Strategies for Negotiating for Your Commercial Property: What’s the Highest Possible Compensation?

As a commercial property owner in Georgia, facing eminent domain can be a daunting prospect. Whether you’re conducting your own business or have tenants in place – or both – eminent domain takings can threaten the health of your business. When the government exercises its power of eminent domain, it’s crucial to ensure you receive just compensation for your property.

While you may be tempted to rely on your business acumen, eminent domain proceedings require specific knowledge and experience. This short guide will outline some key strategies in negotiating for fair compensation, but it’s critical to remember: partnering with an experienced eminent domain attorney can significantly increase your odds of receiving everything you may deserve.

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3 key negotiation strategies

1. Ensure you receive a comprehensive property valuation

Don’t rely solely on the government’s appraisal because it may fail to properly assess:

• Fair market value of the land and structures: This goes beyond just the property’s listed value. Recent sales of comparable commercial properties in your area should be considered, taking into account factors like delivery logistics, location, parking, access and visibility to customers, traffic flow, and local zoning laws.
• Replacement cost of specialized equipment: Commercial properties often house custom or specialized equipment to suit the business or the tenants. Assessments should calculate not just the current value, but the cost to remove, transport, and reinstall equipment at a new location – or replace equipment that cannot be moved. For example, a pizza restaurant may have a massive stone pizza oven that simply cannot be moved.
• Business reputation and lost profits: A full assessment should consider the value of your business’s reputation, customer base, and potential future earnings. For instance, a well-established shopping center might have long-term leases, costly signage, and marketing equity that add significant value beyond just the physical property but might be damaged by a change in location or reduction in access.

2. Consider all compensable damages

As discussed above, you may be entitled to compensation beyond just the fair market value of your property. O.C.G.A. § 22-1-13 outlines additional potential damages related to the taking, including:

• Relocation expenses: These potentially cover more than just moving costs. They can include searching for a new location, planning and engineering for the new site, and temporary storage of equipment and inventory.
• Business losses: These can encompass lost profits during the transition period, customer losses due to a changed location, and costs associated with notifying clients and updating or replacing signage or business materials.
• Access issues: Will the taking affect entry points for large trucks or disrupt your supply chain, or damage customer convenience
• Future development: Does the taking eliminate valuable land you were reserving for future growth?
• Zoning complications: Could the partial taking result in your property no longer meeting local zoning requirements for commercial use?

Example: A large shopping center loses 20% of its land to an eminent domain taking for a new road. While the taken land itself might be worth $2 million, the impact on the center’s operations and lost future expansion potential could result in considerable severance damages .

3. Leverage the project influence rule

Georgia law requires that your property be valued as if the government’s project didn’t exist. This rule is particularly important for commercial properties, as government projects can significantly impact nearby land values.

If your property is being taken for an access road, nearby commercial land might have decreased in value due to the project’s effect on traffic flow. Your property should be valued based on prices before the project was announced.

Remember, while these strategies provide a foundation, the complexities of commercial property eminent domain cases often require focused legal experience to navigate – even for seasoned business owners.