Progression/Regression Tag Archive

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What is progression/regression?
What is the Principle of Progression?
What is the Principle of Regression?

What is progression/regression?

Progression/Regression is, in a broad sense, an upgrade or downgrade by comparison. In real estate they are referred to as the Principal of Progression and the Principle of Regression and they are opposites.

What is the Principle of Progression?

According to this appraisal principle, the value of a property increases when surrounded/adjacent to more expensive properties.
Example: If an abandoned warehouse is restored and converted into desirable creative office space near lower value properties, these will be positively affected, in that their sale or lease price, as well as the property tax, can go up due to their location near the new, more expensive, office property.

What is the Principle of Regression?

The opposite appraisal principle states that a property of higher quality that is located in an area of lower or declining quality properties will be negatively affected due to its location. These principles are evident during a comparative appraisal of properties that are similar in size and amenities.

Example: 15 years ago, a retail property that was located in an affluent neighbourhood with high quality housing and transport would get expensive leases. If, in time, the neighbourhood infrastructure deteriorated, or access to transport is not as convenient as it used to be or the value of the housing properties around it has gone down (or all of the above), the retail property may have to lower its rates in order to keep existing tenants or get new ones.

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