Posted by Jonathan J. Miller -Tuesday, January 17, 2012, 6:00 AM
About a year and a half ago, I did a little side project for The Real Deal Magazine to explore the change in value per floor in Manhattan. This week, Brick Underground broached the subject of floor level but asked me to be more specific to our appraisal practice – how we generally look at the impact of floor level on apartment values. I call it:
When it comes to floor level adjustments, we separate floor height and view into two separate amenities.
The floor level adjustment reflects the actual/perceived changes in natural light, street noise and security. There are variations of this (ie bigger adjustments) for the first and second floor. And of course it all depends on what the market conditions show but a typical adjustment might be 1% per floor before considering view differences. That’s 1% of the price of the unit you are comparing the subject apartment to.
Once a property breaks the roof line of the adjacent building, a view adjustment, in addition to floor level adjustment would likely be warranted. I like to think of view adjustments in terms of percentages rather than dollar figures since there are such wide variations in sizes and types of apartments.
Of course if you live in a walk-up, the reverse logic applies plus the floor level adjustment would likely be a higher percentage of the value. Units above the fourth floor are often subject to more restrictive financing so that would another “break” to be adjusted for.
This amenity isn’t arrived at through a formulaic process – we are looking at comparable sales in Manhattan to extract how much of an adjustment is reasonable – and that amount may change over time.
How much is a higher floor worth? [BrickUnderground]
The cost of a view [TheRealDeal]