Maximally Productive
The fourth and final test in highest and best use analysis: among all financially feasible uses, the maximally productive use is the one that produces the highest residual land value (or highest property value for improved properties).
After filtering uses through the legal, physical, and financial tests, the appraiser compares the remaining feasible uses to determine which produces the highest value. For land as if vacant, this is measured by residual land value — the value remaining after subtracting all development costs. For the property as improved, it is the use that produces the highest overall property value. The maximally productive use becomes the basis for the appraisal — comparables, cost estimates, and income analysis should all reflect the highest and best use conclusion.
Related Terms
Highest and Best Use
HBUThe reasonably probable use of a property that results in the highest value, considering uses that are legally permissible, physically possible, financially feasible, and maximally productive..
Financially Feasible
The third test in highest and best use analysis: a use must generate sufficient income or value to justify the cost of development, including land cost, construction costs, and a market rate of return..
Legally Permissible
The first test in highest and best use analysis: a use must be allowed under current zoning, building codes, environmental regulations, deed restrictions, and other legal constraints to be considered..
Land Value
The market value of a parcel of land as if vacant and available for development to its highest and best use.
More in Highest & Best Use
View allPhysically Possible
The second test in highest and best use analysis: a use must be physically achievable given the property's size, shape, topography, soil conditions, access, and available utilities..
Interim Use
A temporary use of a property that is expected to change in the foreseeable future as market conditions evolve or when the property becomes ripe for development to a higher use..
Conforming Use
A property use that complies with current zoning regulations and is consistent with the predominant land use pattern in the neighborhood.
Feasibility Analysis
The study of whether a proposed project's value upon completion exceeds its total cost, including profit.