What term refers to the cost of constructing a substitute structure of equal utility?

The term that refers to the cost of constructing a substitute structure of equal utility is "Replacement." This concept is crucial in property assessment as it focuses on the cost associated with building a new structure that provides the same functionality and utility as the original one, rather than replicating the original building exactly, which would be termed "Reproduction."

In the context of property valuation, replacement cost is often used to determine how much it would cost to repurpose a property with a similar utility in case of its destruction or significant damage. It reflects more current building practices, designs, and materials. In contrast to "Reproduction," which emphasizes duplicating the exact structure—including outdated materials and designs—replacement tracks the cost of constructing something modern that serves the same purpose but may differ in aesthetics or features.

Understanding the difference between replacement and reproduction is essential for accurate property assessment, especially when considering depreciation, market trends, and the overall value of the property within the broader real estate environment.