Valuing Special-Use and Single-Purpose Properties

What Makes a Property “Special-Use”

Special-use properties are improved for a specific purpose that limits their appeal to a narrow range of buyers — examples include manufacturing plants with specialized equipment infrastructure, self-storage facilities, car washes, and religious or educational institutions.

Limited Market Data Challenges

Because these properties transact infrequently and often outside the subject’s immediate market, appraisers may need to expand their geographic search radius or extend their data collection period to assemble a credible comparable sales set — and even then, adjustments carry more judgment than in a market with abundant, recent transactions.

The Cost Approach’s Expanded Role

Given thin market and income data, the cost approach often plays an outsized role in special-use valuations, particularly for newer or purpose-built improvements where depreciation can be estimated with reasonable confidence.

Considering Alternative Use and Conversion Potential

Where a special-use property’s current use is not its highest and best use, appraisers evaluate the physical and economic feasibility of converting the improvements to an alternative use, or the cost to demolish and redevelop the site, as part of a complete analysis.

Special-use properties require appraisers experienced with limited-data valuation problems. Contact Dunkin Advisors to discuss your property’s specific characteristics.