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Old theater

Discussion in 'Commercial/Industrial Appraisals' started by justinschroeder, Dec 20, 2011.

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  1. justinschroeder

    justinschroeder Sophomore Member

    0
    Sep 13, 2007
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    I have an assignment to do an old 1920's theater. I have sales from around the country but it appears that alot are based on the business income. The one I am doing has been vacant for 30 some years so there is no income. The cost approach isnt reliable. Can I get away with just the sales approach with comps several states away or does anyone have any better ideas or alternative methods of valuation for a special use type property.
     
  2. stefan olafson

    stefan olafson Senior Member

    0
    Apr 2, 2003
    Professional Status:
    Certified General Appraiser
    State:
    North Dakota
    Value goes to highest and best use. Before you begin trying to figure out where to find the comparables, you need to decide what the highest and best use is. Why has it been vacant for so long? Find that out and you should be on your way.
     
  3. ETex2

    ETex2 Sophomore Member

    0
    Dec 10, 2004
    Professional Status:
    Certified General Appraiser
    State:
    Texas
    Sounds like a tear down to me. Value of land as if vacant less demo costs. Costs of renovating a property like that could be prohibitive but that would require a bit of research plus the demand for old rebuilt theatres into an alternative use such as musical venue, etc.. Here locally we've had them converted for community theatre use as well.
     
  4. David Wimpelberg

    David Wimpelberg Moderator Staff Member Moderator

    189
    Mar 30, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    Ditto regarding the HBU issue.

    Any building that has been sitting vacant for 30 years is going to have substantial renovation costs. If there is no demand for movie theaters, alternative uses are very limited due to the design of these buildings. Community theater is an alternative use, but there has to be a demand for it. If one already exists, chances are that another won't be needed. A great many of the movie theaters that existed when I was younger have been razed, excepting a small handful that were converted to performing arts centers.

    Given the age of the building, I would definitely check to see if there is any historic or architectural significance. The existence of such significance could significantly affect the property's HBU.
     
  5. justinschroeder

    justinschroeder Sophomore Member

    0
    Sep 13, 2007
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    The property is located in an old downtown area and connected to two other buildings. Land value in the downtown is cheap as well as are the buildings. It would probably cost to demo the property than what the value of the land would be worth.

    A local non-profit is renovating the property with donations and state issued bonds. The renovation cost is around $3mill. The plans are to have one movie screen and do live performances.

    The value as it sits is $0 but after improvements it will have value, not $3 mill but maybe a tenth or so.
     
  6. justinschroeder

    justinschroeder Sophomore Member

    0
    Sep 13, 2007
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
  7. Stephen J. Vertin MAI

    Stephen J. Vertin MAI Senior Member
    Gold Supporting Member

    31
    Jan 17, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    Which theater is it? I have done a dozen or so in the last several years in Illinois. I may be able to help.
     
  8. justinschroeder

    justinschroeder Sophomore Member

    0
    Sep 13, 2007
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    It is the Capitol Theater in Burlington, IA. Anything you could provide would be greatly appreciated.
     
  9. David Wimpelberg

    David Wimpelberg Moderator Staff Member Moderator

    189
    Mar 30, 2005
    Professional Status:
    Certified General Appraiser
    State:
    New York
    Given the circumstances, I'd be careful with the value type. There is value in use, which may be many times the market value.
     
  10. Stephen J. Vertin MAI

    Stephen J. Vertin MAI Senior Member
    Gold Supporting Member

    31
    Jan 17, 2002
    Professional Status:
    Certified General Appraiser
    State:
    Illinois
    Your area is pretty rural. Most data is in an around Chicagoland. You should compare yours to a modern facility and explore existing competition. It is probably not financially feasible to renovate and reopen. Most likely you have land value. Once these reach a certain age hope is lost. Is there any architectural significance other then local nostalgia?
     
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