- 17 -
improvements to be $521,111 using the Marshall and Swift Cost
Manual. To that figure he added certain indirect costs of
$14,106 and an "entrepreneurial fee" of $114,500. (Lambert
described an entrepreneurial fee as a "soft cost" charged by the
coordinator/developer of a project for the time and risk involved
in bringing it to fruition.) Thus, Lambert's estimate of the
replacement cost new for the improvements was $649,717. Lambert
then estimated total depreciation, including physical
depreciation and external obsolescence, to be $259,887. Adding
together the value of the land and the estimated depreciated cost
of improvements, Lambert valued the Property at $702,800.
For the market-data approach, Lambert chose 5 sales of
improved properties (improved sale), all of which were automobile
dealerships, as comparables. The unit of comparison was the
price paid per square foot of gross building area, including
land. He made adjustments for such factors as location, age and
condition of the improvements, and size. Under this method,
Lambert estimated the value of the Property at $636,300, rounded.
Under the capitalization-of-earnings approach, Lambert
examined the lease rates for 9 properties (lease comparable).
He estimated a rental rate for the Property of $6 per square foot
and a gross building area of 13,980 square feet which, after
expenses, yielded a net annual operating income for the Property
of $76,295. Lambert then used the mortgage-equity band of
investment technique to estimate a capitalization rate of 12.45
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011