Do Cigarette Bans Enhance Property Values?

Posted by Jonathan J. Miller -Saturday, March 24, 2012, 1:00 PM
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Brick Underground published an article on smoking bans in buildings a few weeks ago that continues to have legs on it – it just appeared in AM New York as well.

I am not a smoker. I’m highly allergic to smoke and tobacco. A number of relatives of mine have died from lung cancer, second hand smoke and other smoking related illnesses. I wish people wouldn’t smoke (and better able to quit) so I struggle to be neutral in my view of it’s impact on property values.

My quote on the issue for the Brick Underground piece was:

“I am not aware of any compelling studies that provide empirical evidence proving a smoking ban impacts values one way or another,” said Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal and consulting firm. “Personally, I would think such a ban would be slightly more of a help to values than a hindrance, since the number of smokers are on the decline — and the idea of selling the health benefits of a lack of secondhand smoke would be a plus.”

The policy momentum of our society has grown with the elimination of smoking on airplanes, public transportation, commercial buildings, public spaces and they all speak to the issue of invasiveness. Forcing non-smokers to breath something that has been shown to be unhealthy, even lethal, is no longer tolerated and anti-smoking public policy continues to expand.

So the issue as it relates to multi-family housing would seems to be the next shoe to drop with public policy. Perhaps that is already happening and I’m not aware of it.

Even though a smoker may own their residence and have the right to enjoy it as they see fit, the impact of their behavior moving outside their domicile (i.e. smoke permeating walls and air exchanges) would seem to be invasive and not their right.

With possibly one exception

Grandfathering. As an apartment homeowner, they may have had the right to smoke when the property was purchased and I don’t see how their bundle of rights as a property owner can be altered. They followed the rules and non-smokers who purchased during that era would be aware that there was no ban on smoking.

A new building that bans smoking from day one – that’s not a problem.

But back to the valuation issue. I think I see more potential downside to property values in the long run within buildings that allow smoking to new buyers than to a value upside in buildings that never allowed smoking from day one.

Admittedly I’m merely voicing a subjective opinion. I’m relying on the logic that societal norms will continue to move away from public smoking tolerance.

And that’s not a drag.

[Living The High Life] How Much Is It Worth?

Posted by Jonathan J. Miller -Monday, February 6, 2012, 6:30 AM
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My friend Teri Rogers founder of BrickUnderground described by the New York Times (she used to write for their real estate section) as a provider of practical advice for apartment living in New York, pens a column in amNY. She reached out to me on the topic of valuing views and floor levels.

[Vertical Appraising] How much is a higher floor worth?

Posted by Jonathan J. Miller -Tuesday, January 17, 2012, 6:00 AM
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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:

Getting Floored

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]