The profiles below highlight just a few particularly interesting or challenging assignments, providing a snapshot of the range of valuation scenarios
we’ve faced over the years.
Church with Parking Easement Benefitting Adjoining Property
A church property in which the owner had granted the neighboring property (an office building) an easement allowing it to share the church’s parking area. The site has frontage along a high-traffic arterial road, and the church building was in below-average condition and heavily depreciated, making it likely that the highest ant best use would be re-development, except for the parking easement. The challenge was to assess the impact of the easement on the current market value.
Office Building with At-Risk Offsite Parking
An office building situated on a small parcel with no on-site parking at all. The property relied on an agreement with an adjoining property to use a portion of its parking. The agreement had a fixed expiration date some years down the road, but with no mechanism for renewal. At issue was the risk to the property of non-renewal of the parking agreement and its impact on the value.
Valuation of 50+ Properties for
Estate Purposes.
A portfolio of more than 50 properties consisting of diverse uses including day care facilities, schools and residential properties. A significant number of the parcels are situated at high land value locations and suitable for re-development, presenting interesting highest and best use challenges. This was a retrospective valuation.
Urban Land Assemblage: Demolish and Build or Lease-Up and Hold?
We valued an urban land assemblage consisting of several contiguous and non-contiguous parcels, some of which were vacant, and some improved with older buildings. Some of the buildings were vacant and some partially leased, with some leases extending out a few years. There had been a recent wave of new development in the area, but also some concern that the number of projects in the development pipeline may have grown larger than demand could support. The challenge was to determine whether it would be more profitable to tear down and re-develop, or lease-up the vacant space and hold for re-development in the future, so the analysis had to look at multiple scenarios.
Major renovation and re-positioning, with questions about feasibility of medical office.
A prominent firm that had for many years fully leased a mid-rise office building adjacent to a hospital was considering downsizing and consolidating into a reduced footprint within the building, making several floors available for lease to new tenants. Major renovations were also necessary. Our appraisal took into account the cost of the renovation, the projected vacancy and cost of tenant concessions and leasing commissions during the lease-up period. Being next to a hospital, demand for medical office was strong, so we also compared the feasibility of leasing the newly available space to professional office vs medical office users.
Air rights easement.
We were approached by a local municipality to value an air rights parcel consisting of a narrow space above a public alley at the level of the second floor and above. The parcels on either side of the alley were owned by a developer proposing a single building encompassing the two non-contiguous parcels (connected above the alley from the second floor up). The building would straddle the alley, with contiguous floor plates on the upper floors, but with the public alley remaining in place (like a tunnel through the ground floor of the building). The task was to value the perpetual easement above the alley that the developer was seeking.
High-quality office asset with looming vacancy risk.
The subject was a two-building Class A office park with a tenant mix consisting of high-quality tenants. However, the largest tenant occupying about 40% of the complex had just been acquired by another firm with other locations in the area, and the rent was above-market, raising concerns about the risk of a large block of space becoming vacant prior to lease expiration. Our valuation took into account this added risk as well as the projected decline in revenue when the above-market lease returns to market levels.
Sandwich leasehold.
An urban parcel on a 99-year ground lease with 37 years remaining, with a ground rent that was significantly under market. There was an older single-tenant building on the site, and the tenant on the ground lease had subleased the property to a national retailer. The sublease was also below-market with below-market renewal options extending several years into the future. Our assignment was to value the sandwich leasehold interest (the interest held by the tenant on the ground lease after they subleased the property to the retailer). This position had significant value due to the below-market ground lease, but the value was partly offset by the below-market sublease — which meant that the subleasehold interest (the retailer’s position) also had positive value!
Adjoining parcels: worth more together or separate?
Two contiguous parcels being marketed for sale at the same time, one had an office building on it facing a main road and the other was a vacant lot facing a side street. They were being marketed separately (assuming a higher total value would be achieved by selling them to separate buyers), but we concluded that because demand for medical office space was high and supply of medical office space was limited, the highest value would be achievable by combining the parcels and converting the office building to medical office space, using the vacant parcel for the additional parking that would be required for medical office use.