Summary - Law Seminars International

Anthony Gibbons of Re-Solve Speaker #: 6b-1
Hey, that’s my parking spot!
aka
An analysis of the diminution in property
value resulting from lost parking
Anthony Gibbons, MAI, CRE
RE !SOLVE
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Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-2
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA
IN-LINE
ANCHOR ANCHOR
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Compact, hybrid cars only
STORM WATER DETENTION BICYCLES COMMUNITY HALL
with parking underground
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RETAIL
water feature Open Space
Trails
Architecture

Anthony Gibbons of Re-Solve Speaker #: 6b-3
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RETAILER
The Components of a Property
" The Land
# Valued as though vacant and unimproved
# Typically valued as though free and clear to be
developed to its highest and best use.
" The Building
# Valued under its present use or highest and best use,
based typically on its contribution to the land value as
developed above.
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-4
Before & After Analysis
" The Combination of land and building
# Valued under the use to which it is put, put or could be put put, at the
time of the condemnation.
# This may change due to the condemnation, and thus the “Before”
use and the “After” use may differ.
" Parking may be just one cause of this.
" The appraiser measures the difference between the value of the
property Before and the value of the property After
" The appraiser should also consider, as a deduction from the After
value, the cost to “transition” from one use to the other (rarely done).
# The unit rule allows for a valuation of merged interests
# Leases are ignored unless they happen to be above market
Just Compensation Breakdown
" The take (in the case of parking, this would be):
# LLand d & site it improvements i t (asphalt, ( h lt landscaping, l d i signs) i )
" Damages (in the case of parking, this has to be):
# Loss in building and other improvement value due to take,
that is OVER & ABOVE the value of the land taken.
# The distribution of the Just Compensation may appear to be of
no interest to the property owner, but it is significant as capital
gains would apply to the compensation for the take value but
not for damages (consult your tax attorney or accountant).
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-5
7)18"-. V)49# :001";90#%
" The need for parking is driven by periods of peak demand
" (e.g. weekends, xmas shopping for retail, workday for office)
" A parking lot is fully subscribed at under 100%
occupancy, even at times of peak demand.
" The value of parking equals:
# The value of land on which the parking is located;
# Asphalt, curbs, striping
# And allowing the building to reach its maximally productive
value.
" A property may have more parking than it needs in which
case it could afford to lose some without damages.
How the diminution in value due to
reduced parking can be measured
" By comparison with an identical property that has sold
with less parking:
# Fantasy comparable analysis:
# Doesn’t deal with transitional issue
" Based on demand/supply ratios for type of use:
# Maintenance of actual conditions
# Industry standards for certain types of use
" By retail sales performance analysis
" By a retail sales analysis based on shopping days
" By acquisitions or sales of parking rights
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-6
Before
15,000sf
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA
7
13
retail
59 stalls
3.9 stalls per 1,000
Street
After 7
7
4
7
12,712sf retail
22,288sf 288sf storage
50 stalls
3.9 stalls per 1,000
Street
12
12
20
20

Anthony Gibbons of Re-Solve Speaker #: 6b-7
Before Property (total) 15,000sf $225/sf $3,375,000
After Property (total) 12,712sf $225/sf $2,860,169
2,288sf $100/sf $228,814
Subtotal 15,000sf $206/sf $3,088,983
Transition -$20,000 $20 000
Total After Property $3,068,983
Difference $306,017
Land Only 5,000sf $30/sf $150,000
Asphalt 5,000sf $3/sf $15,000
Total Take $165,000
Damages $141,017
Before
$/stall 9 stalls $15,669/stall
Building 15,000sf $135/sf $2,025,000
Land 45,000sf $30/sf $1,350,000
After
$3,375,000
Building 15,000sf $125/sf $1,868,983
Land 40,000sf $30/sf $1,200,000
$3,068,983
Difference $306,017
-8% loss in building value
-15% loss in parking supply
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-8
Before
After
10,000sf
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA
7
13
7
4
retail
59 stalls
5.9 stalls per 1,000
Street
7
7
10,000sf retail
0sf storage g
50 stalls
5 stalls per 1,000
Street
12
12
20
20

Anthony Gibbons of Re-Solve Speaker #: 6b-9
Before Property (total) 10,000sf $225/sf $2,250,000
(before consideration of excess land)
After Property (total) 10,000sf $225/sf $2,250,000
0sf $100/sf $0
Subtotal 10,000sf $225/sf $2,250,000
Transition $0
Total After Property $2,250,000
Difference $0
Land Only 5,000sf $30/sf $150,000
Asphalt 55,000sf 000sf $3/sf $15 $15,000 000
Total Take $165,000
Damages $0
Before
$/stall 9 stalls $0/stall
Building 10,000sf $152/sf $1,515,000
Land 30,000sf $30/sf $900,000
After
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA
$2,415,000
Building 10,000sf $150/sf $1,500,000
Land 25,000sf $30/sf $750,000
$2,250,000 , ,
Difference $165,000
-1% loss in building value
-15% loss in parking supply

Anthony Gibbons of Re-Solve Speaker #: 6b-10
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA
Parking lot
adjacent j
to
shopping
center

Anthony Gibbons of Re-Solve Speaker #: 6b-11
Parking Demand Analysis by type of use
Parking Impact Analysis
Parking Specifications Property Value Specifications (Before)
Location Type Before After Loss
Space sf $/sf Exp NOI Cap Value
West Lot Permanent 88 100% 62 70% 26 30% Retail 58,204 sf $12.85/sf $7.18/sf $5.67/sf $79.24/sf
Street (est) Temporary 40 40 0 Office 5,807 sf $11.94/sf $7.18/sf $4.76/sf 7.16% $66.51/sf
Garage Temporary 82 82 0 Storage 15,000 sf $2.11/sf $0.00/sf $2.11/sf $29.46/sf
Total 210 100% 184 88% 26 12% 79,011 sf $4.93/sf $68.85/sf
Parking Demand/Supply Analysis
Scenario A - Maintenance of Short Stay Parking Ratio for Retail
Before Allocation per space type After Allocation per space type Re-allocation of spaces
Gain and (Loss) in sf
Retail Office Storage Total Retail Office Storage Total Retail Office Storage Total Retail Office Storage Total
58,204 sf 5,807 sf 15,000 sf 79,011 sf 58,204 sf 5,807 sf 15,000 sf 79,011 sf 41,333 sf 5,807 sf 31,871 sf 79,011 sf -16,871 sf 0 sf 16,871 sf 0 sf
88 0 0 88 62 0 0 62 62 0 0 62 -26 0 0 -26
1.5/1000 0.0/1000 0.0/1000 1.1/1000 1.1/1000 0.0/1000 0.0/1000 0.8/1000 1.5/1000 1.2/1000 0.0/1000 0.8/1000 0.4/1000 1.2/1000 0.0/1000
40 0 0 40 40 0 0 40 40 0 0 40 0 0 0 0
0.7/1000 0.0/1000 0.0/1000 0.5/1000 0.7/1000 0.0/1000 0.0/1000 0.5/1000 1.0/1000 0.0/1000 0.0/1000 0.5/1000 0.3/1000 0.0/1000 0.0/1000
67 5 10 82 67 5 10 82 67 5 10 82 0 0 0 0
1.2/1000 0.9/1000 0.7/1000 1.0/1000 1.2/1000 0.9/1000 0.7/1000 1.0/1000 1.6/1000 0.9/1000 0.3/1000 1.0/1000 0.5/1000 0.0/1000 -0.4/1000
195 5 10 210 169 5 10 184 169 5 10 184 0 0 0 0
3.4/1000 0.9/1000 0.7/1000 2.7/1000 2.9/1000 0.9/1000 0.7/1000 2.3/1000 4.1/1000 0.9/1000 0.3/1000 2.3/1000 0.7/1000 0.0/1000 -0.4/1000
Before Value per sf per Space Type After Value per sf Space Type Difference
$4,611,949 $386,209 $441,842 $5,440,000 $3,275,157 $386,209 $938,787 $4,600,153 $1,336,792 $0 ($496,945) $839,847
$79.24/sf $66.51/sf $29.46/sf $68.85/sf $79.24/sf $66.51/sf $29.46/sf $58.22/sf $79.24/sf $66.51/sf $29.46/sf $58.22/sf
Scenario B - Maintenance of Overall Parking Ratio for Retail
Before Allocation per space type After Allocation per space type Re-allocation of spaces Gain and (Loss) in sf
Retail Office Storage Total Retail Office Storage Total Retail Office Storage Total Retail Office Storage Total
58,204 sf 5,807 sf 15,000 sf 79,011 sf 58,204 sf 5,807 sf 15,000 sf 79,011 sf 49,600 sf 5,807 sf 23,604 sf 79,011 sf -8,604 sf 0 sf 8,604 sf 0 sf
88 0 0 88 62 0 0 62 62 0 0 62 -26 0 0 -26
1.5/1000 0.0/1000 0.0/1000 1.1/1000 1.1/1000 0.0/1000 0.0/1000 0.8/1000 1.3/1000 1.2/1000 0.0/1000 0.8/1000 0.2/1000 1.2/1000 0.0/1000
40 0 0 40 40 0 0 40 40 0 0 40 0 0 0 0
0.7/1000 0.0/1000 0.0/1000 0.5/1000 0.7/1000 0.0/1000 0.0/1000 0.5/1000 0.8/1000 0.0/1000 0.0/1000 0.5/1000 0.1/1000 0.0/1000 0.0/1000
67 5 10 82 67 5 10 82 67 5 10 82 0 0 0 0
1.2/1000 0.9/1000 0.7/1000 1.0/1000 1.2/1000 0.9/1000 0.7/1000 1.0/1000 1.4/1000 0.9/1000 0.4/1000 1.0/1000 0.2/1000 0.0/1000 -0.2/1000
195 5 10 210 169 5 10 184 169 5 10 184 0 0 0 0
3.4/1000 0.9/1000 0.7/1000 2.7/1000 2.9/1000 0.9/1000 0.7/1000 2.3/1000 3.4/1000 0.9/1000 0.4/1000 2.3/1000 0.1/1000 0.0/1000 -0.2/1000
Before Value per sf per Space Type After Value per sf Space Type Difference
$4,611,949 $386,209 $441,842 $5,440,000 $3,930,188 $386,209 $695,283 $5,011,680 $681,761 $0 ($253,441) $428,320
$79.24/sf $66.51/sf $29.46/sf $68.85/sf $79.24/sf $66.51/sf $29.46/sf $63.43/sf $79.24/sf $66.51/sf $29.46/sf $63.43/sf
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-12
Fast Food Study
" Major fast food company
" Chose locations that were similar
" Product type essentially identical
" Differences in performance therefore can
potentially be attributed to differences in parking
supply
" Sales performance can directly be tied to property
value (i.e. we are not measuring business losses).
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
-6.0%
Parking v. # of transactions (4yr avg)
y = 0.0263x - 0.066
0.50 1.00 1.50 2.00 2.50
Parking/100sf
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-13
$1,000
$800
$600
$400
$200
$-
Parking v. Sales (4 yr average)
y = 223.25x + 154.25
00.50 50 11.00 00 11.50 50 22.00 00 22.50 50
Parking/100sf
Parking Impact - Street and Lot Parking Only - Food Tenants only
Area Before After Difference
West Lot 88 62 26
Street 40 40 0
Total 128 102 26
RRetail il sff 58 58,204sf 204 f 58 58,204sf 204 f 00sf f
Total Overall Retail Ratio 2.20 1.75
Predicted Decline in Rent - food court -15.5% 15.5%
Rent $32.68/sf $27.63/sf $5.05/sf
sf 5,938sf 5,938sf 5,938sf
$194,064 $164,065 $29,999
Vacancy 7.5% -$14,555 $14,555 -$12,305 $12,305
Extra Expense Cost 5.0% -$8,975 -$7,588
NOI Loss $170,534 $144,172
Predicted Decline in growth 1.17% 1.17%
Predicted Rise in Cap Rate 7.0% 8.17% 1.17%
Total Food Court Value $2,436,196 $1,763,610 $672,586
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-14
Additional Value Loss for remaining Retail NOI - cap rate change only
Balance of Retail Component 52,266sf 52,266sf
Balance of Retail NOI $135,944 $135,944
Cap Rate Change 7.0% 8.17% 1.17%
NOI per sf $2.60/sf $2.60/sf
Retail Value Balance $1,942,052 $1,662,953 $279,099
Total Value Loss $951,685
Retail Sales Analysis by shopping days
" This is an attempt to measure lost dollars through
iinsufficient ffi i t parking ki supply l
" Requires assumptions to be made regarding
standard shopping patterns and behaviors
" Significant components include:
# Shopping pp g days y pper yyear when pparking g is maximized
# Lost sales opportunity per transaction lost
# Translation of lost sales into lost value
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-15
Retail Sales Analysis
Property Statistics
Shopping Center
A: Before B: After Take Difference
100% Shopping Days Per Year 16% 60 days 16% 60 days 16% 60 days
Other Days Per Year 84% 305 days 84% 305 days 84% 305 days
Total 100% 365 days 100% 365 days 100% 365 days
West Lot Parking 88 stalls 62 stalls 26 stalls
Street Parking 40 stalls 40 stalls
Garage Parking 82 stalls 82 stalls 0 stalls
Total Parking 210 stalls 184 stalls 26 stalls
Garage Street West lot Total West lot Total West lot Total
Shopping Day Turnover 2.0 3.0 3.0 2.6 3.0 2.6 3.0 3.0
Cars Per Shopping Day 164 120 264 548 186 470 78 78
Persons Per Car 3.0 3.0 3.0
Visitors Per Day 1,644 1,410 234
Shopping Day Sales Per Visitor $25 $25 $25
Shopping pp g Day y Sales Per Day y $41,100 , $35,250 , $5,850 ,
Shopping Day Sales Per Year $2,466,000 $2,115,000 $351,000
Annual Rent as a % of Sales 12% 12% 12%
Annual NNN Rent (% of total retail) 38% $295,920 35% $253,800 5% $42,120
Vacancy Allowance 7.5% -$22,194 -$19,035 -$3,159
Marginal Expense Increase 5.0% -$13,686 -$11,738 -$1,948
NOI Loss $260,040 $223,027 $37,013
Capitalization Rate 7.0% 7.5% 5.0%
Indicated Value $3,714,853 $2,973,690 $741,163
Recap of Approaches
Method 1: Parking Ratio Analysis
Range Take(1) Damage Damage/stall Total Rounded
Low $310,000 $118,320 $4,551 $428,320 $430,000
High $310,000 $529,847 $20,379 $839,847 $840,000
Method 2: Parking Occupancy and Sales Analysis
Range Take(1) Damage Damage/stall Total Total JC
Overall $310,000 $431,163 $16,583 $741,163 $740,000
Method 3: Food & Beverage Analysis
Range Take(1) Damage Damage/stall Total Total JC
Low $310,000 $362,586 $13,946 $672,586 $670,000
High $310,000 $641,685 $24,680 $951,685 $950,000
Method 4: Comparison
a). 2003 Sale of parking rights, Seattle $14,834 /stall $700,000
b). Confidential Negotiation 2003, Seattle Land cost
Low additional $13,684 /stall $670,000
High $20,000 /stall $830,000
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA

Anthony Gibbons of Re-Solve Speaker #: 6b-16
Summary
" For the loss of parking to represent a “damage”, its value has to exceed
the value of the land and asphalt upon which it is located.
" Lost parking can reduce the utility of a property to the point where a
change in user may be necessary – this will create transitional costs.
" The easiest way to measure the loss is to consider the required industry
standard for the supply & demand of the type of space presently in the
property – or most suitable for the property.
" More sophisticated techniques provide for a more site specific analysis,
and should be done when conditions permit.
A t h ki ith th lt th t th l f
" A property may have excess parking, with the result that the loss of
land may not result in damages to the improvements.
Law Seminars International | Government Takings | 12/14/07 in Seattle, WA