Rethinking “Highest and Best Use”
Why operational reality matters more than theoretical “highest and best use”
Function. Flow. Friction. Durability. Longevity. Value.
Highest and best use has become a theoretical phrase, thrown around in broker pitches and appraisals without much grounding in actual function.
It usually hinges on:
- What zoning allows
- What the comps suggest
- What the pro forma says
- What the marketing deck needs to claim
But here’s what it skips…how the space actually performs, on a Tuesday at 2 PM, six months after lease-up, mid-delivery, or while construction reroutes the sidewalk.
This article flips the lens. We’re not here to imagine what could be built. We’re here to ask: What actually works when it is?
Because it’s not about density. It’s about durability and frictionless use.
Use AI to Catch Operational Risk Early
A quick loop to test space logic before real dollars move.
AI isn’t here to replace your decision-making. It’s here to help you challenge assumptions and model fit before money gets spent.
Here’s what a quick AI loop breaks down to:
🔁 Ask → Read → Refine → Rerun
- Ask a clear, specific question.
- Read the answer. Identify what feels off, vague, or misaligned.
- Refine. Tell ChatGPT what didn’t work and what to adjust.
- Rerun the prompt.
Don’t stop at the first output. The first draft is rarely the best one. Run the loop at least 3 times or as many times as you need to hone your results and are comfortable with the output.
Case Study: Let’s Pressure-Test a Real Example
A 2,000 SF retail space looks viable on paper, but will tenant operations align with layout? Sidewalk reroutes or buildout missteps can tank performance.
Scenario:
- 2,000 SF space in a suburban retail center.
- Rent is $35/SF + $10/SF CAM (includes shared marketing, maintenance, and property taxes).
- Prospective tenant is a consignment shop.
Prompt:
Generic version:
“Act as a commercial real estate analyst and operator. I’m evaluating a [PROPERTY TYPE] in [NEIGHBORHOOD]. What are five operational risks I should consider before committing to a highest-and-best-use strategy based only on comps or zoning? What questions do developers usually overlook?”
Here’s how the prompt shifts by role:
✅ Tenant Lens
“Act as a CRE analyst and operator. I’m evaluating a 2,000 SF retail space in a suburban shopping center for a curated consignment shop. Rent is $35/SF + $10 CAM. What layout, staffing, and cost structure considerations should I plan for? What are common mistakes tenants make in this category?”
✅ Owner Lens
“Act as a CRE analyst and operator. I own a 2,000 SF unit in a suburban retail plaza. Rent is $35/SF + $10 CAM. I’m considering leasing it to a consignment shop. What improvements or layout decisions could increase flexibility or reduce tenant turnover? What operational needs should I plan for?”
✅ Investor Lens
“Act as a CRE analyst and operator. I’m evaluating a 2,000 SF retail unit in a suburban shopping center leased at $35/SF + $10 CAM to a boutique consignment tenant. What risks or operational mismatches should I look out for? How might tenant type affect long-term value?”
Run the Ask → Read → Refine → Rerun loop.
Copy + Paste This to ChatGPT Now:
“Act as a commercial real estate analyst. I’m evaluating a 2,000 SF retail space in a suburban shopping center for a curated consignment shop. Rent is $35/SF plus $10 in CAM. What operational risks should I consider before signing a lease?”
Don’t settle for the first answer. Push for specifics. Adjust what feels off. Ask again. The more clearly you frame the risk, the more helpful the response becomes.
📌 Remember, You’re Training It
This process will help you to guide your prompt like you would a team, with repetition, direction, clarity, and feedback. Every correction you make improves your results. You’re not looking for a perfect answer, you’re building a better one.
Why start here?
Because “highest and best use” isn’t about density. It’s about durability, function, fit, and friction—or the absence of it. But it’s also about longevity. If a space can’t adapt, it can’t last. And if it can’t last, it never really works. When form, flow, and future all align? That’s when real places take shape. That’s how Wynwoods emerge.