Bowling Alley Appraisal

[cj rein]

I recently reviewed an appraisal of a 30-40 year old +/- bowling alley. I concurred with the appraiser that only the sales comparison approach was applicable. Fortunately, several sales were available within the metropolitan area. My client called later and indicated the bank examiners indicated that all three approaches should have been completed. It is my contention that the cost approach was not applicable due to the age of the property. The income approach was not applicable (in estimating the market value of the real property) since bowling alleys are not typically leased within this market.

I'm looking for some type of support in the form of published articles, etc.. Is anyone aware of anything? Thanks.

 

[A. P. Grice]

I done a couple of bowling alleys, though it has been a decade or so....

Even though they typically aren't rented, they still generate income. Sales from lane/shoe rentals, food and beverage, pool tables, games, etc. The operator should have a good handle on income and expense. Maintenance on older pin setters starts increasing rapidly as they age.

If the facility is as old as you say, do the lanes themselves still have some life left? These get sanded/resurfaced every so often, but after a while the rock maple boards get too thin. Also, the score-keeping system might be obsolete.

Cheers

 

[Dennis J. Black ASA IFAS]

I agree that the Cost Approach on such a property is probably less than meaningful, but regarding the Income Approach bowling alleys are often leased in many markets. However, I caution do not consider the rental of shoes, etc as that is the income stream from the business and not the real estate. Have you contacted the national HQ's of Brunswick and AMF regading possible rentals of buildings for their operations? Have not performed one in about 7 years but rental unit is typically a combination of per lane and then additional s.f. for bar etc..

 

[Fred]

I have never seen an article or monograph on bowling alleys, nor had the pleasure or predicament of appraising one – which is good, because I would probably just get myself into trouble again.

Why would the real property value of a bowling alley be different than any other big box with a parking lot? It seems to me that once you start appraising a “bowling alley,” you end up dipping into value-in-use, business value or both.

Hypothetical: There are two nearby buildings, of similar size, age etc. One is rented at market. One houses a bowling center. Are the real property value roughly the same? Or are the real property values substantially different? If they are different, then why?

 

[Paul Ness MAI]

CJ, Sounds like the appraiser needed to provide more detailed explanation of why he excluded the cost and income approaches. Either that or the examiner needs to be educated on acceptable content of complete appraisals. To support the claim that they are not typically purchased as investments, have the appraiser survey competing bowling alleys in the local market and identify whether they are owner-occupied. They are special purpose properties and to convert to another use would require addressing functional items. Some differences between bowling alleys and any other big box is that they often have stepped flooring from the front entrance to the lanes (magnified even more after the lanes are removed), low ceilings (sometimes sloped down to the rear), and heavier electric service with unique distribution. A lot of work needs to be done to convert such a building to an alternative use after all the bowling equipment and fixtures are removed.

 

[Dennis J. Black ASA IFAS]

I agree pretty much with all of the above points, but would like to expound. Not only is the electric "rear loaded", but HVAC is "front loaded". That is because the people are up front. Concerning, step down layout that is often no longer the case for the very reason that it is viewed more as a big box in today's market. This means the two types need to be treated a little different.

I learned a lot of this before becoming an appraiser as I became involved in real estate because of a regional PBA member being in a league in which I bowled, and he was a real estate broker. Convinced me real estate was a good field.

Dennis J. Black, IFAS

P.S. High game 300. Ring still in the jewelery box. Seems like a life time ago.