Valuation Methods for Mixed-Use Development

You are a senior analyst at a real estate investment firm tasked with evaluating a mixed-use development project located in an urban center. The project comprises residential units, retail spaces, and office units. Your firm requires an assessment of the project's value using three different valuation methods: the Income Approach, the Cost Approach, and the Sales Comparison Approach.

1. For the Income Approach, detail the key factors you would consider in estimating the Net Operating Income (NOI) for the property, including any potential risks and assumptions that may affect cash flows. Discuss how you would derive the capitalization rate and its implications on the value.

2. In applying the Cost Approach, explain how you would determine the Replacement Cost of the property. Include in your analysis the importance of both direct and indirect costs in the valuation process, along with considerations for depreciation and obsolescence.

3. Lastly, in the Sales Comparison Approach, describe how you would select comparable properties in the valuation process. Highlight the adjustments you would need to implement for differences in property characteristics and market conditions.

In your response, discuss how the choice of valuation method may vary based on the type of property and market dynamics, and conclude with your perspective on the most suitable valuation method for this specific project.