Elevators and impact on value

[H.B. Userman]

Adding an elevator to a building that would otherwise not have function of the space that the elevator provides access to can significantly increase that value, correct?

Anyone have any good stories about an elevator making a big difference for an older building?

I am looking for other appraisers' experience regarding elevators.

 

[Brian Weaver]

I appraised a 1957 former union office building in Chicago a few months ago. No elevator. Instead, the owners wanted to fix up the "coach house" out back and rent that out as more offices.

The problem was, the whole second floor of the main building was empty...on the rental market forever with no takers. I suggested they scrap the rehab project ($450K+) and put in a $60K elevator for the main building.

Don't know what they'll decide to do. Seemed like a no-brainer.

 

[DH Wilson]

fat people like them and fat people make up 64.5 percent of your market

 

[Terrel L. Shields]

fat people like them and fat people make up 64.5 percent of your market

and 100% of me

Actually, I have genetically defective knees and stairs aren't bad going up. It is coming down that hurts like mad as well as risks popping a knee cap out. I crab down stairs kinda sideways. I described that to my orthopedic doctor when I had trouble about 10 years ago and he said, "Well, I know you aren't trying to fake getting on disability or Workman's Comp."...He explained that he gets a lot of people trying to make fake claims about knee problems to get on WC or disability. They never mention how going down stairs hurts worse. And he knew. He was even more crippled up than I.
If I ever bought a house with 2 levels, It would get an elevator.
I recently appraised a commercial building that had 2 levels. The last time the upper floor was rented was in the 1940's when it was, of all things, a doctor's office. The people were developing the upper level and had some very neat ideas about using the space. As best I could tell the income should be about $1200/mo. and that is roughly a third the Gross revenue for the building...yet it was vacant for all those years. When I got to thinking about it, i realized that a lot of old downtown buildings have vacant upper floors that could be rented for professional space, loft apartments, etc. if someone would just develop them. I have toyed with the idea of selling out and moving to a mixed commercial property with living space and office space in the same building...its just so hard to give up the rancho, especially when it has been in the family for 6 generations.

 

[DH Wilson]

Also there may be some ADA access liability for the second floor , so its going to have to be fixed at some point anyhows if they intend to rent out as professional office space or just about any commercial endeavour.

 

[H.B. Userman]

Lets say that this addition of an elevator would ultimately increase the NOI by 25%, thus implying the value would also go up the same. What if the implied value increase is over the cost of installing the elevator?

Let's say the elevator cost is $80,000 but the increase in income calculates an increase in value of $100,000. Would the principle of substitution mean that a buyer could buy a similar building and add an elevator, meaning the value is only increased $80k, or do I add the full $100k?

What do you think?

 

[Brian Weaver]

In the building I appraised, I never investigated sales with or without an elevator. I was working under the impression that the building suffered a functional loss WITHOUT the elevator.

I don't think I would have found a large enough pool of building sales without elevators...even here in Chicago.

My subject was a 1957 union admin building. Back then, it wasn't a requirement to have an elevator because they weren't thinking in terms of ADA. I'm sure that all the union officials that worked there in the 1960s were able to walk the single flight of stairs. The building wasn't built for tenants...only the union. So, in order to draw a real conclusion about the value with and without, I'd need sales of similarly intended structures.

I came at it as...the building never suffered the functional loss until the owners started trying to attract outside tenants. In 1957, the building was constructed according to the needs of the owners. When the building changed hands, the new owners decided to rent part of the second floor. Suddenly, there were no takers. I surmised that it was partly due to the lack of an elevator.

My assignment was centered on "what should we do with the coach house?" Not whether an elevator would generate more or any income.

This was a law firm that was looking to move the P.I. stuff upstairs. My question was...if you're moving the personal injury lawyers upstairs, how are the wheelchair and otherwise impaired clients going to get up there?