an appraisal of an industrial warehouse building 60-70

114 Pages·2009·7.1 MB·English

AN APPRAISAL OF
AN INDUSTRIAL WAREHOUSE BUILDING
60-70 SEAVIEW DRIVE
SECAUCUS TOWNSHIP
HUDSON COUNTY, NEW JERSEY 07094

PREPARED FOR:

THE JOHNS HOPKINS UNIVERSITY
CAREY BUSINESS SCHOOL
EDWARD ST. JOHN DEPARTMENT OF REAL ESTATE
10 NORTH CHARLES STREET
BALTIMORE, MARYLAND 21201

PREPARED BY:

DANIEL ELIOT REMS
137 WEST 82nd STREET, APARTMENT 5B
NEW YORK, NEW YORK 10024

EFFECTIVE DATE OF REPORT – DECEMBER 10, 2009

EFFECTIVE DATE OF VALUE – FEBRUARY 28, 2007
December 10, 2009

The Johns Hopkins University
Carey Business School
Edward St. John Department of Real Estate
10 North Charles Street
Baltimore, Maryland 21201

RE: Demonstration Appraisal of a Single-Story Industrial Warehouse Building
60-70 Seaview Drive, Secaucus Township, Hudson County, New Jersey 07094

Ladies and Gentlemen:

Per your request, I have made the necessary inspection and analysis to appraise the above referenced
property. The attached report provides essential data and detailed reasoning employed in reaching
my opinion of value.

The purpose of the following report was to estimate the fee simple interest in the property, in its “as
is” condition, as of February 28, 2007, a retrospective value opinion. The intended use of the report
is to satisfy the practicum requirement of The Edward St. John Department of Real Estate. The
intended users of the report include The Edward St. John Department of Real Estate and its faculty,
staff, and administrators.

The property being appraised consists of a 146,342-square-foot single-story, single-tenant
industrial warehouse facility located on 6.712-acres of land. The property was originally
constructed in 1978. The building, vacant as of the date of value, was previously leased to
Nippon Express U.S.A., Inc. with a lease that extended from 1992 through October 31, 2006.
The property is located in Secaucus Township, Hudson County, New Jersey, within the zoning
jurisdiction of the Hackensack Meadowlands Development Commission. It is well situated
within a mature industrial submarket and affords good access to the regional highway system.

The value reported is qualified by certain definitions, limiting conditions, extraordinary
assumptions and certifications that set forth in the attached report. The scope of my appraisal
included a site inspection, most recently on October 8th, 2009. At the time of inspection, the
property was 100% leased to AFL Quality NY, LLC with a lease that extending through
December 31, 2017. Over the course of the inspection, the entire floor area was inspected, including
warehouse and office areas. The mechanical areas and roof were also inspected by the appraiser.
Edward St. John Department of Real Estate
December 10, 2009
Page Two

In its current condition, upon occupancy in 2008, the current tenant performed extensive
renovations to the property including new paint, new vinyl tile, carpeted floorings, and a new
ceiling grid in the office area. Furthermore, the tenant dramatically increased the floor load in
one bay of the warehouse in order to support a very heavy printing press. The front façade was
recently upgraded with new stucco and paint. Lastly, the tenant recently installed a new 2,500
KVA transformer and a 3,200 Amp, 480/277 volt, three-phase, four-wire electrical service,
including installation of a 4” copper pipe along the roofline for the delivery of compressed air
throughout the warehouse.

As previously mentioned, my appraisal is as of a retrospective date of value of February 28, 2007,
when the subject was vacant and the recent renovations had yet to be undertaken. Although the
appraiser did not inspected the property on the retrospective date of value, in its pre-renovated
condition, the appraiser relied on detailed property descriptions, leases, operating statements, and
property photographs from building ownership and other parties familiar with the property on the
retrospective date of value.

The analysis contained in the report that follows is considered to be a complete appraisal and is
presented in a self-contained format.

Based on this analysis, my opinion of the retrospective market value of the subject property, as
set forth, documented, and qualified in the attached report under conditions prevailing on
February 28, 2007, was:

TEN MILLION SIX HUNDRED THOUSAND DOLLARS
($10,600,000)

The value reported is qualified by the definitions, limiting conditions, and certifications set forth
in the attached report.

Respectfully submitted,

Daniel Eliot Rems
Associate Appraiser
TABLE OF CONTENTS

Subject Property Photographs..........................................................................................1
Summary of Important Facts and Conclusions..............................................................5
Scope of the Appraisal .......................................................................................................7
Purpose of the Appraisal....................................................................................................8
Intended Use and User of the Appraisal...........................................................................8
Property Rights Appraised................................................................................................8
Date of Value Opinion.........................................................................................................8
Definition of Market Value................................................................................................8
Exposure and Marketing Time..........................................................................................9
Identification of the Property.............................................................................................9
History of the Property.....................................................................................................10
Site Description and Analysis..........................................................................................11
Improvement Description and Analysis.........................................................................13
Zoning and Land Use Plans.............................................................................................16
Real Estate Tax and Assessment Analysis.....................................................................17
Regional Map.....................................................................................................................18
Fundamental Market Analysis........................................................................................19
Highest and Best Use.........................................................................................................56
Cost Approach...................................................................................................................59
Income Capitalization Approach....................................................................................80
Sales Comparison Approach............................................................................................98
Reconciliation and Final Value Estimate.....................................................................109
SUBJECT PROPERTY PHOTOGRAPHS

FRONT ELEVATION (Photo 1/18/07)

REAR ELEVATION (Photo 1/18/07)
1
SUBJECT PROPERTY PHOTOGRAPHS

WEST SIDE ELEVATION (Photo 1/18/07)

EAST SIDE ELEVATION (Photo 1/18/07)
2
SUBJECT PROPERTY PHOTOGRAPHS

TYPICAL INTERIOR VIEW OF WAREHOUSE (Photo 1/18/07)

TYPICAL INTERIOR VIEW OF OFFICE (Photo 1/18/07)
3
SUBJECT PROPERTY PHOTOGRAPHS

STREET SCENE VIEW NORTHWEST ALONG SEAVIEW DRIVE (Photo 1/18/07)

STREET SCENE VIEW SOUTHEAST ALONG SEAVIEW DRIVE (Photo 1/18/07)

4
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS

Property type: 146,342 square foot industrial warehouse facility

Location: 60-70 Seaview Drive
Secaucus, Hudson County, New Jersey 07094

Date of value opinion: February 28, 2007

Property rights appraised: Fee Simple Estate

Site: A 6.712-acre site that is fully improved and conforms to all
applicable ordinances.

Improvements: The subject property is a fully sprinklered, single-story
warehouse industrial building originally constructed in
1978.The rentable area is 146,342 square feet. The building
is composed of a steel frame with concrete block curtain
walls over poured concrete slab. The building contains
14,500+ square feet (9.9+%) office space, which is in need
of renovation. There are 15 dock height loading doors
including three interior docks. Additionally, the site is
improved with an asphalt parking area suitable for
approximately 150 automobiles and 15-20 tractor-trailers.
The parking areas have landscaped islands and concrete
curbs and walkways.

Intended use/user: To fulfill demonstration appraisal report requirement
for Johns Hopkins University. Client is Johns Hopkins
University.

Zoning: The subject property is zoned Light Industrial and
Distribution A, as designated by the Hackensack
Meadowlands Development Commission.

Highest and Best Use:

As vacant Hold the site for development until the ideal improvement
(determined to be a similar industrial building developed to the
highest allowable density) becomes financially feasible.

As improved Continued use as an industrial warehouse building is the
optimum use.

5
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS

VALUE VIA INCOME
CAPITALIZATION APPROACH: $10,600,000 (rounded)
IRR 8.50%
Terminal Cap Rate 7.50%
Going-In Rate 7.00%

VALUE VIA SALES
COMPARISON APPROACH: $10,400,000 (rounded)
Unit Value $71.07/SF

VALUE VIA
COST APPROACH: $9,500,000 (rounded)

FINAL VALUE CONCLUSION: $10,600,000
Estimated Marketing Period up to 12 months

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