Five-acre vacant parcel has these value estimates: residential value $225,000; commercial value $1.25 per square foot; industrial value $50,000 per acre. What is the highest and best use?

• A. Residential
• B. Commercial
• C. Industrial
• D. Cannot determine from information provided

Answer: (B)

The decision hinges on which use yields the greatest value from the land itself. For five acres, convert to square feet: 5 × 43,560 = 217,800 sq ft. Then compare the estimated land values for each use: residential is 225,000 total; industrial is 50,000 per acre × 5 = 250,000; commercial is 1.25 per sq ft × 217,800 = 272,250. The use that produces the highest land value is commercial, at 272,250, so it is the highest and best use, assuming zoning and feasibility allow it. If those constraints prevented commercial development, the next best would be industrial (250,000) or then residential (225,000).