a boulevard segment through downtown, tunneling the main lanes of I-35, shifting the downtown frontage road lanes to the west side of I-35, and creating 12 new pedestrian bridges, in addition to “capping” areas between the bridges for potential parks, plazas and gathering spaces. The project is designed to reconnect a city divided by a towering and expansive interstate highway, and will be a transformational investment that speaks not only to mobility in an active city, but to long-term land use, value, and connectivity, which are factors that appraisers track closely. For more information on the project visit: https://www.txdot.gov/mymobility35/projects/capex-central.html.

How Do You Value an Island?

One of the most engaging case studies involved a now-isolated property off the Bolivar Peninsula, being land that became an island during the construction of the Gulf Intracoastal Waterway (GIWW), which now stretches 1,100 miles from Brownsville, Texas to Florida. With no dock, no utilities, and no road access, the appraisers had to get creative.

Key considerations included:

• Tidal and submerged boundaries matter: Surveyors in Texas rely on the mean high tide line to determine where submerged land begins. The Navigable Stream Statute further clarifies how property lines shift gradually with natural changes—meaning riparian or littoral owners may gain or lose land over time.
• Submerged land isn’t yours: The State of Texas holds fee title in a public trust to submerged lands, which means the water’s edge can change what’s privately owned.
• Highest and best use was recreational: Because the island had no access or infrastructure, and it was encumbered by a spoils easement, it was deemed unsuitable for residential or commercial development.
• Valuation required heavy due diligence: Ownership history, physical characteristics, spoil easements, and environmental limitations all factored in.

This case highlighted just how nuanced shoreline and waterway valuations can be, and why understanding land boundaries, statutes, and usage limitations is essential for credible appraisal work. It was humorously noted that the ability to say you own an island had more value than what was actually here. This was a firm reminder that the imagined value of a property, an island in particular, can differ significantly from its appraised value grounded in research.

Environmental & Cultural Factors in ROW Projects

Long, linear infrastructure projects, like transmission lines, come with a host of challenges—and they aren’t just about route mapping. Speakers walked us through the environmental factors that can shape valuation, like wetlands (defined by water, plants, and soil), endangered species, and cultural sites. Permits might be needed from TCEQ, the U.S. Army Corps of Engineers, and others. One example? A project had to pause for nesting birds, and another project required hiring a professional to check on if alligator eggs had hatched. On the cultural side, pre-construction digs often turn up artifacts, from Native American tools to colonial-era items, which can mean reworking a route. These are the kinds of variables that make ROW planning and valuation both tricky and essential to get right.

Texas Growth: A Taylor-Made Case Study

Closing the seminar, Ben White offered a compelling look at Taylor, Texas, a small town at the center of global tech. Samsung’s $17 billion initial investment, announced in 2021, (per https://gov.texas.gov/news/post/governor-abbott-announces-new-17-billion-samsung-manufacturing-facility-in-taylor) and now with additional funding is bringing major growth, including over 150 expected supporting suppliers required to be located within an hour away. In response, the city implemented a new water and wastewater plan in 2023, only to realize shortly after that even more infrastructure would be needed to meet the surge in demand. His takeaway? “Development follows infrastructure,” and we’re already seeing the consequences of growth outpacing planning in towns across the country. It’s a warning to municipalities and developers alike: make sure you’re truly ready. Overlooking utility capacity, parcel readiness, and long-term policy alignment can stall momentum before it starts.

Final Thoughts

The IRWA Region 2 Seminar offered a reminder that valuation isn’t always straightforward. From shifting coastlines to multi-billion-dollar tech corridors, appraisers must weigh physical facts, legal nuance, and future potential.

Economic development deals can reshape communities, and reshape property values. Last week, the McKinney Community Development Corporation (MCDC) approved a $35 million incentive package to support the development of a new Marriott Autograph Collection resort. The planned 289-room luxury hotel will anchor the Craig Ranch development and feature event space, retail, and other destination amenities.

This investment is part of MCDC’s broader mission to enhance McKinney’s aesthetic, cultural, and leisure amenities. Since voters approved a half-cent sales tax in 1996, MCDC has reinvested nearly $225 million into the community, funding projects that honor the city’s history, enrich quality of life, and support long-term economic growth.

While the hospitality sector continues to rebound post-pandemic, local governments across Texas are increasingly using public-private partnerships to spur high-end commercial growth. Projects like this don’t just change the skyline; they impact future land use, influence investor interest, and set new benchmarks for nearby properties.

What does that mean from a valuation standpoint?

Incentivized developments often create ripple effects that extend well beyond the initial project footprint. For appraisers, it raises important questions: Will surrounding properties see increased demand? Will rents rise? How should projections account for future absorption and competition?

When conducting commercial real estate appraisals in areas like Craig Ranch, where growth is rapid and planned infrastructure is in motion, it’s critical to assess both current performance and future potential. Our team analyzes regional policy decisions, development timelines, and comparable incentives to forecast how these deals may influence value—not just for hotels, but for retail pads, office space, and multifamily assets nearby.

McKinney and neighboring towns north of Dallas have been on our radar for years. This project is a clear sign that the growth trend is far from over.

During July 2025 Lowery Property Advisors joined dozens of industry leaders at the Aggie Real Estate Network’s 50th Anniversary Conference in College Station. Our CEO, Mark Lowery, joined four peers on the Valuation Panel where they dove into intriguing topics such as AI in appraisal, property types being overlooked, and the next generation in the appraisal business. Parts of this conversation have been included in our discussion below. From our Dallas HQ office, Stormi Wright and Ashley Travis joined, as well as Olivia Shimmin and Danielle Watkins from our Forth Worth office. Danielle, serving as Region I Director for AREN, played a pivotal role in organizing the conference—exemplifying her dedication both as a committed appraiser and an industry leader. With 15 members of our staff being alumni of Texas A&M’s MRE program that is closely connected to AREN, we were genuinely glad to be there to reconnect and contribute to the conversation.

Themes That Resonated

Here are the trends and ideas that stood out:

• Strategy with intention: A keynote from Hines’ Global CIO emphasized need for perspective to understand what’s likely ahead—and the humility to know it can all change quickly. He shared a striking overlay of inflation data from 1966–1977 and 2014–2025, suggesting we may be on track for a third potential uptick. As Mark Twain said, “History doesn’t repeat itself, but it often rhymes”—a reminder to stay grounded, alert, and ready for shifts in the cycle.
• AI isn’t replacing us, but we should become familiar: Panelists agreed AI can boost data efficiency and streamline tasks, but it doesn’t replace professional judgment. Appraisers must own their work, use AI selectively, and always “review the work it does”—because at the end of the day you are the one responsible. One insightful comparison made by the keynote speaker was to the early fears about women entering the workforce after the war. Many thought women would take too many jobs, yet the economy grew and expanded in unexpected ways. Similarly, AI will change how we work and may disrupt certain roles, but overall, it will drive growth and new opportunities. In Texas—one of the world’s largest economies—this could lead to more organic growth because of its diverse industries, strong business climate, and culture of innovation, all of which create fertile ground for AI to enhance productivity and spark new opportunities rather than just disrupt existing jobs. Some companies are already leveraging AI within their communities to anticipate potential risks and make smarter decisions, showing how thoughtful adoption of AI can enhance, rather than replace, human expertise.
• Opportunities in under-the-radar sectors: Daycare and pet boarding came up as unexpected growth sectors. Consumers are increasingly willing to invest in services that care for their children and pets, creating niche value opportunities that investors and appraisers should watch closely. These sectors often fly under the radar but represent meaningful demand drivers that can enhance a portfolio’s diversification and resilience.
• Valuation = an art using data: Commercial real estate appraisal is much more than crunching numbers—it’s a blend of science and art. Mark Lowery emphasized “research, research, research” as the heartbeat of our organization and credible valuations. He went on to explain that at LPA, we are a tech-enabled company and have a dedicated research team, providing our appraisers with the tools they need to deliver accurate, reliable, and context-rich valuations. In addition, successful appraisers also bring relational expertise: listening carefully to client needs, understanding nuanced local market trends, and translating raw statistics into meaningful insights—this is the art part. This combination ensures valuations are not only precise but actionable and tailored to each unique property.
• Nurturing the next generation: Mentoring and cultivating young professionals was a consistent theme throughout the conference. Mark highlighted how a strong company culture that prioritizes work-life balance and growth opportunities is key to attracting and retaining appraisal talent. Becoming an appraiser offers a valuable gateway into the broader real estate industry—providing hands-on experience, deep market knowledge, and a foundation for a lifelong career, not just a stepping-stone. Investing in training and mentorship today builds the resilient, skilled workforce needed for tomorrow’s evolving market.

A Moment of Resilience

Among all the forward-thinking, we were reminded of the A&M community’s leadership during recent Texas floods—with over 700 individuals across the system stepping in to support recovery efforts. It reinforced the values of service and unity that make our industry—and our community—stronger.

Closing Takeaway: Data Drives, People Lead

Conferences like AREN remind us that the real estate industry is more than just assets and transactions—it’s a thoroughly connected network grounded in data, guided by experience, and driven by people.

As of their June 24th meeting, the Fort Worth City Council unanimously greenlit a $125 million incentive package to kick off Westside Village, a $1.7 billion mixed-use transformation on 37 acres of underutilized land. Included in this development from Dallas-based developer Larkspur Capital will be 1,800 apartments, 880,000 SF of Class AA office, 238,000 SF of retail, a 175-room hotel, and mass timber construction (a more environmentally friendly building technique), all rolling out in phases through 2035.

Fort Worth’s Westside neighborhood has already seen a wave of revitalization—from the Cultural District to West 7th—drawing more housing, shops, and activity west of downtown. Now, the $125 million incentives package aims to accelerate that momentum transforming underused car lots and vacant buildings into a walkable, amenity-rich district.

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How This Shapes Fort Worth’s Community & Valuations

A community energized: New public spaces, housing choices, and commercial options will enhance local quality of life, attract residents and businesses, and bolster city tax revenues.

Amenities that boost appeal: Office, retail, and hospitality tenants now gain access to a vibrant, walkable environment—with better connectivity and flood protection. That makes the area more attractive to both users and investors.

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What It Means for Commercial Appraisal in the Area

Mixed-Use Complexity

Appraisals must combine distinct income streams—residential rent-up, office and retail leasing, hotel performance—into one cohesive commercial real estate appraisal.

Incentive Valuation

With public funding supporting infrastructure, flood control, and transit, appraisers need to isolate and quantify how much those incentives increase net operating income and reduce developer risk across the board.

New Market Benchmarks

Nearly 880,000 SF of new Class AA office—the city’s single largest office addition in 40 years—will reset comparables and compress cap rates. Timely monitoring of lease and sale activity is essential

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Bottom Line

This is more than bricks and mortar—it’s a transformational moment for Fort Worth. Valuations here will need to account for phased delivery, incentive impact, and the ripple effects of a walkable, mixed-use district.

At LPA, we combine data-driven analysis with real-world insight to deliver valuation reports you can trust. Have questions about a property you’re working on? We’re here to help.

Texas is making a bold play to attract film and TV production, with historic implications for commercial real estate appraisal. Through Senate Bill 22, the state has locked in $300 million every two years until 2035—a total of $1.5 billion—to bolster the Texas Moving Image Industry Incentive Program. This marks the largest investment in media jobs in Texas history.

Why this matters to commercial real estate appraisal

When studios pour hundreds of millions into production, they don’t just shoot on location—they lease soundstages, office space, warehouses, parking lots, and post‑production facilities. That ripple effect has a direct and measurable impact:

• Demand surge for specialized properties: Industrial and flex spaces equipped for production are now in hot demand. Appraising these assets requires factoring in higher lease rates, occupancy growth, and cap‑rate compression, core aspects of a commercial appraisal.
• Infrastructure investment: Developers have ramped up production, including new studio campuses and adaptive reuse of industrial assets, anticipating long‑term demand. With this, a pulse on local zoning changes, future build‑out, and enhanced utility availability is necessary.
• Market comparables shift: As production tenants enter markets, comps begin to reflect higher lease and sale prices indicating a need to adjust income models, cap rates, and stabilized vacancy assumptions accordingly.

What we’re watching next

1. Leasing & income trends. We expect upward pressure on rents for industrial flex and production-ready spaces—good news for valuation under the income approach.

2. Capital markets & investor interest. New investor capital may flow into the asset types powering production support, boosting valuation multiples. Appraisers should weigh sales trends in major markets like Dallas–Fort Worth, Austin, and Houston.

3. Long-term vs. short-term demand. With funding secured through 2035, this is more than a flash-in-the-pan boom. That extended horizon strengthens value stability and lease term assumptions—critical for underwriting.

Viewing these changes with a commercial real estate appraisal lens, as Texas positions itself among top film-production states, these developments translate into real valuation opportunities and challenges. At LPA, we combine data-driven analysis with real-world insight to deliver valuation reports you can trust. From industrial assets to office parks and mixed-use developments, we help our clients make sense of value, one property at a time.