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2. Replacement Cost Approach--Retail/Office
Under the replacement cost method for the retail/office
component of the property, Carneghi estimated the value of the
underlying land to be $276,098 (41.83 percent of the $660,000
total land value). He then estimated the replacement cost new of
the retail/office component to be $1,790,999. Again, Carneghi
relied on the Adamson cost estimate, to which he added 7 percent
for “General Conditions”, 5 percent for “Contractor’s Overhead
and Profit”, and 12.5 percent for “Developer’s Profit”. Accrued
depreciation for physical deterioration was estimated to be 34
percent or $608,940, based on an economic life of 50 years (per
the Marshall Valuation Cost Estimation Manual), an effective age
of 30 years, and the resulting remaining economic life of 20
years. Carneghi estimated the total value for the retail/office
portion of the property under the replacement cost approach to be
$1,460,000 (rounded), computed as follows:
Total Replacement Cost New $1,790,999
Less: Depreciation (608,940)
Total Depreciated Value of Improvements1,182,060
Add: Land Value 276,098
Indicated Market Value by Cost Approach$1,458,158
3. Comparable Sales Approach--Theater
For the comparable sales approach, Carneghi analyzed the
sales of the San Jose Fox and the Stanford. Carneghi also looked
at the sale of the Circle Star Theater (Circle Star), a live
performance theater located in the City of San Carlos, near the
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