Letter to Editor
Reader Challenges Article on Appraising Garages
I read with interest the article “How Appraisers Value Parking Facilities,” by William “Ted” Anglyn, in the October 2013 issue of PT.
While Mr. Anglyn describes in detail many revenue and cost considerations, he fails to elaborate on how such data apply to an appraisal. I have made a number of appraisals or estimated value analyses for parking garages, and would like to expand on the material contained in Mr. Anglyn’s article.
My approach has been to consider the value of a garage from
1. Present value of the future net revenues that might be generated over the estimated useful remaining service life of the garage.
2. Replacement value of a similar facility, adjusted for the estimated remaining service life of the facility.
Two factors that will have a significant effect on the valuation are the remaining service life of the garage and the discount rate or interest rate used to determine the present value of future net revenue.
In my opinion, the replacement value approach overvalues the facility, whereas the present value of future net revenues tends to undervalue the garage. But by using both methods, a realistic probable range of values can be determined.
Jean M. Keneipp
Article Abstract from December, 2013