Site Characteristics & Land Use Impact on Value

Chapter: Site Characteristics & Land Use Impact on Value

Introduction

The value of real property is inextricably linked to its site characteristics and the allowable land uses as dictated by regulations. A comprehensive understanding of these elements is crucial for accurate property valuation. This chapter will delve into the scientific principles governing the relationship between site attributes, land use, and property value, providing a framework for informed decision-making in property appraisal.

1. Physical Characteristics of Land and Their Influence on Value

1.1 Site Size and Shape

• Principles: Site size and shape directly influence the buildable area, usability, and potential for various developments. The concept of functional utility dictates that the value is influenced by how well the size and shape accommodate the intended use.
• Mathematical Representation:
  • 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 irregular shapes: Can be approximated by dividing into smaller regular shapes or using surveying techniques.
• Practical Applications:
  • Residential Appraisal: A large, irregularly shaped lot might not proportionally increase value if only one dwelling is permitted, as determined by zoning regulations.
  • Commercial Appraisal: Rectangular lots are generally preferred for commercial developments to maximize building footprint and parking space.
• Experiment: Conduct a market analysis comparing the price per square foot of differently sized lots within the same zoning district. Observe the relationship between size and unit price.

1.2 Corner Influence

• Principles: Corner lots offer higher visibility and accessibility, which can be advantageous for commercial properties. However, they might face challenges regarding increased traffic noise and security concerns for residential properties. Setback requirements can also limit the buildable area. The Principle of Supply and Demand affects corner lot values, as their limited availability can increase desirability for specific uses.
• Practical Applications:
  • Commercial Use: A corner location is beneficial for businesses relying on high visibility and easy access, like gas stations or retail stores.
  • Residential Use: Interior lots within a quiet neighborhood are often preferred for residential properties due to reduced noise and increased privacy.
• Experiment: Compare sale prices of comparable properties, with the only difference being corner versus interior lot location. Stratify by land use (residential, commercial) to isolate the corner influence.

1.3 Plottage Potential

• Principles: Plottage refers to the increase in unit value resulting from combining two or more adjacent parcels into a single, larger site. This is based on the Principle of Increasing Returns, where larger sites often have greater utility and development potential. However, negative economies of scale can also occur.
• Mathematical Representation:
  • Plottage Value = (Value of Combined Parcels) - (Sum of Individual Parcel Values)
• Practical Applications:
  • Industrial Parks: Combining smaller lots to create larger lots suitable for modern industrial facilities can significantly increase value.
  • Agricultural Land: Larger farms can support more efficient equipment and farming practices, resulting in higher per-acre values.
• Experiment: Research the market for potential plottage scenarios. Compare the sale price per square foot of individual lots versus combined lots intended for a specific development (e.g., a shopping center).

1.4 Excess Land and Surplus Land

• Principles:
  • Excess Land: Land not needed to support the existing or planned use and capable of being sold separately. Its value is typically equal to its independent highest and best use.
  • Surplus Land: Land not needed to support the existing or planned use but cannot be sold separately due to its size, shape, or access limitations. Its value is often less than the typical land value.
• Practical Applications:
  • Residential: A double lot with a single-family home may contain excess land if zoning allows for subdivision and another home to be built.
  • Industrial: An industrial site with a land-to-building ratio significantly higher than the market norm may have surplus land if the excess land lacks independent access or utility.
• Experiment: Analyze sales data for properties with potential excess land. Estimate the value of the excess land as if it were a separate parcel and compare it to the overall property value.

1.5 Topography

• Principles: Topography (contour, grading, drainage) impacts construction costs, usability, and potential views. Slopes can influence building design and accessibility. Natural drainage patterns can create opportunities or limitations.
• Scientific Basis:
  • Soil Mechanics: Steep slopes can lead to soil instability and erosion, increasing construction costs.
  • Hydrology: Poor drainage can cause flooding and damage, affecting property value.
• Practical Applications:
  • Steep Slopes: May require terracing or retaining walls, increasing development costs.
  • Natural Drainage: Sites located downstream or in natural drainage basins may have limited usefulness.
• Experiment: Compare construction costs on sites with varying topographic features (e.g., slope, drainage). Quantify the additional costs associated with mitigating topographic challenges.

1.6 Utilities

• Principles: Availability and accessibility of utilities (water, sewer, electricity, gas, internet) are crucial for development. The cost of extending utilities to a site can significantly impact its value.
• Scientific Basis:
  • Civil Engineering: Determining the capacity of existing utility systems and the cost of extending them to a site.
• Practical Applications:
  • Undeveloped Land: Lack of utilities can severely limit development potential and reduce value.
  • Rural Areas: Septic systems may be required, affecting the buildable area and adding to development costs.
• Experiment: Analyze the impact of utility availability on land values in areas where utilities are scarce or costly to extend.

1.7 Site Improvements

• Principles: Existing improvements on a site (e.g., landscaping, paving, fencing) can add to or detract from value, depending on their condition and suitability for the intended use.
• Practical Applications:
  • Commercial Sites: Well-maintained landscaping and parking areas enhance curb appeal and attract customers.
  • Residential Sites: Mature trees and well-designed landscaping can increase property value.
• Experiment: Analyze the impact of landscaping and other site improvements on property values in a specific neighborhood.

1.8 Accessibility

• Principles: Ease of access to a site significantly impacts its value. This includes proximity to major transportation routes, public transportation, and pedestrian access.
• Scientific Basis:
  • Transportation Planning: Analyzing traffic patterns and travel times to assess accessibility.
• Practical Applications:
  • Commercial: Sites with excellent accessibility are preferred for retail and office developments.
  • Residential: Proximity to public transportation and major roadways increases convenience and property value.
• Experiment: Conduct a hedonic pricing analysis to determine the impact of proximity to transportation infrastructure on property values.

1.9 Environment

• Principles: Environmental factors such as soil contamination, noise pollution, and proximity to hazardous sites can significantly impact property value. The presence of wetlands or endangered species habitats can also restrict development.
• Scientific Basis:
  • Environmental Science: Assessing the presence and extent of environmental hazards.
  • Ecology: Evaluating the impact of development on sensitive ecosystems.
• Practical Applications:
  • Brownfields: Contaminated sites often require remediation, which can be costly and time-consuming.
  • Wetlands: Development may be restricted or require mitigation measures.
• Experiment: Analyze the impact of environmental factors on property values near contaminated sites or protected areas.

2. Land Use Regulations and Their Impact on Value

2.1 Zoning Regulations

• Principles: Zoning regulations dictate the allowable uses, density, and building height on a property. Zoning restrictions can significantly limit development potential and affect value.
• Practical Applications:
  • Residential Zoning: Restricting development to single-family homes can limit density and increase property values in desirable areas.
  • Commercial Zoning: Designating areas for specific types of commercial development can concentrate businesses and attract customers.
• Experiment: Compare property values in areas with different zoning designations. Analyze the impact of zoning changes on property values.

2.2 Building Codes

• Principles: Building codes set minimum standards for construction, ensuring safety and structural integrity. Compliance with building codes is essential for obtaining permits and ensuring the long-term value of a property.
• Practical Applications:
  • New Construction: Building codes dictate the materials and methods used in construction.
  • Renovations: Building codes require upgrades to existing structures to meet current safety standards.

2.3 Subdivision Regulations

• Principles: Subdivision regulations govern the division of land into smaller parcels. These regulations ensure that new subdivisions meet minimum standards for street access, utilities, and lot size.
• Practical Applications:
  • Residential Development: Subdivision regulations dictate the minimum lot size and street layout in residential subdivisions.
  • Commercial Development: Subdivision regulations govern the creation of commercial lots and access to public roads.

2.4 Environmental Regulations

• Principles: Environmental regulations protect natural resources and prevent pollution. These regulations can restrict development in sensitive areas and require mitigation measures for environmental impacts.
• Practical Applications:
  • Wetland Protection: Regulations protect wetlands from development and require permits for any activities that may impact them.
  • Air Quality: Regulations limit emissions from industrial facilities and require permits for certain types of construction.

3. Assessment and Tax Information

• Principles: Real property taxes are based on ad valorem assessments. While assessments may not perfectly reflect market value, they provide valuable insights into the property’s tax burden and potential future tax trends.

4. Conclusion

Site characteristics and land use regulations are critical determinants of property value. A thorough understanding of these factors, combined with sound appraisal principles, is essential for accurate and reliable property valuation. Ignoring these factors can lead to inaccurate value estimates and poor investment decisions. The use of scientific principles, mathematical formulas, and market data analysis can help appraisers make informed judgments about the value of real property.