Cost approach is a real estate appraisal valuation method used to price an individual property.
One of the basics is that there is a sufficient supply of buildable land that construction is a viable alternative to purchase of an existing property.
In some parts of the world today, including in the US, there are areas which are either so fully developed, or so restrictive in their planning approvals, that new construction is not an option because of the scarcity of land.
If the trend of development favors, say, high volume warehousing, would anyone consider building a multi-story manufacturing facility?
These are lumped into physical (wear, tear and deterioration), functional (look, feel, form and style), and locational (the influence of factors outside the property itself).