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Site Attributes: Size, Shape, and Special Features
Chapter: Site Attributes: Size, Shape, and Special Features
Introduction:
Site analysis is a crucial aspect of real estate valuation and investment. Understanding the intrinsic characteristics of a site is paramount to determining its highest and best use, market value, and potential for development. This chapter delves into the critical site attributes of size, shape, and special features, providing a scientific framework for their analysis and impact on real estate value.
1. site size❓:
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Definition: Site size refers to the total area of a parcel of land, typically measured in square feet, acres, hectares, or other relevant units.
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Impact on Value: Site size significantly influences property value. Generally, the relationship between size and unit price is inversely proportional. This can be mathematically expressed as:
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UP = k / S,
where:
- UP is the unit price (e.g., price per square foot),
- S is the site size,
- k is a constant reflecting market conditions and location.
However, this is a simplification and may not hold true in all situations. Very small or very large sites can exhibit unique pricing dynamics.
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Economies of Scale: Larger sites can leverage economies of scale, reducing per-unit development costs❓ for certain uses, like residential subdivisions or industrial parks. However, very large sites can suffer from diseconomies of scale if they exceed market demand or require extensive infrastructure.
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Functional Utility: Different land uses have ideal size requirements. A single-family home lot has different size requirements than a commercial retail complex or a large-scale agricultural operation.
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Example: A minimum lot size requirement for septic systems, dictated by percolation rates (PR), can be calculated as:
- LSA = F × (Dw / PR)
Where
LSA is the Lot Size Area
F is a factor that accounts for safety margin
Dw is the daily water usage per household.
PR is the percolation rate
- LSA = F × (Dw / PR)
- Excess Land vs. Surplus Land:
- Excess Land: Land that can be separated and sold independently. It has its own highest and best use.
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Surplus Land: Land that cannot be sold independently due to access issues, shape, or other limitations. It may add value to the primary site but doesn’t have an independent highest and best use.
For a property with a house and two lots, with only one lot being necessary to support the property, the second lot is deemed to be excess land. The excess land can be developed to a new house. On the other hand, additional land with a warehouse may be considered surplus land because it lacks access to the street.
- Plottage Potential: The incremental value created by combining two or more parcels of land into a larger, more usable site. This is also called assemblage.
- Plottage Value: PV = VCombined - (VParcel1 + VParcel2 + …), where V represents the value of the combined or individual parcels.
2. Site Shape:
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Definition: Site shape refers to the geometric configuration of a parcel of land. Common shapes include rectangular, square, triangular, irregular, and flag-shaped (panhandle).
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Impact on Value: Site shape affects usability, development potential, and overall desirability.
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Frontage: The length of a site that abuts a street, river, lake, or other recognized feature. Frontage is important for visibility, access, and commercial appeal.
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Depth: The distance from the frontage line to the rear property line. Ideal depth depends on the intended use.
Different prospective uses have ideal size and depth characteristics.
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Corner Influence: Corner lots have frontage on two or more streets, which can be advantageous for commercial properties due to increased visibility and access. However, they can be less desirable for residential properties due to increased noise and reduced privacy.
- Corner influence can be quantified through paired sales analysis, comparing corner lot prices to interior lot prices in the same area.
- Shape Irregularities: Irregularly shaped sites can present challenges for development, requiring creative design solutions and potentially reducing usable space.
- Shape Factor (SF): A metric used to quantify the regularity of a site. A circular shape will be a value of 1, while a more irregular shape will approach zero. SF = 4πA / P2 where A is the Area and P is the Perimeter.
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Setback Requirements: Local zoning ordinances dictate setback requirements, which limit the buildable area on a site based on its shape and location.
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Impact to Residential Properties: Quiet, cul-de-sac sites in the interior of a subdivision may be more desirable and command higher prices. Residences on corner sites are exposed to more traffic noise and provide less security. Owners of corner sites may pay higher costs for front-footage sidewalks and assessments, and the side street setback may affect the permitted size of the building. Usually owners of residences on corner lots have to maintain a larger landscaped area which may, in fact, be public property.
3. Special Features:
- Topography:
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Definition: The surface features of a site, including elevation, slope, and natural drainage.
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Impact on Value: Topography affects construction costs, site accessibility, and overall usability. Steep slopes can increase construction costs. Good natural drainage is desirable.
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Topographic Surveys: Detailed maps showing elevation contours, used to assess site suitability.
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Calculations: Slope is calculated as rise over run, often expressed as a percentage.
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Formula: Slope (%) = (Vertical Distance / Horizontal Distance) * 100
- Geology and Soil Conditions:
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Definition: The composition and structure of the soil and underlying geological formations.
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Impact on Value: Soil conditions affect the suitability of a site for building construction and septic systems. Poor soil conditions may require special foundations or remediation, increasing development costs.
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Soil Testing: Geotechnical investigations to determine soil bearing capacity, permeability, and other properties.
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Soil Triangle: A diagram used to classify soils based on the proportion of sand, silt, and clay.
- Water Features (Floodplains and Wetlands):
- Floodplains: Areas subject to periodic flooding. Development within floodplains is often restricted or requires flood mitigation measures.
FEMA determines proximity to flood zones. -
Wetlands: Areas saturated by surface or groundwater, supporting vegetation adapted to wet conditions. Wetlands are often protected by environmental regulations.
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Floodplain Maps: Maps delineating areas subject to flooding, prepared by FEMA.
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Wetlands Delineation: Identifying and mapping wetland boundaries based on soil, hydrology, and vegetation criteria.
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Clean Water Act: The main federal environmental legislation regulating activities in wetlands.
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Formula: The probability of a flood of a certain magnitude occurring in any given year can be expressed as:
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P = 1 / RI,
where:
- P is the probability of the flood,
- RI is the recurrence interval (e.g., 100 years).
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- Views: Scenic views can significantly enhance property value, especially for residential properties.
- Hedonic Pricing: Statistical models that quantify the value of views and other amenities.
- Environmental Contamination: The presence of hazardous substances in the soil or groundwater can severely impact property value.
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Environmental Site Assessments (ESAs): Investigations to identify and assess environmental contamination.
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Remediation Costs: The costs associated with cleaning up contaminated sites.
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Mineral Rights:
The appraisal of mineral rights (i.e., the right to extract natural resources found on a site) is a highly specialized appraisal assignment, and appraisers often must work with a geologist or other expert in the mining industry.
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Other Considerations:
- Access: Ease of access to roads, utilities, and public transportation.
- Utilities: Availability of water, sewer, electricity, and other essential services.
- Zoning: Regulations governing land use and development.
Conclusion:
The size, shape, and special features of a site are critical determinants of its value and development potential. A thorough understanding of these attributes, coupled with sound scientific principles, is essential for accurate site analysis and informed real estate decision-making. By applying the concepts and techniques outlined in this chapter, professionals can unlock the true value of real estate and maximize investment opportunities.
Chapter Summary
Site Attributes: Size, Shape, and Special Features - Scientific Summary
This chapter examines how key site attributes – size, shape, and specific physical features – influence real estate value and highest and best use. The core scientific principle is that land value is not simply a function of area but is intricately linked to its utility and suitability for particular uses.
Size and Frontage:
- Scale Economies/Diseconomies: As site size increases, the unit price (e.g., per square foot or acre) generally decreases due to economies of scale. Conversely, smaller sites often command higher unit prices. However, “plottage” can occur where combining smaller parcels creates a larger, more valuable site than the sum of its parts, exhibiting increased utility. Very large assemblages can yield a lower value per square foot in the marketplace due to negative economies of scale.
- Frontage: Frontage, the length of a site abutting a street, river, or other significant feature, affects accessibility and visibility. Corner lots, possessing frontage on multiple streets, may offer increased visibility and access for commercial uses but may present disadvantages like noise and reduced privacy for residential properties.
Shape and Corner Influence:
- Shape and Utility: Irregular site shapes can limit functional utility. Large, oddly shaped lots (e.g., triangular lots) may not realize their full value potential if zoning or other restrictions limit development.
- Corner Influence: Corner locations can have positive or negative influences on value. Commercial corners near high-traffic intersections with traffic lights are highly desirable for businesses like gas stations and banks. Residential corners may be less desirable due to noise, reduced privacy, and potentially higher maintenance costs.
Plottage Potential:
- Assemblage and Value Creation: Plottage refers to the increased value that arises when combining two or more parcels to create a larger, more useful site. This potential is driven by the improved utility and potential for a higher and better use of the combined site. The opposite of plottage can occur with very large lots, where assembling yields lower value per square foot due to negative economies of scale.
Excess and Surplus Land:
- Distinguishing Excess and Surplus Land: The concept of an optimal land-to-building ratio is introduced. Land beyond what is required to support the current or ideal use is classified as either excess or surplus. Excess land has the potential to be sold separately and has an independent highest and best use. Surplus land, in contrast, cannot be sold separately and does not have an independent highest and best use; it may contribute marginally to the overall property value. Careful analysis is crucial to differentiate between the two for accurate valuation.
Topography and Geology:
- Topographical Influences: Topography (land contour, grading, drainage) significantly impacts site suitability and development costs. Steep slopes can hinder construction❓, while natural drainage patterns can be advantageous or disadvantageous. Topographical maps provide valuable data for site analysis.
- Geological and Soil Analysis: Soil composition, subsoil conditions, and load-bearing capacity are critical for determining site suitability for construction and agriculture. Special foundations or soil remediation can significantly affect development costs. Soil surveys and geological assessments are essential for identifying potential geotechnical issues.
Floodplain and Wetlands Analysis:
- Floodplain Assessment: Proximity to flood zones, as indicated by FEMA maps, significantly impacts site value. Properties within floodplains are subject to specific regulations and insurance requirements.
- Wetlands Delineation and Regulation: Wetlands are defined by soil type, hydrology, and vegetation. Regulations governing wetlands vary at the local, state, and federal levels, impacting development potential and valuation. Expert consultation with soils and hydrology experts may be required for credible conclusions.
Implications for Real Estate Valuation:
The chapter underscores that a comprehensive site analysis, incorporating size, shape, and special features, is crucial for accurate real estate valuation. Appraisers must consider how these attributes affect site utility, development costs, regulatory constraints, and market perceptions. Failure to properly analyze these factors can lead to inaccurate value estimations and flawed investment decisions. Market sales data of lots of various sizes and characteristics❓ are essential for observing value tendencies and supporting appraisal conclusions.
