It seems to be one of the main discussion points with commercial real estate, “Is there a liquor license included?” I hear that question asked more than probably any other when dealing with downtown Missoula commercial properties, and rightfully so. ”Liquor License” was such a buzz word in the past decade as they skyrocketed in value and diminished in supply. Everyone was intrigued by it whether they knew real estate or not. Like many topics of interest, there is also a lot of misinformation going around.
So what is the true value of a Missoula city all beverage and gaming license?
There are several things to consider when looking at historical values for a Missoula license:
- Was real estate transferred with the sale? If the license was transferred with real estate, the buyer and seller can allocate values to each asset. When the value is allocated by the buyer, the recorded sales price of the license can be skewed.
- What type of license was purchased? There are several types of liquor licenses available from cabaret to full liquor and gaming.
- Can the license be transferred or is it attached to a property?
For the purpose of discussion we are going to focus on City of Missoula all liquor and gaming license. Like many markets, Missoula liquor license values are directly related to supply and demand.
The graph illustrates how high demand for Missoula liquor license starting in 2007- 2008 drove down the inventory and pushed the price to a high of $1,000,000 in September of 2008. A changing market opened up the supply in 2010 and slowly reduced the prices. Today’s average price is around $695,000. However, with low inventory we could see those prices start to rebound.
Total volume of sales for Missoula all beverage and gaming license.
Average sales prices indicate that the values of Missoula liquor license are rebounding from a low in 2010. This year is showing low inventory so look for this trend to continue.
This graph shows the sales prices for liquor licenses sold since 2006. The low price of $300,000 is an example of how values can be allocated to reflect different prices. In this situation it may not reflect a true sales price and should be considered an outlier.
Overview: The value of a Missoula liquor license is established because it is a scarce commodity and they are not issuing any more. Even when prices were pressured down due to supply in 2010, there was only 5-6 available at any given time. So when prices are down it only takes 1,2 or 3 sales before they become scarce again. At the high in 2009, the buyers most likely had to convince a seller to sell because there were none on the market. Any time you are dealing with scarce resources with small numbers of supply there is a big upside.
Our Recommendation: BUY
Call for more information on available liquor licenses not currently on the market.Jeremy Williams Williams & Associates 406-926-6767