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Air Rights

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Ad Wizard

Freshman Member
Joined
Jan 23, 2008
Professional Status
Certified General Appraiser
State
Virginia
I am working on a downtown redevelopment project that is scheduled in three phases. I have done several of these, but I have a question about air rights.

The third phase involves constructing seven stories on an existing historic two-story building. The land and building is owned by developer, but the building is leased for 99 years for $1 annually to the former owner. Once developed the existing building will become a condominium in the entire building and will be owned in fee simple by the lessee.

The existing building has been structurally improved to support construction of an additional seven stories (I have all engineering docs, studies, etc.) The project has site plan approvals and a building permit. The client needs to know the value of this phase (3rd) after completion of the first phase. Am I to value the air rights or the entire phase including the leased building (since it is part of the subject, but has little to no value due to the lease arrangement, which was negotiated as part of the land/development purchase)? Is valuing the air rights the most likely indicator of value for the 3rd phase?

thank you
 
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