Wert-Berater, Inc. completed an independent Highest and Best Use Study for two contiguous parcels totaling approximately 1.89 acres on a suburban commercial corridor in Mundelein, Lake County, Illinois. Applying Appraisal Institute four-test methodology, the study concluded that small-format commercial redevelopment emphasizing restaurant and small-shop retail uses represents the highest and best use of the combined assemblage, supported by an 8.0 percent stabilized yield on cost and a 17.7 percent ten-year equity IRR. A hybrid concept preserving a wedding and event venue component was also tested at the client's request and ranked fourth among ten alternatives examined.
Wert-Berater, Inc. was engaged to deliver an independent Highest and Best Use Study for two contiguous parcels on a mature suburban commercial corridor in Mundelein, Lake County, Illinois. The combined site totals approximately 1.89 acres and is currently improved with two rental residences. The assignment directed the firm to apply accepted Appraisal Institute methodology to the property both as though vacant and as currently improved, testing each configuration — parcel by parcel and as a combined assemblage — against the four sequential criteria of highest and best use: physical possibility, legal permissibility, financial feasibility, and maximum productivity.
The engagement is an independent consulting study, not a USPAP appraisal, and does not contain an opinion of market value. The firm's fiduciary duty ran to the lender, investor, and client decision-making process the study was intended to serve. A client-supplied preliminary financial model was independently audited before use; its single-scenario multiplier methodology was found unreliable and was not relied upon in reaching the report's conclusions.
The study applied a four-phase alternative-use screening process: a broad long list of plausible uses, a fatal-flaw elimination pass removing uses clearly barred by physical or legal constraints, a preliminary scoring of surviving alternatives against the four-test criteria, and a final selection of alternatives for detailed financial testing. Ten alternatives were ultimately examined in full, including restaurant and small-shop retail concepts, personal service, medical and general office, fitness, mixed-use, and, at the client's specific request, a wedding and event center in both hybrid and full-concept configurations.
Financial feasibility testing modeled stabilized yields on cost, debt service coverage ratios across a five-year horizon, capitalized exit values at 3, 5, 7, and 10-year hold periods, and project-level (unlevered) and equity-level (levered) IRRs. Sensitivity analysis and principal-risk identification were completed for each alternative. All figures were produced in a live, formula-driven Excel model rather than hardcoded outputs, enabling auditable traceability from assumption to conclusion.
Market analysis rested on a six-property comparables survey conducted across a three-mile competitive market area encompassing the subject's primary arterial corridor and adjacent retail nodes. Achievable rent evidence ranged from approximately $9.00 to $16.00 per square foot per year for small-format retail space, with a restaurant pad comparable commanding $35.00 per square foot at the premium end of the competitive set. A retail market leakage analysis estimated approximately $121.4 million in annual restaurant, entertainment, apparel, and personal-care spending generated by the primary market area's approximately 11,600 households, applying Bureau of Labor Statistics Consumer Expenditure Survey data to a locally verified household count.
The study situated the subject within a layered economic context spanning national, state, and county conditions. Lake County significantly outperformed the Illinois statewide economy across every independently verified metric: the Illinois Department of Employment Security reported a Lake County metro unemployment rate of 4.5 percent in April 2026, below both the statewide figure and the Chicago-Naperville-Schaumburg metro division, with year-over-year job growth in the county even as unemployment rose in 97 of Illinois's 102 counties. County economic development reporting cited 2025 as the strongest year on record for direct capital investment in the county, and Site Selection magazine ranked the county among the top 10 U.S. counties for economic development that year.
Financing-cost assumptions reflected a federal funds rate in the 3.5 to 3.75 percent range consistent with Federal Reserve guidance current at the time of the study, and rent escalation assumptions were anchored conservatively to local comparable evidence rather than extrapolated from national trends. The Mundelein trade area's median household income of approximately $108,000, homeownership rate of 71.2 percent, and active local dining and liquor license base provided direct, locally sourced demand support for restaurant and small-shop retail alternatives.
The study concluded that the highest and best use of the two parcels, as though vacant, is small-format commercial redevelopment emphasizing restaurant and small-shop retail uses on a combined-assemblage basis. This alternative ranked first on every verified financial metric, including an 8.0 percent stabilized yield on cost and a 17.7 percent ten-year equity IRR. As improved, the highest and best use is interim continued use transitioning to that same redevelopment once required confirmations — principally zoning verification, a current survey, and title review — are satisfied.
The hybrid concept combining restaurant, retail, and a compact wedding and event venue, sized to the site's actual parking capacity rather than the client's initial unexamined square footage assumption, ranked fourth among the ten alternatives tested. At that right-sized configuration, the wedding venue component reached approximately $202,000 in stabilized annual EBITDA as an owner-operated business, a finding the study presented as decision-relevant rather than dismissive of the objective. The larger full-concept wedding venue alternative was found to cost more to build than its combined real estate and business value could support at current market conditions. Recommended next steps included confirming the zoning classification with the applicable municipal authority and obtaining a current survey and title commitment before committing any capital.
A Highest and Best Use study is an independent consulting analysis that applies Appraisal Institute methodology to determine which legally permissible, physically possible, and financially feasible use of a property produces the greatest value. Unlike a USPAP appraisal, it does not conclude with a specific opinion of market value and is not bound by every USPAP reporting requirement, though it borrows the same analytical rigor, including sourced comparables, tested assumptions, and a defined scope of work.
Two legally distinct contiguous parcels can behave differently when analyzed separately versus together. An assemblage can produce a value premium when combined ownership enables a larger, more efficient development program that neither parcel could support alone, or it can produce a discount if combined ownership creates regulatory or physical complications. Testing all three configurations — each parcel independently and the combined assemblage — is the only way to determine which configuration is genuinely most productive.
A leakage analysis compares the retail-relevant spending that a trade area's own households generate against the spending actually captured by businesses located within that trade area. When local spending potential exceeds local retail sales, residents are directing some of that spending elsewhere, indicating potentially unmet local demand. This directional signal helps assess whether new retail or restaurant tenants would be entering a supply-constrained market or an already-saturated one.
Rather than assuming a return to historically low rates or projecting a further tightening cycle, a lender-grade feasibility study anchors financing-cost assumptions to the most current credible guidance available — in this case, the Federal Reserve's own published projections. Conservative assumptions are applied throughout to avoid overstating project feasibility, and the rationale for each assumption is documented so a lender or investor can evaluate whether the chosen figures are appropriate for their own underwriting standards.
President, Wert-Berater, Inc. — independent feasibility study consultants since 1998. More than 4,000 feasibility studies completed across all 50 states and internationally, evaluating $40.2 billion in project value for SBA, USDA, EB-5, conventional, and institutional financing decisions. Fiduciary duty runs to the lender and agency in every engagement.
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