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Assignment Developer's/Residual Method of Appraisal In this assignment, you are required to determine the offer price for your property under study using the residual or developer's method of appraisal.
Assumptions:
1. Assume the equity invested is equal to the land value (you can ignore the cost of financing the land)
2. If your property is to be leased, you can capitalize the income stream by using market capitalization rates. Market capitalization rates can be derived from the published reports from commercial real estate firms.
3. Building costs can be derived from costing manuals from companies such as Marshall and Swift. Appraisal firms in your area or sometimes local libraries will have copies of these costing manuals. another source of costing data can be obtained by contacting local builders in your area for estimates of construction costs per square foot
| All "plugged" Numbers | Calculated Value | |||
| Mid-Rise Economics, Proforma Analysis | Mid Rise | High Rise | Mid Rise | High Rise |
| Residential Unit & Area Statistics | ||||
| Number of Floors | 8 | 25 | ||
| Number of Units | 75 | 300 | ||
| Average Net Unit Size (SF) | 850 | 725 | ||
| Gross to Net Efficiency (GNE, %) | 85% | 88% | ||
| Average Gross Unit Size (SF) | 1,000 | 824 | ||
| Total Residential Saleable Area (SF) | 63,750 | 217,500 | ||
| Efficiency | 85% | 88% | ||
| Gross Residential Area (GRA, SF) | 75000 | 247,159 | ||
| Estimated Floor Plate | 9,375 | 9,886 | ||
| GRA (square meters) | 6,968 | 22,962 | ||
| Retail Area (SF) | 4,688 | 4,943 | ||
| Gross Livable Area = GRA + retail (GLA, SF) | 79,688 | 252,102 | ||
| Required Parking Stalls (per residential unit) | 0.81 | 0.81 | ||
| Resident Parking Stalls Constructed | 60.75 | 243 | ||
| Number of Visitor Parking Stalls | 4.5 | 18 | ||
| Required Retail Parking | 5 | 5 | ||
| Number of Parking Stalls Sold | 56.25 | 225 | ||
| Estimated Area per Stall (SF) | 400 | 400 | ||
| REQUIRED Total Parking Area - Below Grade (SF) | 26,175 | 99,177 | ||
| Revenues | ||||
| Residential Index Price (PSF) | $300 | $300 | ||
| End Price (per residential unit) | $255,000 | $217,500 | ||
| Parking Revenue (per stall) | $20,000 | $20,000 | ||
| Retail Index Price ($20 PSF @ 8% Cap rate) | $250 | $250 | ||
| Costs | ||||
| Hard (Construction) Costs Above Grade GRA Construction Cost (PSF) |
$140.00 | $130.00 | ||
| Above Grade Retail Area Construction Cost (PSF) | $150.00 | $150.00 | ||
| Below Grade Parking Cost (PSF) | $45.00 | $60.00 | ||
| Blended Construction Cost (PSF) of GLA | $155 | $154 | ||
| Soft (Development) Costs Rule of Thumb Approach, % of total development costs |
30% | 29% | ||
| Developer/Builder Profit Profit Margin (% of total revenues) |
10.00% | 10.00% | ||
| PROJECTED REVENUES | ||||
| Revenues from Sale of Units | ############# | $65,250,000 | ||
| Revenues from Sale of Parking | $1,125,000 | $4,500,000 | ||
| Revenues from Sale of Retail Area | $1,171,875 | $1,235,795 | ||
| Total Revenues | ############# | $70,985,795 | ||
| PROJECTED COSTS | ||||
| Land Cost - RLV to be determined Above & Below Grade Hard Construction | ############# | $38,822,795 | ||
| Soft (Development) Costs | $5,306,143 | $15,857,198 | ||
| Total Costs | ############# | $54,679,994 | ||
| Total Costs PSF GLA | $222 | $217 | ||
| Total Residual Land Value and Profit | $3,734,732 | $16,305,802 | ||
| Total Profit | $2,142,188 | $7,098,580 | ||
| Total Residual Land Value (future$) | $1,592,545 | $9,207,222 | ||
| RLV Per Residential Unit | $21,234 | $30,691 | ||
| RLV PSF of GLA | $20 | $37 | ||
| Total Residual Land Value (present$) | $1,316,153 | $5,995,999 | ||
| RLV Per Residential Unit | $17,549 | $19,987 | ||
| RLV PSF of GLA | $17 | $24 | ||
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