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Appraising a parking lot as surplus land

Terrel L. Shields

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May 2, 2002
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Certified General Appraiser
State
Arkansas
The site is exempt from parking requirements.
But why does it need to be segregated from the building? As excess it should likely to be the same value and again "as is" isn't that what it is? Don't create a scenario that does not exist (hypothetical) - i.e.- 2 parcels where there are only one, or is it two separate deeded parcels?
 

runner52

Thread Starter
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Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
But why does it need to be segregated from the building? As excess it should likely to be the same value and again "as is" isn't that what it is? Don't create a scenario that does not exist (hypothetical) - i.e.- 2 parcels where there are only one, or is it two separate deeded parcels?
As excess land, it could be sold off separately. Doesn't mean it would be but given separate ingress and egress and a rear siting in relationship to the primary site, it potentially could be sold off separately (hence, excess land).
 

Zephyr999

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Oct 23, 2015
Professional Status
Certified General Appraiser
State
Wisconsin
What is the economic unit? I'm with Terrel...plus in my experience parking is viewed as a premium, especially where there isn't any.
 

runner52

Thread Starter
Sophomore Member
Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
The excess land benefits the former bank building in terms of parking. But the parking lot is over built. There is 2x as much parking that is required. The owner never leased the parking lot out to other businesses in the area. Alittle history; the bank occupied it and has a lease until 2021. But they have consolidated its operations and vacated the building. They are still paying on the lease until 2021. The buyer is honoring the lease until then and then what he may want to do is reconfigure the building for multiple professional office spaces and have his business upstairs. He is thinking of developing the excess land (Currently a parking lot) with a small office or 4-plex and leasing it. He does not plan to lease the parking lot as a parking lot. I am trying to assess demand for the parking since it's downtown but noone seems to be able to give me a straight answer. I can say that when I inspected it, since the building is vacant, you'd think there would be cars parked there (there are no signs saying no parking). This area of downtown is somewhat sleepy. I have allowed for enough parking spaces for the primary parcel as if there were parking requirements (ordinarily outside of the downtown for a bank, it's 1:250 SF). I keep asking myself; what is the highest and best use and I just don't see it as parking given the area. More likely, redevelop with small commercial building.
 

Terrel L. Shields

Elite Member
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Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Regardless some future use, if your assignment is "as is" (as are most of my commercial assignments) then the land is with the building. It does not need to be valued separately. Again, what you propose for the "excess" is a division that is not necessary. Otherwise every farm and ranch in America would have to pretend they are subdivided into house lots.
 

Sid Holderly

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Jun 16, 2005
Professional Status
Certified Residential Appraiser
State
Indiana
Agree with Terrel, It appears they want the value as it sits with no changes made, not what it hypothetically could be.
 

CANative

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Jun 18, 2003
Professional Status
Certified Residential Appraiser
State
California
Excess land is excess land. No HC needed to value separately.

HBU of next use needs .xx acres for structure and .xx for parking (parking varies by uses: # of customers/employees and amount of time to turn them.)

Leaving .xx acres as excess. What is the value of .xx acres of commercial land ready for development. Two appraisals, one report.
 
Last edited:

glenn walker

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Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
They will need the parking -- It's not excess or surplus !
 

runner52

Thread Starter
Sophomore Member
Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
Regardless some future use, if your assignment is "as is" (as are most of my commercial assignments) then the land is with the building. It does not need to be valued separately. Again, what you propose for the "excess" is a division that is not necessary. Otherwise every farm and ranch in America would have to pretend they are subdivided into house lots.
Thank you for the clarity. You are correct; it is "as is" and I think I just need to provide an explanation inn the H&BU. Not value it.
 

KHS445

Member
Joined
Aug 20, 2011
Professional Status
Appraiser Trainee
State
Michigan
Who is your client? The property actually has some additional value based on what you mentioned in post #14. What value are you going to assign to the lease? It has value because as the purchaser I am receiving cash flow from the vacant building and then when the lease expires I will be left with the remainder. So this one could get a little sticky having to figure out the value of the remaining lease and then the value of the building at the end of the lease term. What are the terms of the lease; insurance, taxes, maintenance, utilities, etc.?

Does the lease cover the entire parcel or just the building and adjoining parking spaces? If just the building and adjoining spaces then the excess land could be developed sooner than later and would require a separate valuation. You keep mentioning there are no required parking requirements in this area. Regardless of the requirements I would have to believe that there is some building owner/occupant located nearby that would love to have a designated and reserved area where their employees and customers could park. Rather than playing roulette and hoping you find a space nearby especially in bad weather.

I have worked with two different clients who wanted to buy a bank branch that had been closed, but was still subject to lease. In both cases we worked a deal with the property owner (not the occupying bank) and then went to the bank and offered them a discount on the remaining lease terms and let them off the hook for all the expenses they were responsible for. Both leases were triple net and had five and seven years left to run, the buyer ended up getting full control the property nearly immediately and also received rather hefty lease buy outs. Some of the money went towards renovations and some went in the investor's pocket, thus reducing their acquisition cost.
 
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