Site Factors: Analysis & Regulations

Site Factors: Analysis & Regulations

This chapter delves into the critical aspects of site analysis, emphasizing the interplay between physical characteristics, land use regulations, and their combined influence on property valuation. Understanding these factors is paramount for accurate and reliable appraisals. We will explore relevant scientific principles, mathematical relationships, and practical applications, alongside examples of related experiments and data analysis.

1. Physical Site Characteristics: An Overview

The physical attributes of a site form the bedrock of its potential utility and value. Appraisers must meticulously describe and interpret these characteristics, analyzing how they relate to the site’s improvements, surrounding properties, and overall market demand.

• Key Physical Characteristics:
  • Size and Shape
  • Corner Influence
  • Plottage Potential
  • Excess Land and Surplus Land
  • Topography
  • Utilities
  • Site Improvements
  • Accessibility
  • Environment

2. Size and Shape: Geometry and Utility

A site’s size and shape are fundamental determinants of its usability and value. These characteristics directly impact the type and intensity of development that can be accommodated.

• Quantifying Size: Large tracts of land are typically measured in acres (1 acre = 43,560 square feet), while smaller parcels are often measured in square feet. Dimensions are expressed in feet and tenths of feet for ease of calculation.

• Frontage: Frontage refers to the length of a site that abuts a street, waterway, or other significant feature. It influences accessibility and visibility.

• Mathematical Relationships:

  • Area of a Rectangle: A = L * W where A = Area, L = Length, W = Width
  • Area of a Triangle: A = 0.5 * B * H where A = Area, B = Base, H = Height
  • Area of a Circle: A = π * r^2 where A = Area, π ≈ 3.14159, r = radius
  • Perimeter of a Rectangle: P = 2 * (L + W) where P = Perimeter, L = Length, W = Width

• Size and Value Relationship: Generally, as the size of a parcel increases, the unit price (e.g., price per square foot) decreases due to economies of scale. Conversely, smaller parcels often command higher unit prices. This relationship is not always linear and is influenced by the specific market and type of property.

• Experiment Example: Conduct a market study analyzing sales of similar properties of varying sizes. Plot the sale price per square foot against the size of the parcel. Analyze the trend to determine the relationship between size and unit price in that particular market. Calculate the Pearson correlation coefficient to determine the strength and direction of the linear association.
  r = (Σ((xi - x̄)(yi - ȳ))) / (√Σ((xi - x̄)²) * √Σ((yi - ȳ)²)) where:

  • r is the Pearson correlation coefficient
  • xi is the size of parcel i
  • x̄ is the mean size of the parcels
  • yi is the price per square foot of parcel i
  • ȳ is the mean price per square foot of the parcels
  • Σ denotes the sum

3. Corner Influence: Access and Exposure

Corner properties, with frontage on two or more streets, often exhibit different values than interior properties. The advantages and disadvantages depend on the intended use.

• Commercial Applications: Corner locations frequently offer superior visibility, accessibility, and ingress/egress, making them ideal for businesses like gas stations, banks, and retail stores. The presence of traffic lights at the intersection significantly enhances the value of commercial corner locations.

• Residential Applications: Corner locations may be less desirable for residential properties due to increased traffic noise, reduced privacy, and potentially higher maintenance costs (e.g., sidewalk maintenance). Setback requirements on corner lots can also restrict building size.

• Experiment Example: In a residential neighborhood, compare the sale prices of corner lots to interior lots of similar size, condition, and improvements. Control for other influencing factors such as view, landscaping, and age of the property. Use statistical analysis (t-test or ANOVA) to determine if there’s a significant price difference between corner and interior lots.

  • T-Test Formula: t = (x̄1 - x̄2) / √(s1²/n1 + s2²/n2)

    Where:
    * x̄1 = Mean price of corner lots
    * x̄2 = Mean price of interior lots
    * s1 = Standard deviation of corner lot prices
    * s2 = Standard deviation of interior lot prices
    * n1 = Number of corner lots
    * n2 = Number of interior lots

4. Plottage Potential: The Sum is Greater Than Its Parts

Plottage refers to the potential increase in value when two or more adjacent sites are combined to create a larger, more usable site. This increase arises from the combined site’s enhanced utility, allowing for a higher and better use.

• Creating Plottage Value: Plottage value exists when the unit value of the combined parcel exceeds the sum of the individual parcels’ values.

• Agricultural Applications: Combining undersized agricultural parcels to support modern equipment and maximize profits can create plottage value.

• Commercial Applications: Assembling commercial or residential sites can facilitate larger-scale developments, increasing unit values.

• Experiment Example: Analyze the market values of both individual and assembled parcels. Plot a graph illustrating the relationship between the parcel size and unit price. Use regression analysis to model the effect of combining parcels on the unit price. Compare the predicted unit price of the combined parcel with the sum of individual unit prices to calculate the plottage value.

  • Regression Model: y = β0 + β1x + ε

    Where:
    * y = Unit price of the assembled parcel
    * x = Size of the assembled parcel
    * β0 = Intercept (base unit price)
    * β1 = Slope (change in unit price per unit increase in size)
    * ε = Error term

5. Excess Land and Surplus Land: Identifying Underutilized Assets

Differentiating between excess and surplus land is crucial for accurate valuation. These terms describe portions of a property that are not necessary to support the existing or proposed highest and best use.

• Excess Land: Land that is separable from the primary site and has its own independent highest and best use. Excess land can be sold separately, effectively creating multiple properties.

• Surplus Land: Land that cannot be separated from the primary site and does not have an independent highest and best use. Surplus land may contribute to the overall value of the property (e.g., for expansion or parking) but is typically valued at a lower unit price than developable land.

• Decision Tree: A decision tree can be a useful tool. The first question is: Can the land be legally and physically separated? If “yes,” it’s likely excess land. If “no,” it is surplus land. A secondary question might be: Does the additional land add utility to the primary improvement? If the answer is “yes,” the value is typically greater than if the answer is “no.”

• Example: A 20,000 sq. ft. warehouse on a 100,000 sq. ft. site in an industrial park where land-to-building ratios are typically 2.8:1 to 3.5:1. Since the ideal land area is (20,000 sq. ft. * 3.5) = 70,000 sq. ft., 30,000 sq. ft. is either excess or surplus. If the 30,000 sq. ft. is at the back of the site, inaccessible to the street and can’t be developed, it is considered surplus land.

6. Topography: Shaping Value

Topography encompasses the contour, grading, drainage, and geological characteristics of a site. These factors significantly influence construction costs, usability, and overall value.

• Steep Slopes: Impede building construction and increase development costs.

• Natural Drainage: Can be advantageous or disadvantageous, depending on the site’s location and drainage patterns. Poor drainage can limit the site’s usefulness.

• Geodetic Survey Program: Topographic maps prepared by the U.S. Geological Survey provide valuable information about land elevations, rivers, lakes, and man-made features.

• Calculating Slope: Slope is often calculated as a percentage:

  • Slope (%) = (Vertical Rise / Horizontal Run) * 100

• Experiment Example: Analyze how construction costs change with varying degrees of slope. Obtain cost estimates for constructing identical structures on sites with different slopes. Correlate the slope percentage with the additional construction costs.

7. Geology and Soil Analysis: Foundations of Value

The geological composition of surface and subsurface soil is critical for both improved properties and agricultural land.

• Soil Suitability: Soil’s ability to support buildings and septic systems is paramount. Special pilings or floating foundations may be required for sites with poor soil bearing capacity, significantly increasing development costs.

• Agricultural Applications: Soil scientists assess soil qualities for specific agricultural uses.

• Soil Triangle: The USDA Soil Triangle is a tool for classifying soil based on the percentage of sand, silt, and clay.

• Structural Distress: Cracks in walls or foundations may indicate underlying geotechnical problems (e.g., subsidence).

• Experiment Example: Conduct a soil compaction test. This test measures the density of soil and the ability of the soil to support a load. These tests are common in construction engineering and require specialized equipment such as a Proctor compaction test apparatus.

8. Floodplain and Wetlands Analysis: Mitigating Risk

Proximity to flood zones or wetlands can significantly impact property value due to increased risk of flooding, development restrictions, and insurance requirements.

• FEMA Flood Maps: Floodplain maps from the Federal Emergency Management Agency (FEMA) delineate areas within the 100-year floodplain and provide data for flood insurance rate maps (FIRMs).

• Wetlands Regulations: Wetlands are protected by federal and state regulations, which restrict development and require mitigation measures.

9. Land Use Regulations: Zoning and Beyond

Zoning regulations are the primary mechanism for controlling land use and development. Understanding these regulations is essential for determining a site’s highest and best use and estimating its market value.

• Zoning Ordinances: Zoning ordinances specify permitted uses, building height restrictions, setback requirements, and other development standards.

• Zoning and Value: Zoning restrictions can significantly impact property value. A site zoned for high-density residential development will typically be more valuable than a similar site zoned for single-family residences.

• Variance: An exception to zoning regulations, granted when strict application of the ordinance would cause undue hardship.

• Special Use Permit: Allows specific uses that are not generally permitted in a zoning district, subject to certain conditions.

• Tax Implications: Taxation levels are significant in considering a property’s potential uses. Property taxes based on ad valorem assessments impact property values.

• Experiment Example: Analyze the impact of zoning changes on property values in a specific area. Compare the sale prices of properties before and after a zoning change that allowed for higher-density development.

10. The Interplay of Site Factors and Regulations: A Holistic Approach

Effective site analysis requires integrating all of the above factors. It’s not sufficient to analyze each physical characteristic or regulation in isolation. The interaction between the site’s inherent properties and the imposed regulations ultimately dictates its potential and value. Understanding the science and the legal constraints is essential for accurate property valuation.