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Appraising Light Industrial Condominium

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runner52

Sophomore Member
Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
I am appraising a light industrial condominium building that is 12,351 SF. There are three warehouses on this property of 2.89 acres. The owner recently converted all of them to condominiums. However, he allocated most of the land to the larger condo (not one I am appraising), leaving a small portion to the one I am appraising. The owner told me that if he were to sell the building (the one I am appraising), the buyer would only get the underlying land plus 10 feet on either side for parking. This yields roughly 0.41 acres and 68% coverage ratio.

My light industrial comparables all have site coverage ratios that are smaller, between 5% and 25% suggesting that there is more land value in these sales. Not sure whether I should value the improvements only for my subject by extracting out the land values for my comps yielding a $/SF for improvements only. Then separately do a site valuation for my subject's underlying land and then combine the improvements value and land value for a final value.

Basically I'm questioning how to handle the vast difference in site coverage ratios between my subject and comps which I think are yielding higher price/SF values for my comps.

Thanks.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
So if you've got 12,351sf of GBA and 18,000 sf of lot area then you're looking for the contributory value of another 30,000sf, right?

In a perfect world you would be able to find both 18,000sf site and 50,000sf sites to see if their respective $/sf holds up. I've seen it both ways - sometimes the different size ranges sell for the same price/sf and other times they sell as slightly different rates.

In my region, commercial or industrial condos can sometimes get a little tricky due to the effects of the association or common element maintenance fees being excessive in relation to those costs if owned outright.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
If your subject is an industrial condo, what do the condo documents state that the common elements comprise? Is the 10 ft of site area "allocated" to the subject unit limited common area? Are your comparable properties industrial condominium units as well?
 

runner52

Sophomore Member
Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
If your subject is an industrial condo, what do the condo documents state that the common elements comprise? Is the 10 ft of site area "allocated" to the subject unit limited common area? Are your comparable properties industrial condominium units as well?

Yes the common elements are for parking and outside storage. I only have one condo comp and it's much newer and smaller. My other comps are not condos. I haven't finalized the comparable dataset because I'm not sure they will work. Do I need to use all condos? They are almost non existent.
 

runner52

Sophomore Member
Joined
Mar 15, 2010
Professional Status
Certified General Appraiser
State
Washington
So if you've got 12,351sf of GBA and 18,000 sf of lot area then you're looking for the contributory value of another 30,000sf, right?

In a perfect world you would be able to find both 18,000sf site and 50,000sf sites to see if their respective $/sf holds up. I've seen it both ways - sometimes the different size ranges sell for the same price/sf and other times they sell as slightly different rates.

In my region, commercial or industrial condos can sometimes get a little tricky due to the effects of the association or common element maintenance fees being excessive in relation to those costs if owned outright.[/QUOM
Yes the common elements are for parking and outside storage. I only have one condo comp and it's much newer and smaller. My other comps are not condos. I haven't finalized the comparable dataset because I'm not sure they will work. Do I need to use all condos? They are almost non existent.

I am going to do a more extensive search for industrial condominiums.
 

PL1957

Senior Member
Joined
Jul 19, 2004
Professional Status
Certified General Appraiser
State
Illinois
Yes the common elements are for parking and outside storage. I only have one condo comp and it's much newer and smaller. My other comps are not condos. I haven't finalized the comparable dataset because I'm not sure they will work. Do I need to use all condos? They are almost non existent.
You need to understand whether there's a difference in market perception between condos and free standing buildings. There may or may not be depending on your market dynamics. Generally, the thing to keep in mind is the comparative functional utility. If a condo has minimal "site ownership" but has extensive use of common areas for loading, parking, etc. it may have the same functionality as a property that has larger "site ownership" but less extensive common areas.
 
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