Gross Vs. Usable Site Area

[runner52]

I am appraising a hospital that sits on 11 parcels....most partially improved by the building or a very large parking lot.The total gross site area is 5.29 areas but I've determined the "usable site area" at 1.57 acres. Largely because the land drops off into a very steep ravine, is heavily forested and virtually not buildable. Do I need to give value to the non-usable area or can I give verbiage in the report that the gross site area is 5.29 acres but because of terrain the usable site area is 1.57 acres and focus on that area? Am I not giving value to something in the end? I am not calling out "surplus land" because it is unusable. If I were to value any of it, there would be no comps for it. The assessed value (not that this is totally credible) has assessed the whole thing (improvements and parcels) at $1,400,000 but I am only coming in at value at $1,050,000 largely because they have an assessed value for each parcel, regardless if its usable or not and I am not. Basically...am I leaving something on the table as far as the land?

Here is a diagram. Note the building and parking lot along the southern elevation. Anything you see as forested is that and very sloped and unbuildable. I did state in the report that I made some assumptions for the usable site area and that there was no surplus land based on my measurements and discussions with the county assessor but without a survey from the owner, I could not be definitive. Thanks for your thoughts.

 

[residentialguy]

From what you say, this area of the lot has minimal to no value. Why not call it surplus land (if it can't be separated) or excess land (if it can be separated) if it has no contributing value? The usable land may benefit from the view & privacy buffer of that surplus land, but I wouldn't think it would be much for a commercial building.

 

[hastalavista]

Although the site area may not be "buildable", it might be included in the development/density calculations. In other words, because of the larger site, that may allow for a higher density on the portion that is buildable.
Let's put it this way: Using the "buildable' area as an element of comparison and comparing that to sites with a total acreage of 1.57 (and 100% buildable), you might be missing a density bonus that the larger site gets due to its larger total area.

 

[runner52]

From what you say, this area of the lot has minimal to no value. Why not call it surplus land (if it can't be separated) or excess land (if it can be separated) if it has no contributing value? The usable land may benefit from the view & privacy buffer of that surplus land, but I wouldn't think it would be much for a commercial building.

I did call it surplus land at first...but got wrapped around it. The gross site is 5.29 acres, usable is 1.57 acres. I'm not sure what I would label "surplus" thought. The usable is a result of my measuring each parcel for its gross vs. usable area. Would the surplus land simply be the 5.29 - 1.57 acres or 3.72 acres? And if I label it as such "surplus" land and don't think there is any value to it, do I simply say it has no added value? I do not think it does. I usually don't have trouble with surplus land but with this one, it got a bit confusing. Thanks.

 

[runner52]

Although the site area may not be "buildable", it might be included in the development/density calculations. In other words, because of the larger site, that may allow for a higher density on the portion that is buildable.
Let's put it this way: Using the "buildable' area as an element of comparison and comparing that to sites with a total acreage of 1.57 (and 100% buildable), you might be missing a density bonus that the larger site gets due to its larger total area.

I have identified the "site coverage" based on gross site area and the "site coverage" based on usable area. And then in the Sales Comparison Approach, I compared it with the comps in this aspect. But I'm still not sure how this affects my final value.

 

[Gobears81]

I did call it surplus land at first...but got wrapped around it. The gross site is 5.29 acres, usable is 1.57 acres. I'm not sure what I would label "surplus" thought. The usable is a result of my measuring each parcel for its gross vs. usable area. Would the surplus land simply be the 5.29 - 1.57 acres or 3.72 acres? And if I label it as such "surplus" land and don't think there is any value to it, do I simply say it has no added value? I do not think it does. I usually don't have trouble with surplus land but with this one, it got a bit confusing. Thanks.

I don't have a problem with you concluding that the 3.72-acres doesn't have additional value, especially if you are able to conclude from other land sales that have steep ravines that there isn't additional benefit from the area that doesn't have development potential, though Denis is right. However, reread the definition of surplus land. I believe that you will conclude it to be surplus land.

 

[residentialguy]

Good point by Denis, as usual

 

[runner52]

I don't have a problem with you concluding that the 3.72-acres doesn't have additional value, especially if you are able to conclude from other land sales that have steep ravines that there isn't additional benefit from the area that doesn't have development potential, though Denis is right. However, reread the definition of surplus land. I believe that you will conclude it to be surplus land.

So...are you saying I need to do a land valuation for the surplus land? The surplus land is essentially "pieces" of each parcel plus three very small parcels? I tried to find land sales with deep ravines and could not find any. Plus, the surplus land is not one contiguous piece of land. It is what I said above....can I conclude it as surplus land without having to value it? Typically I do value it but there is nothing to comp this land with....

 

[Gobears81]

So...are you saying I need to do a land valuation for the surplus land? The surplus land is essentially "pieces" of each parcel plus three very small parcels? I tried to find land sales with deep ravines and could not find any. Plus, the surplus land is not one contiguous piece of land. It is what I said above....can I conclude it as surplus land without having to value it? Typically I do value it but there is nothing to comp this land with....

Again, re-read the surplus land definition. Your answer lies within

 

[runner52]

Again, re-read the surplus land definition. Your answer lies within

Yes. Thanks....just did.