What does a higher 'Highest and Best Use' indicate about a property?

A higher 'Highest and Best Use' indicates that a property is being used in a way that allows it to achieve its greatest potential market value. This concept reflects the most profitable legal use of a property that is physically possible, financially feasible, and maximally productive. When the highest and best use of a property is identified, it often reveals that the property can achieve a greater market value compared to other possible uses.

In practical terms, if a property is situated in an area with high demand for a particular type of use—such as commercial, residential, or mixed-use—it can significantly enhance its attractiveness to buyers or investors. Therefore, recognizing a property's highest and best use signals that there is likely a premium associated with that use, directly correlating to greater potential market value. This understanding is fundamental in property appraisal, as it helps in determining how much a property could be worth on the open market based on its most advantageous use.