Non-arm's length, specific buyer, no other market question

[tracyhock]

Hello! I have a parcel that I am valuing for a University who is "selling" some land to a public entity. It is a narrow strip along the top and side edge of a larger parcel, that due to layout, would not be marketable on its own. The public entity already owns the land bordering this strip on their side. Public entity's land would be considered a corridor for utility purposes.

There is no marketability to an outside party other than the adjacent land owning public entity for this land. However, there would be marketability to the larger lot that this is being split from, as it is accessible, and sizable enough for significant improvements.

I would appreciate your thoughts on the best way to view this!

Thanks!

 

[TerryRohrer]

To what definition of value are you developing an opinion?

 

[Terrel L. Shields]

Over the fence valuation -

 

[tracyhock]

Market value is what is requested, but like most clients, they don't specifically know what that means in these situations. Over the fence value would be the most likely way to go IMO. I've done corridor values out here before, and substantiated a 1.25-1.75 multiplier for OTF land. However, this land in question is not NEEDED for the public entity's corridor use. It's just some bonus to them.

 

[George Hatch]

When universities and corps and other entities expand a campus they frequently redevelop one of their close-in parking lots and replace that parking lot with an acquisition of an outlying parcel. The parking lot goes from having one use to having another use. The way you described it, this acquisition would expand the size and possibly the future redevelopment potential of the adjacent parcel, even if that buyer can still use that subject in conjunction with their existing use of the parking lot.

Why would the buyer buy this subject if they have already been using it without buying?

 

[TerryRohrer]

I would start by nailing down a definition of what is being valued. Over the fence values are not market values, but rather provide a proxy of something that is sometimes agreeable to the client.

 

[tracyhock]

When universities and corps and other entities expand a campus they frequently redevelop one of their close-in parking lots and replace that parking lot with an acquisition of an outlying parcel. The parking lot goes from having one use to having another use. The way you described it, this acquisition would expand the size and possibly the future redevelopment potential of the adjacent parcel, even if that buyer can still use that subject in conjunction with their existing use of the parking lot.

Why would the buyer buy this subject if they have already been using it without buying?

The other way around. The university owned land (which they will sell to another related party), is actually going to diminish, and the corridor land will increase in size.

 

[Mark K]

ATF or Assemblage would be a reasonable method.

I've appraised literally thousands of strips of land for R/W projects, utility corridors, and trails/linear park systems. None of the parcels would have had a 'market value'. I think it would be difficult for anyone to question the credibility of using the unit value of the parent parcel or ATF/Asseblage.

 

[George Hatch]

The other way around. The university owned land (which they will sell to another related party), is actually going to diminish, and the corridor land will increase in size.

I was referring to the buyer, not the seller

 

[sputnam]

Hello! I have a parcel that I am valuing for a University who is "selling" some land to a public entity. It is a narrow strip along the top and side edge of a larger parcel, that due to layout, would not be marketable on its own. The public entity already owns the land bordering this strip on their side. Public entity's land would be considered a corridor for utility purposes.

There is no marketability to an outside party other than the adjacent land owning public entity for this land. However, there would be marketability to the larger lot that this is being split from, as it is accessible, and sizable enough for significant improvements.

I would appreciate your thoughts on the best way to view this!

Thanks!

Guess I do things differently than some. I would have gotten answers before accepting the assignment.