What typically indicates functional obsolescence?

Functional obsolescence refers to a reduction in the functionality or desirability of a property due to its design. This can occur when a property's layout, features, or systems no longer meet the current preferences or needs of potential users or buyers. When the design of a property is outdated, it may not efficiently serve modern living or business requirements, leading to decreased appeal and value. For instance, an older home with small rooms and insufficient electrical outlets may no longer attract buyers who prefer open floor plans and smart home technology, thereby reflecting functional obsolescence.

The other options represent different issues. A poor location focuses more on external economic or environmental factors rather than the property's internal functionality. High ownership turnover can indicate issues but does not directly convey the concept of functional obsolescence itself. Lastly, being located in a high-demand area would typically enhance a property's value, not detract from it, contradicting the notion of obsolescence. Therefore, outdated design clearly aligns with the definition and consequences of functional obsolescence.