APPRAISAL-298 Main StreetBENNETT FRANKLIN REAL ESTATE SERVICES
____________________________________________________________________________________________________
SUITE 203 MEADOW PLACE, 200 NORTH MAIN STREET, EAST LONGMEADOW, MA 01028
(413) 526-0800 FAX (413) 526-0822 www.bennettfranklin.com
APPRAISAL REPORT
298 Main Street
Northampton, MA 01060
Prepared For
Mr. Wayne Feiden, FAICP
City of Northampton Office of Planning & Sustainability
210 Main Street, City Hall
Northampton, MA 01060
Effective Date of Valuation
December 1, 2022
BENNETT FRANKLIN REAL ESTATE SERVICES
____________________________________________________________________________________________________
SUITE 203 MEADOW PLACE, 200 NORTH MAIN STREET, EAST LONGMEADOW, MA 01028
(413) 526-0800 FAX (413) 526-0822 www.bennettfranklin.com
December 6, 2022
Mr. Wayne Feiden, FAICP
City of Northampton Office of Planning & Sustainability
210 Main Street, City Hall
Northampton, MA 01060
Re: Appraisal Report
298 Main Street, Northampton,
MA, 01060
Bennett Franklin Appraisal Report # BF 10898
Dear Mr. Feiden, FAICP:
At your request, for the benefit of City of Northampton Office of Planning &
Sustainability (the client) we have inspected the property located at 298 Main Street,
Northampton, MA, 01060. The property contains approximately 0.33 acres of land. The
subject is improved with a three-story masonry, steel, and wood frame building that
contains approximately 14,500 square feet, which includes two fully above grade stories
and one below / partially below grade level. The property was originally constructed for
use as a church and was in the process of being converted to an entertainment and
bar/restaurant venue up until the COVID-19 Pandemic halted construction; according to
the owner, there is approximately $625,000 of costs remaining to complete the
improvements ($500,000 for interior buildout and finishes and approximately $125,000
for an elevator). It is reported that the prospective buyer plans to somewhat reconfigure
the interior of the building and complete the interior buildout for use of the property as a
community use building. The subject site is improved with some small lawn areas,
decorative brick retaining walls, trees, etc.
The subject property was inspected and photographed on December 1, 2022. The
purpose of our inspection and the accompanying analysis is to provide our opinion of the
'as is' market value of the subject property as of December 1, 2022. The intended use of
the appraisal is to for internal business purposes. The intended users of the report are
City of Northampton Office of Planning & Sustainability/client and / or its affiliates.
The analysis and conclusions within this Appraisal Report are based upon field research,
data collected from market participants and public records. The scope of this assignment
includes applicable methods of valuation. It is our determination that this appraisal does
not result in a misleading or confusing report. It is understood that the client is aware of
the scope of this appraisal and is familiar with the subject property and/or the subject
property type.
The accompanying report has been made in accordance with the minimum standards set
forth in Title XI of the Financial Institutions Reform, Recovery Act (FIRREA) as
amended and the Uniform Standards of Professional Appraisal Practice. Included in the
report is a description and analysis of the real estate, all pertinent data, valuation
methodology, supporting relevant exhibits, and addenda to the report.
As indicated we have inspected the subject property and we have conducted market
research respective to similar properties in the market area. In accordance with the
definitions, certifications and limiting conditions as set forth in this Appraisal Report, it is
our conclusion that the opinion of value determined in this appraisal report is well
supported. Based upon the analysis completed it is our opinion that the "as is" Market
Value of the Fee Simple interest in the subject property, as of December 1, 2022 is:
Three Million Three Hundred Thousand Dollars
$3,300,000
Thank you for contacting us for this assignment. If you have any questions concerning
our valuation and analysis we may be reached at (413) 526-0800.
Jerome Franklin
MA- Certified General Real Estate
Appraiser License #5219,
Expires November 9, 2023
Robert Harrington
MA- Certified General Real Estate
Appraiser License #75351,
Expires November 12, 2024
TABLE OF CONTENTS
Summary of Property Details.............................................................................................. 5
Description of the Appraisal Report ................................................................................... 6
Purpose of the Appraisal ..................................................................................................... 6
Intended Use and Intended User ......................................................................................... 6
Competency Statement ....................................................................................................... 6
Contingent and Limiting Conditions .................................................................................. 6
Certification Statement ....................................................................................................... 8
Qualifications of Jerome Franklin .................................................................................. 9
Qualification of Robert Harrington ............................................................................... 10
Scope of Work .................................................................................................................. 11
Effective Date of the Appraisal Report ............................................................................. 13
Property Rights Appraised ................................................................................................ 13
Definition of Market Value ............................................................................................... 13
Ownership of Property / Sales History ............................................................................. 14
Northampton Community Analysis .................................................................................. 14
Neighborhood of Subject Analysis ............................................................................... 17
Site Description ................................................................................................................. 18
Flood Zone: ................................................................................................................... 23
Zoning and Conformity................................................................................................. 24
Improvements Description ................................................................................................ 25
Assessment and Taxes ...................................................................................................... 31
Highest and Best Use ........................................................................................................ 32
Market Analysis ................................................................................................................ 33
Exposure Period and Marketing Time .............................................................................. 34
Valuation Methodology .................................................................................................... 35
Analyses Applied .......................................................................................................... 35
Cost Approach to Value (As Is) ........................................................................................ 36
Land Value (As Vacant) ............................................................................................... 36
Land Sale Comparison .................................................................................................. 42
Land Value Conclusion................................................................................................. 42
Valuation of the Improvements .................................................................................... 43
Cost Approach to Value Conclusion............................................................................. 46
Sales Comparison Approach ............................................................................................. 47
Comparables ................................................................................................................. 47
Analysis Grid ................................................................................................................ 51
Analysis of Comparable Sales ...................................................................................... 52
Conclusion ........................................................................................................................ 55
Income Approach (As Is) .................................................................................................. 56
Vacancy and Collection Loss........................................................................................ 58
Expenses ....................................................................................................................... 59
Expense Reimbursements ............................................................................................. 60
Selection of Capitalization Rate .................................................................................... 61
Income Approach to Value Conclusion ........................................................................ 63
Final Reconciliation .......................................................................................................... 64
Addenda ............................................................................................................................ 66
Bennett Franklin File # BF 10898 Page 5
Summary of Property Details
Location: 298 Main Street, Northampton,
Hampshire County, MA, 01060
Ownership:
298 Main Street, LLC
Legal Description:
Book 8962, Page 200
Property Rights Appraised: Fee Simple
Value Appraised Market Value
Date of Report: December 6, 2022
Date of “As Is” Valuation: December 1, 2022
Land Area:
0.33 Acres
Zoning:
Central Business (CB)
Improvements: The subject is improved with a three-story masonry, steel, and wood
frame building that contains approximately 14,500 square feet,
which includes two fully above grade stories and one below /
partially below grade level. The property was originally constructed
for use as a church and was in the process of being converted to an
entertainment and bar/restaurant venue up until the COVID-19
Pandemic halted construction; according to the owner, there is
approximately $625,000 of costs remaining to complete the
improvements ($500,000 for interior buildout and finishes and
approximately $125,000 for an elevator). It is reported that the
prospective buyer plans to somewhat reconfigure the interior of the
building and complete the interior buildout for use of the property as
a community use building. The subject site is improved with some
small lawn areas, decorative brick retaining walls, trees, etc.
Highest and Best Use
of the Site:
HBU as vacant is for development with residential improvements at
the highest possible density allowed by zoning.
Highest and Best Use
as Improved:
HBU as improved is to finish the interior buildout for use as
commercial space (office, retail, or a combination thereof).
Type of Value: Market Value
VALUE INDICATIONS
Market Value Conclusion(s) “As Is”
Land Value: N/A
Cost Approach: $3,310,000
Sales Comparison Approach: $3,260,000
Income Approach:
Direct Capitalization
$3,320,000
Reconciled Value(s): $3,300,000
Bennett Franklin File # BF 10898 Page 6
Description of the Appraisal Report
This valuation is an Appraisal Report, which can be used by financial institutions and individuals
subject to Title XI of the Financial Institutions Reform Recovery Act (FIRREA) and the Uniform
Standards of Professional Appraisal Practice (USPAP). This is an Appraisal Report as defined
by Uniform Standards of Professional Appraisal Practice under Standards Rule 2-2(a). This
format provides a summary or description of the appraisal process, subject and market data and
valuation analyses. In consideration of the subject property type and the client’s knowledge of
the subject’s market area it is our determination that this Appraisal Report is appropriate.
Purpose of the Appraisal
The purpose of our inspection and the accompanying analysis is to provide our opinion of the 'as
is' market value of the subject property as of December 1, 2022.
Intended Use and Intended User
The intended use of the appraisal is to for internal business purposes. The intended users of the
report are City of Northampton Office of Planning & Sustainability/client and / or its affiliates.
Competency Statement
Based on our knowledge of the subject property and the real estate market that it competes
within, we have the knowledge and experience to complete this assignment in accordance with
the competency rule in the Uniform Standards of Professional Appraisal Practice (USPAP).
Contingent and Limiting Conditions
We assume no responsibility for matters legal in nature, nor do we render any opinion as to the
title, which is assumed to be marketable.
Any sketches, plats, maps, or other exhibits in this report are included to assist the reader in
visualizing the property and we assume no responsibility for their accuracy. We have made no
survey of the property.
We are not required to give testimony or appear in court because of having made this appraisal
report, with reference to the property in question, unless arrangements have been previously
made thereof in writing.
We assume that there are no hidden or unapparent conditions of the property, subsoil or
structures which would render it more or less valuable. We assume no responsibility for such
conditions or for engineering which might be required to discover such factors.
We have assumed that the subject site will or has met all acceptable standards with regard to any
existing Federal or State hazardous waste material laws.
Information, estimates and opinions furnished to us and contained in this report were obtained
from sources considered reliable and believed to be true and correct. However, no responsibility
for accuracy can be assumed by us.
Bennett Franklin File # BF 10898 Page 7
The distribution of the total valuation of this report between land and improvements applies only
under the existing program of utilization. The separate valuation for land and improvements
must not be used in conjunction with any other appraisal and are invalid if so used.
The Americans With Disabilities Act of 1990 requires, in some instances, retrofitting of
buildings to maximize accessibility by persons with disabilities. Assumptions regarding cost of
compliance by the owner (s) with this civil rights act, which became effective on January 26,
1992, have not been made in arriving at the opinion of value set forth herein. Please contact the
undersigned in this regard if such additional work will be required for present purposes.
Neither all nor any part of the contents of this report, or copy thereof, shall be used for any
purpose by anyone but the client without the previous written consent of the appraiser and the
client; nor shall it be conveyed by anyone including the client, to the public through advertising,
public relations, news, sales, or other media without the written consent and approval of the
author, particularly as to valuation conclusions, the identity of the appraiser, or a firm with which
he is connected.
We have complied with the appraisal standards as promulgated by the Uniform Standards of
Professional Appraisal Practice adopted by the Appraisal Standards Board of the Appraisal
Foundation.
We who were involved in this assignment worked in tandem and have experience in the
valuation of properties similar to the subject and are competent in the valuation of such
properties.
We certify that we are appropriately licensed or certified to appraise the subject property in the
State in which it is located.
Bennett Franklin File # BF 10898 Page 8
Certification Statement
We certify that, to the best of our knowledge and belief:
• The statements of fact contained in this report are true and correct.
• The reported analyses, opinions and conclusions are limited only by the reported assumptions
and limiting conditions, and are our personal, impartial, and unbiased professional analyses,
opinions and conclusions.
• We have no present or prospective future interest in the property that is the subject of this
report, and have no personal interest with respect to the parties involved.
• We have no bias with respect to the property that is the subject of this report, or to the parties
involved with this assignment.
• Our engagement in this assignment was not contingent upon developing or reporting
predetermined results.
• Our compensation for completing this assignment is not contingent upon the development or
reporting of a predetermined value or direction in value that favors the cause of the client, the
amount of the value estimate, the attainment of a stipulated result, or the occurrence of a
subsequent event directly related to the intended use of this appraisal.
• Our analyses, opinions, and conclusions were developed, and this report has been prepared,
in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).
• No one provided significant real property appraisal assistance to the person(s) signing this
certification.
• We certify sufficient competence to appraise this property through education and experience,
in addition to the internal resources of the appraisal firm.
• No photographs have been altered in this report.
• The appraisers have not performed prior appraisal services regarding the subject within the
previous three years of the appraisal date.
• Jerome Franklin certifies that, to the best of my knowledge and belief, the reported analyses,
opinions and conclusions were developed, and this report has been prepared, in conformity
with the requirements of the Code of Professional Ethics and the Standards of Professional
Appraisal Practice of the Appraisal Institute. Jerome Franklin certifies that the use of this
report is subject to the requirements of the Appraisal Institute relating to review by its duly
authorized representatives.
• Jerome Franklin has made an exterior inspection of the subject property.
• Robert Harrington has made an inspection of the subject property.
Jerome Franklin
MA- Certified General Real Estate
Appraiser License #5219, Expires
November 9, 2023
Robert Harrington
MA- Certified General Real Estate
Appraiser License #75351,
Expires November 12, 2024
Bennett Franklin File # BF 10898 Page 9
Qualifications of Jerome Franklin
Education
Bentley College - MBA, 1992
Western New England College - BSBA, 1989
Appraisal Institute courses attended and successfully completed
Real Estate Appraisal Principles – 110,
Real Estate Appraisal Procedures - 120
Basic Income Capitalization - 310
Standards of Professional Practice, Part A - 410, Part B – 420, Part C - 430
Advanced Income Capitalization - 510
Highest & Best Use and Market Analysis - 520
Advanced Sales Comparison and Cost Approaches – 530
Report Writing and Valuation Analysis – 540
Advanced Applications - 550
Passed Appraisal Institute General Comprehensive Examination
Business Experience
Bennett Franklin Real Estate Services, Partner, East Longmeadow, MA
Independent Real Estate Appraiser / Consultant / Broker, Springfield, MA
Crowley Real Estate Appraisers, Inc. Springfield, MA, Real Estate Appraiser
United States Navy, Electrical Technician
Licenses
Massachusetts Certified General Real Estate Appraiser License #5219
Connecticut Certified General Real Estate Appraiser License #894
Massachusetts Licensed Real Estate Broker #9018019
New York Certified General Real Estate Appraiser License #46000046409
Vermont Certified General Real Estate Appraiser License #080.0095482
Current and Past Memberships
Member National Council of Housing Market Analysts (NCHMA)
General Associate Member of the Appraisal Institute; Candidate for MAI designation
Member of the Greater Springfield Board of Realtors
Member of the Massachusetts Board of Realtors and National Association of Realtors
Springfield Planning Board (Chairman)
Springfield Taxicab Commission
Better Homes of Springfield, Board of Directors
Western Massachusetts Council, Boy Scouts of America, - Executive Board
Client List Available Upon Request
Bennett Franklin File # BF 10898 Page 10
Qualification of Robert Harrington
Education
Union College-BA, 1998
Appraisal courses attended and successfully completed
Basics of Real Estate Appraisal
Uniform Standard of Professional Appraisal Practice
Appraising Income Properties
Residential Sales and Income Approach
Residential Market Analysis and Highest and Best Use
Advanced Income Property Appraising
Basics of Real Estate Appraising
Business experience
Independent MA Cert. Gen. R.E. Appraiser, East Longmeadow, MA
General Contractor-Massachusetts
Cleaner Image, Co-owner, Framingham, MA
Licenses
MA Cert. Gen. R.E. Appraiser Lic. #75351
Construction Supervisor, license # CS 083984
Client List Available Upon Request
Bennett Franklin File # BF 10898 Page 11
Scope of Work
Report Type: This is an Appraisal Report as defined by Uniform Standards of
Professional Appraisal Practice under Standards Rule 2-2(a).
This format provides a summary or description of the appraisal
process, subject and market data and valuation analyses.
Property Identification: The subject has been identified by the legal description and the
assessors' parcel number.
Inspection: An interior and exterior inspection of the subject property has
been made, and photographs taken.
Information Sources: The following description is based on our property inspection,
[assessment records, property deeds, associated legal documents,
survey data, etc.] research of local assessor's offices, planning
departments, collectors offices, regional data sources,
conversations with brokers, managers, investors and owners
familiar with similar properties as well as information provided
by the property owner and/or representatives of the property
owner.
Additional Information: We have conducted research of property characteristics of the
subject (site and improvements). We have researched if there are
adverse site and property conditions. We have reviewed income
and expense information when and if provided. We have
reviewed lease agreements when and if provided. We have
reviewed agreements for sale when and if provided.
Market Area and Analysis
of Market Conditions:
A complete analysis of market conditions has been made. The
appraiser maintains and has access to comprehensive databases
for this market area and has reviewed the market for sales and
listings relevant to this analysis.
Highest and Best Use
Analysis:
An 'as vacant' and 'as improved' highest and best use analysis for
the subject has been made. Physically possible, legally
permissible and financially feasible uses were considered, and the
maximally productive use was concluded.
Type of Value: Market Value
Valuation Analyses
Cost Approach:
A cost approach was applied as despite the actual age of the
'bones' of the improvements, the subject property has been
extensively remodeled and will be valued as if in good condition
with the assumption in place that the interior buildout has been
completed; in addition, the improvements are somewhat unique,
which makes acquiring truly comparable sales and rental data
somewhat scarce. As such, we have included the cost approach
to assist in developing our opinion of value for the subject
property.
Bennett Franklin File # BF 10898 Page 12
Sales Comparison
Approach:
A sales approach was applied as there is adequate comparable
data from the market that we uncovered to assist in developing an
opinion of value for the subject property via this approach;
although the comparable sales differ somewhat in buildout,
layout, and / or use, we feel the properties do lend support to our
opinion of value for the subject property.
Income Approach: An income approach was applied as in some instances properties
like the subject are owned as investments and leased to a tenant
on a long term lease and held as an income producing asset;
buyers of this property type will often correlate the value of the
property with the amount of income it generates through the term
of the lease.
Hypothetical Conditions:
• There are no hypothetical conditions for this appraisal.
Extraordinary Assumptions:
• The subject property is in unfinished condition (requires
interior finishes such as drywall, plaster, bathroom
fixtures, electrical finishes, etc.); as there is limited
comparable data associated with properties that have
similar characteristics as this, we have appraised the
subject property assuming the improvements have been
completed and included in this valuation method will be a
deduction of the estimated costs associated with
completing the interior buildout. We have not been
provided with detailed estimates but were provided with a
rough estimate indicating $500,000+/- for drywall,
plaster, and interior finishes and approximately $125,000
for an elevator car. These costs appear reasonable and we
have completed our valuation under the extraordinary
assumption that the property can be completed / builtout
for an amount similar to that which we were provided; if
these assumptions prove untrue, the opinion of value
provided in this appraisal may be impacted and we reserve
the right to revise our opinion of value accordingly based
on any new information provided associated with costs of
completing the improvements.
Information Not Available: • Detailed construction budget, floor plans, etc.
Extraordinary Assumption Definition
“An assumption, directly related to a specific assignment, which, if found to be false, could alter
the appraiser’s opinions or conclusions.”1
1 The Dictionary of Real Estate Appraisal, Fourth Edition, 2002, Pg. 106
Bennett Franklin File # BF 10898 Page 13
"As Is" Value
The "as is" value is considered to represent the value of the property in its current condition as of
the effective date of the appraisal. It represents the most probable price that a proposed
purchaser would pay for the subject considering all of the costs and risks inherent in its future
ownership.
Effective Date of the Appraisal Report
The subject property was inspected and photographed on December 1, 2022. At the request of
the client we are to provide our opinion of the 'as is' market value of the subject property. Our
“as is” valuation of the subject property is as of December 1, 2022.
Personal Property
The opinion of value provided in this report concerns the real estate only and does not include
the valuation of any other personal property such as furniture, licenses or goodwill of the owner
or the tenants.
Property Rights Appraised
The subject property is currently vacant / unoccupied and reportedly not encumbered with any
lease agreements. Thus, we have appraised the fee simple interest of the subject property. The
fee simple interest is defined as follows.
"absolute ownership unencumbered by any other interest or estate, subject only to the
limitations imposed by the governmental powers of taxation, eminent domain, police
power and escheat."2
Identification of the Real Estate
The property which is the subject of this appraisal report is located at 298 Main Street,
Northampton, Hampshire County, MA, 01060. The property is also noted at the Northampton
Assessors Office as Parcel Map 31D, Lot 98.
Definition of Market Value
"the most probable price which a property should bring in a competitive and open market under
all conditions requisite to a fair sale, the buyer and seller each acting prudently and
knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this
definition are the consummation of a sale as of a specified date and the passing of title from
seller to buyer under conditions whereby:
(1) buyer and seller are typically motivated;
(2) both parties are well informed or well advised, and acting in what they consider their
own best interest;
(3) a reasonable time is allowed for exposure in the open market;
(4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements
comparable thereto; and
(5) the price represents the normal consideration for the property sold unaffected by special
or creative financing or sales concessions granted by anyone associated with the sale."3
2 The Appraisal of Real Estate, Appraisal Institute, 10th Edition, 1992, p. 122
Bennett Franklin File # BF 10898 Page 14
Ownership of Property / Sales History
The property is owned by 298 Main Street, LLC who purchased the subject property from Eric
Suher for consideration of 'One Dollar ($1.00)' on November 29, 2006. The deed is recorded in
Book 8962, Page 200 at the Hampden County Registry of Deeds (Springfield, MA). To our
knowledge there have been no transfers of the subject property in the past three years. The
subject property is not reportedly currently actively listed for sale, but the property is reportedly
encumbered with an option to purchase in the amount of $3,300,000 between the City of
Northampton and 298 Main Street, LLC; the prospective owners reportedly plan to finish the
interior of the building for use as a 'Community Resilience Hub', which will serve as a referral
center for local non-profit groups that provide social services, a community space, and an
emergency response center during crisis times.
There are typical utility and municipal easements that cross the frontage of the subject property.
There no known adverse encumbrances or easements that would restrict the use or appeal of the
property and no encroachments were identified. Please reference Limiting Conditions and
Assumptions. Our research unveiled the deed mentioned above which is considered adequate for
the purposes of this appraisal report. Further title analysis is beyond the scope of this appraisal
and we recommend that a complete title search be conducted by a qualified individual. A copy
of the deed is in the addendum.
Northampton Community Analysis
Northampton is bordered by the Town of Hatfield to the north, the City of Holyoke and Town of
Easthampton to the south, and the Towns of Hadley and Easthampton to the east and west,
respectively. The city is approximately 100 miles from Boston, and 35 miles north of Hartford.
The city is easily accessible via three interchanges from Interstates 91 within its borders.
Interstate 91 networks the city northerly to southern Vermont, and southerly to major
commercial regions of Springfield, MA and Hartford, CT. The Massachusetts Turnpike has an
interchange in West Springfield, approximately 13 miles from Northampton center, which also
provides access from that interstate to the city. The City of Northampton contains approximately
35.62 square miles of land.
According to the US Census Bureau, as of April 1, 2020, Northampton had a population of
29,571, which indicates an approximate 3.6% increase from the 2010 population estimate of
28,549 residents (2010 US Census). According to US Census Bureau statistics, the average
median household income in Northampton was $71,866 (2016-2020 average in 2020 dollars),
which indicates that the median household income average for Northampton is relatively similar
to the surrounding area ($73,518 for Hampshire County), but lower than the average indicated by
the entire Commonwealth ($84,385) as of the same time period. The major employer in
Northampton is Smith College with a student enrollment of approximately 2,500 students. Smith
College and the other area colleges provide solicitation for the downtown business district's retail
and restaurant trades. The lodging industry in the area is stable as well, primarily as a result of
the presence of the colleges in the area.
3 Interagency Appraisal and Evaluation Guidelines, Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the
Federal Reserve System (FRB); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); and National
Credit Union Administration (NCUA), Federal Register / Vol. 75, No. 237 / Friday, December 10, 2010
Bennett Franklin File # BF 10898 Page 15
As a function of the city’s presence in a diversity of markets, and the demand for commercial
goods and services posed by Smith College and the other colleges and university in the region,
Northampton has one of the lowest unemployment rates in the region and State. According to
the Massachusetts Department of Labor and Training statistics from September 2022, 2.5% of
the City's labor force was unemployed. This rate is slightly lower than both the Hampshire
County unemployment rate of 2.7% and the Commonwealth of MA rate of 3.1% as of the same
time period.
Map of Northampton and Surrounding Communities
The region is noted for having an established transportation network in place which has
contributed to an established position in distribution and light industrial sectors. In the last five
years the market has witnessed significant new development in the modern industrial locations
with inventory available for expansion. The locations in the region with very good highway
access and visibility have shown expansion in the light industrial, distribution, and commercial
sectors. Virtually all of the commercial sectors are represented within the City. Downtown
Northampton has historically held a strong commercial presence. The downtown area is very
accessible to pedestrians as parking is not abundant and is nearly all metered and closely
monitored. Investment in real estate in downtown Northampton has been steady over the recent
years with renovations to the majority of the buildings along Main Street in the last five years.
Bennett Franklin File # BF 10898 Page 16
The popularity of the downtown area has resulted in sale and rental values for properties in
downtown that generally exceed the greater three-county market. Retail vacancy in downtown
has been less than 5% for the last five years. A few properties have been converted to
condominiums with residential units on upper floors and commercial units on ground floors.
There are two notable developments that have recently occurred in the southerly / southeasterly
portion of the CBD. The first, known as Live 155, is an estimated $19.9 million project
associated with 70 apartment units (27 studio apartments and 43 one-bedroom apartment units)
and 2,600 square feet of ground floor retail; this project contains 47 “affordable” units and 23
market rate units. The other project, known as the “Lumber Yard”, involves the construction of
a four story 70,000 square foot complex that houses 55 apartment units geared toward
accommodating low- and middle-income individuals and families. This project reportedly cost
approximately $20,000,000. In addition to these two projects, there is a new 30-unit residential
condominium development that is in process on Hawley Street / Phillips Place in the easterly
portion of the CBD; this development includes two and three – bedroom townhouse units that
contain between 2,000+/- and 2,400+/- square feet. Units are being marketed and selling at
values in the range of $720,000 to $881,625 and $410+/- and 485+/- per square foot.
There is a good number of high-profile retail and commercial properties along King Street/North
King Street (US Route 5) that includes a number of automotive dealerships, grocery stores, fast
food restaurants, gas stations, pharmacies, branch banks, etc. The most recent notable
developments along King Street over the past five or so years include: two newer car dealerships
at the former Kollmorgen site, a Taco Bell at the site formerly improved with a Wendy’s, the
redevelopment of the former Hill and Dale Mall site (expansion of Firestone has been completed
and a Bank branch has been constructed, installation of a traffic light on King Street, extensive
remodeling of the “main building” for medical office use) and others. The former Lia Honda
sales and service building (171-181 King Street) has been razed (July 2014) and sits vacant; the
site has been deemed contaminated and there are pending lawsuits regarding site remediation.
Another on-going development in Northampton is The Village at Hospital Hill which is a major
redevelopment of the former Northampton Hospital. This project incorporates
MassDevelopment and The Community Builders as development partners. The project includes
approximately 476,000 square feet of mixed-use commercial space comprised of retail, office,
light industrial, and research and development/multimedia space, and space for live-work
studios, a childcare center, a possible community center/museum area, and the development of
60-80-unit assisted living facility. The project will also include 207 residential units, of which
100 units are single family homes and 107 are mixed income housing. There is a good amount
of residential development on-going on the north campus portion of the site; there are several
apartment complexes that are already open and occupied. Hillside Place at Village Hill (40
units) and Hilltop Apartments (33 units) have been completed. There are also single family
homes being constructed. Over the past 5 years (2017 through 2021) there have been between
20 and 50 new single family home building permits issued annually in Northampton (136 total or
an average of 27+ annually). There have been additional residential units permitted for
development over that same time period in multi-unit apartment / condominium properties (97
units permitted in structures containing between 8 and 61 units).
Bennett Franklin File # BF 10898 Page 17
There has been some commercial development in this area over the past several years that
includes ServiceNet contsructing a 17,600 square foot corporate and administrative headquarters
on 2.3 acres it purchased from MassDevelopment in the Village at Hospital Hill. The
development was completed with a combination of public and private financing; the total cost
including the land acquisition is reported to be approximately $4,100,000.
In conclusion, the City of Northampton provides a prominent commercial and residential center,
and properties in Northampton have good marketability to the greater area. The city’s ability to
participate in a diversity of commercial markets is positive and economic conditions in
Northampton are expected to remain stable into the future.
Neighborhood of Subject Analysis
The subject is located on the southerly side of Main Street, Elm Street, and West Street at their
traffic light-controlled convergence in the westerly portion of the Northampton, MA CBD.
These three roadways, along with State Street and New South Street, are the primary roadways
through this portion of the City; they provide access throughout the CBD and to various points of
the community outside of the CBD.
Map showing the location of the subject’s neighborhood.
Bennett Franklin File # BF 10898 Page 18
The subject property neighborhood is heavily traveled and heavily developed with a mix of
properties that include municipal uses, mixed use properties, local retail/service provider uses,
residential use properties, and institutional uses/ Some of the uses in the neighborhood of the
subject property include Academy of Music, Edwards Church, Forbes Library, Smith College,
Pizza Amore, Northampton City Hall, Fly By Night, and many, many others.
The neighborhood has good accessibility to local roadways and highways for a variety of users.
Based on all information we uncovered through our research we anticipate the neighborhood
uses will remain mixed in the future in a manner that is similar to that which currently exists; due
to the lack of developable land, it is unlikely that there will be any new developments in the area
with the exception of updates to existing improvements unless older, less functional uses are
razed to allow for sites to be redeveloped.
Site Description
SITE
Location: The subject is located on the southerly side of Main Street, Elm Street, and
West Street at their traffic light-controlled convergence in the westerly
portion of the Northampton, MA CBD.
Current Use of the
Property:
Vacant for church
Site Size: 0.33 acres; 14,560 square feet
Shape: The site is rectangular in shape.
Street Access: The subject property has average/good to good access due to its proximity to
main roadways and highways.
Street Frontage:
West St., Elm Street, Main Street - 110+/- feet.
The site has an average depth of 130+/- feet.
The subject is not a corner lot.
Rail Access: The site does not have rail access.
Visibility: Considered having average/good to good accessibility and visibility, as the
subject site is located on a heavily traveled roadway in a CBD location.
Topography: The subject site is primarily level and at street grade with a gently sloped
contour along the street frontage.
Soil Conditions: The soil conditions observed at the subject appear to be typical of the region
and adequate to support development.
Bennett Franklin File # BF 10898 Page 19
Utilities:
Electricity: Public Utility
Sewer: City
Water: City Water
Natural Gas: Natural Gas Company
Underground Utilities: The site is serviced by underground utilities.
Adequacy: The subject's utilities are typical and adequate for the market area.
Site Improvements: • Street lighting: Yes
• Sidewalks: Yes
• Curb & Gutter: Yes
• The subject site is improved with some small lawn areas, decorative brick
retaining walls, trees, etc.
Wetlands/Watershed: No wetlands were observed during our site inspection.
Environmental Issues: There are no known adverse environmental conditions on the subject site.
Please reference Limiting Conditions and Assumptions.
Encumbrance /
Easements:
There are typical utility and municipal easements that cross the frontage of
the subject property. There no known adverse encumbrances or easements
that would restrict the use or appeal of the property and no encroachments
were identified. Please reference Limiting Conditions and Assumptions.
Site Comments: The site has average and typical utility.
Aerial of the subject property
Bennett Franklin File # BF 10898 Page 20
Bennett Franklin File # BF 10898 Page 21
Subject Property
Bennett Franklin File # BF 10898 Page 22
Views of West St., Elm Street, Main Street
Bennett Franklin File # BF 10898 Page 23
Flood Zone: The subject is located in an area mapped by the Federal Emergency
Management Agency (FEMA). A portion of the subject is located in
FEMA flood zone C, which is not classified as a flood hazard area.
FEMA Map Number: 2501670002A
FEMA Map Date: April 3, 1978
Flood Zone C, X (unshaded) are minimal risk areas outside the 1-
percent and .2-percent-annual-chance floodplains. No BFEs or base
flood depths are shown within these zones. (Zone X (unshaded) is used
on new and revised maps in place of Zone C.) The appraiser is not an
expert in this matter and is reporting data from FEMA maps. A copy
of the appropriate portion of the Flood Map is as follows.
Bennett Franklin File # BF 10898 Page 24
Zoning and Conformity
Zoning Code: Central Business (CB)
Zoning Description:
The Central Business zone allows for a variety of office, retail, residential,
mixed use and municipal uses.
Current Use Legally
Conforming:
The subject is a legal and conforming use.
Minimum
Land Area
Minimum
Frontage
Minimum Setback Maximum
Building Height Front Yard Side Yard Rear Yard
None None None None None 55 Feet
Zoning Comments
In addition to the noted requirements there is a 95% maximum building
coverage allowed in the CB zone. The subject property is considered a legal
and conforming use. The appropriate portion of the Zoning Map are shown
as follows:
Subject Property
Bennett Franklin File # BF 10898 Page 25
Improvements Description
Improvements Description - 298 Main Street
Building Identification: 298 Main Street
Building Description: Office/Service Provider
Construction: Masonry, Wood, and Steel
Construction Quality: Good
Year Built: 1900
Effective Age: 10 years
Remaining Useful Life: 40 years
Condition: Average/Good
Utility/Floor Plan Layout: Fair / Average/Fair
Appeal/Appearance: Average
Areas, Ratios &
Numbers:
Number of Stories: 3.00
Gross Building Area: 14,500 Square Feet
Gross Leasable Area: 14,500 Square Feet
Rentable Area: 14,500 Square Feet
FOUNDATION, FRAME & EXTERIOR - 298 MAIN STREET
Foundation: Poured concrete / Partially Below Grade
Structural Frame: Masonry, Wood, and Steel
Exterior: Brick and Wood Shakes
Windows: Fixed Frame and Double Hung
Roof Type/Cover: Pitched / Asphalt and Slate Shingles
Bennett Franklin File # BF 10898 Page 26
INTERIOR - 298 MAIN STREET
Interior Layout: The subject property improvements consist of a three story masonry,
wood, and steel frame building that contains approximately 14,500
square feet, which includes two above grade levels and one partially
below grade level. The building has a brick and wood shake
exterior with fixed frame and double hung windows and pitched
roof sections that are covered with asphalt and slate shingles; we
note that many of the windows are currently 'boarded up' with
plywood, but it is reported that all of the windows are in storage and
were removed so not to be damaged during construction). The
interior is divided into three levels; the partially below grade lower
level is laid out (interior demising walls, plumbing, and associated
mechanicals) for use as a kitchen and function hall area with a
commercial kitchen area, bar and seating area, restroom areas,
cooler / freezer area, etc.; there are cement floors, exposed brick,
stone, and wood framed walls, and exposed wood joist and beam
ceilings. The first floor above grade is divided into a 350-seat
entertainment area with stage, a full bar area, and multiple restrooms
(includes patron and 'back-stage restroom); these areas have
plywood flooring, exposed wood frame walls, and exposed wood
joist ceilings with a vaulted ceiling area above the main seating area
in front of the stage. The second floor above grade is divided into
two primary areas; there is a 50-seat balcony area opposite the stage
area and there is a private meeting room / function area with two
nearby private office areas; these areas have plywood flooring,
exposed wood frame and brick walls, and exposed joist ceilings.
There are interior stairwells and a four-stop elevator shaft installed
(requires purchase and installation of the 'car') that are intended to
allow access between all levels of the building including the
basement/lower level, the first-floor level, the stage level, and the
upper level function / meeting room and office areas. The subject
has an Average/Fair layout for this type of property.
Floor Cover: Plywood and Cement.
Walls: Exposed Brick and Wood Frame.
Ceilings & Ceiling
Height:
Exposed Joists at 8+/- to 18+/-feet.
Lighting: A mix of fluorescent and incandescent and LED lighting.
Restrooms: Multiple Rough Framed Restrooms (Multi-fixture and single fixture)
Bennett Franklin File # BF 10898 Page 27
MECHANICAL SYSTEMS - 298 MAIN STREET
Heating: Gas fired forced warm air and Forced Hot Water/Steam
Cooling: Central A/C
Electrical: 'Huge' / New
Plumbing Condition: Average
Sprinkler: Yes (New)
Subject Photographs
Bennett Franklin File # BF 10898 Page 28
Lower Level
Bennett Franklin File # BF 10898 Page 29
First Floor
Bennett Franklin File # BF 10898 Page 30
Second Floor
Bennett Franklin File # BF 10898 Page 31
PARKING
Parking Type and
Number of Spaces:
Type: Paved open surface parking and street
Spaces: 5+/-
Condition: average/good
OVERALL PROPERTY ANALYSIS
Design & Functional
Utility:
The subject property is considered to have fair overall utility due to
the layout and buildout of the improvements (multi-story building
with partially below grade space, no interior buildout, etc.).
Deferred Maintenance: The property appears to have received extensive updates and
maintenance in the recent past.
Capital Improvements: It is reported that the prospective owners will slightly reconfigure
the interior layout in areas and install interior finishes to
accommodate their intended use of the property as a community
space ('Resilience Center').
Overall Property
Comments:
The subject property is considered to be in an average/good location
with improvements that are in average/good overall condition and
the property is considered to have overall fair utility due to the
layout and buildout of the improvements.
Assessment and Taxes
Taxing Authority Northampton
Assessment Year 2022
Real Estate Assessment and Taxes
Tax ID Land Improvements Other Total City
Rate
Taxes
Map 31D, Lot 98 $264,200 $401,200 $0 $665,400 $17.89 $11,904
Totals $264,200 $401,200 $0 $665,400 $11,904
Comments
There have been nominal changes to the tax rate and assessments in the recent past. It is likely
that the assessed value of the subject property will increase if the interior of the building is
finished; to project a building assessment for the subject property we reviewed comparable
assessment records of the Northampton Assessor and have found that comparable properties in
the CBD are assessed at values in the range of $75 to $80 per square foot. As such, we have
projected a building assessment of $1,123,750 ($77.50 per SF times 14,500 SF) for the subject
building assuming the interior is finished / builtout for commercial use. Adding the projected
building assessment to the assessed land value ($264,200), results in a projected total assessed
value of $1,387,950; multiplying the real estate tax rate of $17.89 by the projected assessed value
results in a projected real estate tax burden of $24,830.43 assuming the property's interior is
finished for commercial use and the property is assessed and taxed at market.
Bennett Franklin File # BF 10898 Page 32
Highest and Best Use
Highest and best use may be defined as
the reasonably probable and legal use of vacant land or improved property, which is
physically possible, appropriately supported, financially feasible, and that results in the
highest value.
1. Legally Permissible: What uses are permitted by zoning and other legal restrictions?
2. Physically Possible: To what use is the site physically adaptable?
3. Financially Feasible: Which possible and permissible use will produce any net return to
the owner of the site?
4. Maximally Productive. Among the feasible uses which use will produce the highest net
return, (i.e., the highest present worth)?
Highest and Best Use of the Site
Considering the land as vacant there are a few development options for the site due to the size,
location, and zoning of the property. The neighborhood is improved with a mix of institutional,
local retail / service providers, mixed use properties, multi-family homes, condominiums
(commercial and residential), and municipal uses. The site is considered to have average
accessibility and visibility for use in a commercial capacity.
Research of the market for data relating to vacant land uses similar to the subject reveals that
sites that have average characteristics will demand values as vacant land and of improved
properties that are at the higher end of the market range or between $750,000 and $1,500,000+
per useable acre. There have been many instances in the past in Northampton where properties
like the subject property ‘as vacant’ were purchased to be improved with multi-family residential
uses (typically condominium units that are in some instances held as rentals and in other
instances sold off based on market demand). In our opinion, based on the characteristics of the
subject property and the most recent development activity in the area and along with the demand
for housing in the area, it is our opinion that the HBU as vacant is for development with
residential improvements at the highest possible density allowed by zoning.
Highest and Best Use as Improved
The subject property is improved with building and site improvements that are considered to be
in overall Average/Good condition and have been extensively remodeled toward a commercial
use; the improvements are approximately 90%+/- remodeled and only lacking interior buildout
and finishes. Based on our research and analysis, along with the current market conditions and
demand in the area for all of the potential types and uses that would be considered at the subject
property, we feel the HBU as improved is to finish the interior buildout for use as commercial
space (office, retail, or a combination thereof). The subject property has a layout that can
accommodate an entertainment venue and restaurant/bar use or potentially with little interior
reconfiguration it could accommodate more of a general retail / office use; we considered the
potential of conversion to residential or a mixed use retail / residential use, but feel this type of
conversion would prove more costly than the increase in value that would result at the property.
Bennett Franklin File # BF 10898 Page 33
Market Analysis
Over the past 12+/- months market conditions have remained relatively stable, following a spike
in uncertainty around the onset of the COVID – 19 pandemic when many, if not most, businesses
were forced to temporarily close due to restrictions put in place by political leaders and health
officials trying to stop the spread of Covid-19. Although some business have not reopened or
permanently closed and others have adapted to the ‘new normal’ with more remote employee
working or other changes to ‘typical’ business plans, the market data we reviewed indicates that
market conditions have been somewhat stable over the past 12+/- to 18+/- months with some
sectors showing signs of improvement beyond those that existed prior to the Pandemic (i.e.
multi-family market, single tenant net-leased, warehouse, etc.).
The general office market has shown less signs of improvement as many businesses are now
seeing more employees working remotely, the overall demand for office space has yet to
rebound in a similar manner as other sectors of the commercial real estate market. However, we
have uncovered some comparable sales data that indicates there have been sales of comparable
properties in the market area that indicate per square foot sale prices in the range of $25+/- to
$100+. Although the overall volume of comparable sales activity has not returned to the level
that existing prior to the Pandemic, the sale prices of those that have sold are similar to and in
some instances superior to the those that existed prior to the on-set of the Pandemic. Our
conversations with buyers, owners, and brokers of similar properties indicated that many of the
sales that have occurred are associated with owner – occupants that were once tenants in other
properties and they are seeking ‘autonomy’ in the event of another wave of the Pandemic.
Others were companies that previously rented or leased larger spaces and following retirements
and / or downsizing are now looking for smaller spaces and have purchased properties rather
than leasing, again, in an effort to have more control over their property in the event of another
‘shut-down’. Yet in other instances, some are associated with net leased properties and mixed
use properties that are in locations that are deemed to be ‘stable’ investment markets that appear
to have been less impacted by the effects and changes of the market.
There have been very few recently completed construction projects concerning similar use
properties in the subject property market area and the region. The majority of similar use
properties that compete with the subject are in locations with similar / somewhat similar
neighborhood characteristics. The existing stock of these types of properties has been able to
continue to provide the needed space for a multitude of users; however, there have been some
properties that have been purchased and subsequently updated / remodeled prior to the owners
taking occupancy; there have been some instances in the market area of new construction, but for
the most part, these projects are associated with net leased medical office space or retail use
space or a combination thereof that are preleased to a tenant or tenants at rates and terms that
offsets or outweighs the cost of construction.
Considering the subject’s location, it is adequately suited for a commercial use. The location is
good, and it is our opinion that the subject has average to average/good marketability compared
to other similar properties in the area due to its location, condition (amount of renovations
completed), and potential uses.
Bennett Franklin File # BF 10898 Page 34
There have been sales of similar / somewhat similar properties in similar locations in the market
area; the properties that have sold in the area that we feel are most similar / somewhat
comparable to the subject property have indicated prices ranging from $190+/- to $250+/- per
square foot. Rental rates at commercial use properties in similar locations as the subject are
typically in the range of $15.00+/- to $25.00+/- per square foot on varying rental terms (i.e.,
NNN, Net of Utilities, Modified Gross, or Gross, etc.). The amount of rent that can be
demanded typically depends on the location, condition, utility, land area, building area / rental
space size, etc. of the property. Obviously, properties with superior characteristics will typically
demand higher sale prices and / or rental rates than properties that have inferior characteristics.
In addition, rental terms will typically influence the rates that are charged at properties with
tenants paying lower ‘base’ rental rates in NNN, net of utilities, or modified gross agreements
due to their paying additional operating expenses associated with the property (i.e., utilities,
some CAM, real estate taxes, insurance, etc.). Conversely, tenants who occupy spaces on gross
terms will typically pay higher ‘base’ rates for their spaces as the property expenses are included
in the ‘base’ rent. In regard to size of the units, it is commonplace for smaller spaces to indicate
higher rental rates than larger spaces with most all other variables being similar due to the
Economies of Scale Principle.
The properties that have sold most recently include an array of ‘buyers’; regardless of whether
being purchased for partial owner occupancy or as an investment, the per square foot sale prices
indicated most recently equate to implied capitalization rates in the range of 5%+/- to 8%+/-; in
most instances in the marketplace the comparable properties that have most recently sold are
either purchased for owner occupancy and / or partial owner occupancy or they have occurred in
‘private deals’ with full income and expense data being unavailable, so, calculating ‘actual’
capitalization rates proves difficult. However, if market rental rates, vacancy rate projections,
market expense, and market-based lending criteria are projected in a similar manner that we have
done for the subject property, ‘implied’ capitalization rates in the range of 5% to 8%+/- are
apparent.
Based on our research, there is adequate demand for the subject property at this location. Similar
properties that do become available for sale tend to experience marketing periods of 6 to 18
months.
Exposure Period and Marketing Time
We have considered the supply of similar properties in the region and we have discussed
marketing times for similar properties with real estate brokers and investors. Additionally, we
have investigated the marketing times for specific comparable properties that we are familiar
with. Our opinion of value for the subject property is based on a number of factors that include
its location and utility. Our opinion of value assumes that the subject property would have been
exposed to the market for approximately 6-18 months and is based upon market conditions and
sales data which occurred prior to the effective date of appraisal. Properties that are offered at
unreasonable pricing levels will most likely remain on the market for extended periods of time.
Based on our understanding of the market and our due diligence effort, it is our opinion that if
the subject property were offered for sale at a price near to our appraised value, the marketing
period would be approximately 6-18 months.
Bennett Franklin File # BF 10898 Page 35
Valuation Methodology
Three basic approaches may be used to arrive at an estimate of market value. They are:
1. The Cost Approach
2. The Income Approach
3. The Sales Comparison Approach
Cost Approach
The Cost Approach provides an estimate of the land as vacant combined with the depreciated
cost of the site and building improvements.
Income Approach
The Income Approach converts the anticipated flow of future benefits (income) to a present
value estimate through a capitalization and or a discounting process.
Sales Comparison Approach
The Sales Comparison Approach compares sales of similar properties with the subject property.
Each comparable sale is adjusted for its inferior or superior characteristics. The values derived
from the adjusted comparable sales form a range of value for the subject. By process of
correlation and analysis, a final indicated value is derived.
Final Reconciliation
The appraisal process concludes with the Final Reconciliation of the values derived from the
approaches applied for a single estimate of market value. Different properties require different
means of analysis and lend themselves to one approach over the others.
Analyses Applied
A cost analysis was considered and was developed because despite the actual age of the 'bones'
of the improvements, the subject property has been extensively remodeled and will be valued as
if in good condition with the assumption in place that the interior buildout has been completed;
in addition, the improvements are somewhat unique, which makes acquiring truly comparable
sales and rental data somewhat scarce. As such, we have included the cost approach to assist in
developing our opinion of value for the subject property.
A sales comparison analysis was considered and was developed because there is adequate
comparable data from the market that we uncovered to assist in developing an opinion of value
for the subject property via this approach; although the comparable sales differ somewhat in
buildout, layout, and / or use, we feel the properties do lend support to our opinion of value for
the subject property.
An income analysis was considered and was developed because in some instances properties
like the subject are owned as investments and leased to a tenant on a long term lease and held as
an income producing asset; buyers of this property type will often correlate the value of the
property with the amount of income it generates through the term of the lease.
Bennett Franklin File # BF 10898 Page 36
Cost Approach to Value (As Is)
In order for the Cost Approach to produce a meaningful result, it is necessary to separately
estimate the value of the land as vacant as well as the depreciated value of the improvements.
Application of the accrued depreciation to the reproduction or replacement cost new, plus the
value of the land as vacant will result in a value indication that will allow us to develop a final
estimate of market value.
Land Value (As Vacant)
As a value of the land, as vacant, is needed to determine a value estimate via the Cost Approach,
we reviewed market data to determine our opinion of value for the subject as vacant. It is
necessary to research sales of similar use land in the subject’s market area. In the valuation of
vacant land similar to the subject property, the regional market dictates that the value of a
property such as the subject is determined based on the cost/value per acre of land area. This
typically includes all usable land area excluding wetlands, steep slopes, etc. divided into the
verified sale price of the property.
We note that recorded sale prices may or may not represent the actual consideration paid, and as
such, it is our responsibility as appraisers to contact at least one of the parties involved in a sale
transaction to determine the circumstances of the sale. This allows us to accurately reflect any
adjustments to the recorded sale price such as real estate tax payments made by the buyer beyond
customary adjustments, extraordinary costs such as hazardous waste removal costs or demolition
expenses to the buyer or corporate or individual tax payments/adjustments that may be part of
the sale price. Other matters necessary to uncover include if personal property or good will is
part of the sale price consideration, or if the property was sold under adverse conditions. All of
these matters directly impact the per acre comparative unit of measurement and must be
addressed before comparisons of the sale(s) are made respective to the subject land.
We have researched three comparables for this analysis; these are documented on the following
pages followed by a location map and analysis grid. All sales have been researched through
numerous sources, inspected and verified by a party to the transaction.
Bennett Franklin File # BF 10898 Page 37
ID 8976 Date 7/2/2021
Address 107 Williams Street Price $466,000
City Northampton Price per Acre $1,792,308
State MA Financing Typical
Tax ID Map 32C, Lot 198 Property Rights Fee Simple
Grantor Arthur W. Sousa Days on Market --
Grantee 4 Aces Realty, LLC Verification Grantee and Appraisal
Legal Description Book 14170, Page 166
Acres 0.3 Topography Level
Land SF 11,326 Zoning URC-Commercial
Road Frontage 64 Flood Zone None
Shape Rectangular Encumbrance or None
Utilities Water, sewer, gas, Environmental Issues None
Comments
This property is situated on the westerly side of Williams Street in the southeasterly portion of the
Northampton, MA CBD. Williams Street is a secondary roadway through this portion of the City that
provides north – south travel through this portion of the city connecting with Hockanum Road with less
than 0.1 miles south of this property and connecting with Hancock Street within about a ¼ mile north of this
property. There are several other secondary roadways off of Williams Street in the neighborhood of this
property (Montview Avenue, Kary St, Holyoke Street, Isabella Street, and Eastern Avenue) that are
primarily improved with residential structures. This property is considered to be in an average overall
location.
At the time of the sale, this property was improved with a dilapidated single-family home that contained
approximately 950+/- square feet that was to be demolished ($33,000+/- cost) to allow for the site to be
redeveloped with an approximately 7,717 square foot, two and three-story, eight unit condominium property.
Each unit will contain between approximately 830 and 870 square feet that will be divided into a kitchen, a
living room, two-bedrooms, and one bathroom; the owners are reportedly planning on retaining ownership
of the units 'as completed' and renting them to multiple tenants. The provided budget indicates an
approximate total development cost of $2,841,429 (includes acquisition cost of $208,000 and demolition cost
of $33,000) to complete the proposed redevelopment of the property.
The effective sale price we noted includes the purchase price of $208,000 plus the demolition cost of $33,000
plus the soft cost (engineering and architectural costs) of $225,000 the owner indicated incurring. Our
effective sale price is intended to reflect the price the owner of the property paid for a cleared developable
site with engineering and architectural costs included. Thus, assuming these costs are included in the sale
price, the property would be considered to have average/good utility.
Land Comparable 1
Transaction
Site
Bennett Franklin File # BF 10898 Page 38
ID 6791 Date 3/17/2020
Address 10 Hawley Street Price $1,375,000
City Northampton Price per Acre $743,243
State MA Financing Typical
Tax ID 32A-171-001 Property Rights Fee Simple
Grantor The Roman Catholic Days on Market --
Grantee O'Connell Hawley, LLC Verification Rep of Grantee
Legal Description B13567, P55
Acres 1.9 Topography Level
Land SF 80,586 Zoning URC-Commercial
Road Frontage 346+/-Flood Zone None
Shape Irregular Encumbrance or None
Utilities Water, sewer, gas, Environmental Issues None
Site
Transaction
Comments
This property is located in the CBD portion of Northampton, MA a few hundred feet from State Route 9.
This area is moderately traveled and developed with a mix of commercial, retail, and multi-unit residential
uses (market rate and affordable apartment properties). This property is considered to be in an
average/good location.
The buyer of this site purchased the property with plans to raze the rectory, garage, and vacant church that
improved the property to allow for the construction of 30 townhouse style condominiums. The rectory and
garage have been demolished at a reported cost of approximately $115,000, but the application to demolish
the church has twice been denied and the developer is now seeking approvals to convert the church to a 10
unit condominium building. As such, if built out as now planned, which will prove more expensive than
demolishing the church and building new would have if allowed, there will be 33 condominium units.
This parcel is deemed to have average utility, as the owners were required to pay for architectural and
engineering in addition to the purchase price and demolition costs.
The price noted included approximately $115,000 in demolition and removal costs associated with the
rectory and and outbuildings.
Land Comparable 2
Bennett Franklin File # BF 10898 Page 39
ID 8438 Date 1/18/2019
Address 132 Northampton Road Price $1,182,000
City Amherst Price per Acre $1,343,182
State MA Financing Contract Financing
Tax ID Map 14C, Lot 8 Property Rights Fee Simple
Grantor Jeffrey M. Keedy and Mia Days on Market --
Grantee Valley Community Verification Buyer/Appraisal
Legal Description Book 13182, Page 330
#REF!
Acres 0.9 Topography Level
Land SF 38,333 Zoning R-G General Residence
Road Frontage 140+/-Flood Zone C
Shape Slightly Irregular Encumbrance or There are typical utility
Utilities Electric Company, Environmental Issues There are no known
Land Comparable 3
This property is situated along the southerly side of Northampton Road (SR 9) on the southwesterly
outskirts of the Amherst, MA CBD and abuts a portion of the Amherst College Campus (Lehrman Stadium
is located immediate south of this property). The neighborhood of this property is moderately / heavily to
heavily traveled and developed with a mix of property uses. Northampton Road is the primary roadway
through this portion of Amherst and provides access to and through the CBD of Amherst to the
east/northeast of this property and access to Hadley, Interstate 91, and Northampton to the west. Uses in
the neighborhood of this property include a number of smaller multi-family residential uses, some single
family homes, municipal uses, and institutional uses. The dominant use in the neighborhood is the Amherst
College Campus, a portion of which (Lehrman Stadium) is located immediately south of this property
location. In the westerly portion of the neighborhood, beginning primarily at / near the intersection of
University Drive and Northampton Road there is more of a commercial use presence with many local,
regional, and national retailers and service providers along with some larger apartment complexes that
include some older facilities and some of more recent construction. Overall, this property is considered to
be in an average/good location.
This property contains approximately 0.88 acres of land that was improved with an approximately 1,744
square foot single family home at the time of the sale; the buyers sought approvals and received them to
allow for the demolition of the improvements ($50,000) to allow for the site to be improved with a 2.5 story,
11,983 square foot building that will be divided into 28 studio apartment units and associated common area
and administrative staff space. The units will be leased to low income qualified tenants and was built at a
higher density than allowed by zoning (40b); the reported architectural and engineering costs associated
with this development were approximately $750,000.
Considering the characteristics of this property at the time of the sale, this property is considered to have
average/good utility (this is based on the effective sale price and what is included in the said sale price----
purchase price of $408,000, demolition cost of $50,000, and architectural and engineering cost of $725,000).
Comments
Site
Transaction
Bennett Franklin File # BF 10898 Page 40
Comparables Map
Analysis Grid
The above sales have been analyzed and compared with the subject property. We have
considered adjustments in the areas of:
Property Rights Sold
Financing
Conditions of Sale
Market Trends
Location
Physical Characteristics
The following sales comparison grid displays the subject property, the comparable sales, and the
adjustments applied.
Bennett Franklin File # BF 10898 Page 41
Address
City
State
Date
Price
Acres
Acre Unit Price
Property Rights
Fee
Simple 0.0%
Fee
Simple 0.0%Fee Simple 0.0%
Financing Typical 0.0%Typical 0.0%Typical 0.0%
Conditions of Sale Normal 0.0%Normal 0.0%Arm's Length 0.0%
Market Trends Through 1/21/2012 0.0%
Location
% Adjustment
$ Adjustment
Acres
% Adjustment
$ Adjustment
Utility
% Adjustment
$ Adjustment
Net Adjustments
Gross Adjustments
$929,054$1,881,923
5.0%25.0%
Adjusted Acre Unit Price $1,625,250
10.0%
5%5%
$1,477,500
-5%
10.0%
15.0%20.0%25.0%
Average
-$89,615 $0
0%-5%
AverageAverage/Good
20%
1.85
$148,649
0.33
$37,162
10%
Adjusted Acre Unit Price $1,792,308
Good Average
Fee Simple
0.0%
$743,243
0.0%
132 Northampton Road
1.85
Comp 2
$743,243
Transaction Adjustments
0.33
$0 $1,792,308
298 Main Street
Land Analysis Grid Comp 1
Adjusted Acre Unit Price $1,792,308
Cash
Northampton Northampton
MAMA
$743,243
1/21/2012
Conventional
107 Williams Street 10 Hawley Street
Northampton
Comp 3
3/17/20207/2/2021
$1,375,000
Amherst
$1,343,182
0.880.26
1/18/2019
$466,000 $1,182,000
MAMA
Average/Good
10%
$0 $147,750
Average/Good
$73,875$179,231
0.26
0%
0.88
$1,343,182
-$73,875
Average/Good
$0
Date of Sale
In analyzing market conditions in this appraisal assignment, we have applied the best available
means to measure the effect of changes in the market. During the 12 to 24+/- months leading up
to March 2020 market conditions had been rather stable. However, following several months of
uncertainty after the on-set of the COVID – 19 Pandemic, our research indicates market
conditions steadily improved and rebounded to levels that equal or exceed those that existed
prior to the on-set of the Pandemic. As such, we have included an upward adjustment for Sale 3,
which occurred during a time period in which our research indicates market conditions were not
as favorable overall as those that have existed more recently. Sales 1 and 2 have been rated
similar to the subject property and no adjustments have been included for these two sales.
Property Rights Conveyed
We are appraising the fee simple interest in the subject property. The buyers purchased the fee
simple interest to each sale since the land was either vacant or unencumbered by long-term
leases, which is similar to the subject property ‘as vacant’. Therefore, the sales were rated
similar to the subject and no adjustments were applied to the sales for this standard.
Bennett Franklin File # BF 10898 Page 42
Financing
Each of the comparable sales had typical market rate financing. As the financing of each sale
was considered to be at market rates no adjustment is required to any of the sales for this element
of comparison.
Sale Conditions
The comparable sales were properly exposed to the market and they did not evidence unusual
sale adjustments or conditions. As such, the sales are rated similar to the subject for this element
of comparison and no adjustments are necessary.
Land Sale Comparison
Comparable Sales 1 and 2 are located in less heavily traveled and visible locations than the
subject property. Thus, these properties have been rated inferior to the subject property in regard
to location. Sale 3 is located in a heavily traveled and visible location like the subject property,
but we feel the CBD location of the subject property warrants an overall inferior location rating
for this property and therefore, we have made an upward adjustment to this sale.
The subject property contains approximately 0.33 acres of usable land area. Comparable Sale 1
has a similar land area as the subject property. Comparable Sales 2 and 3 have larger land areas
than the subject property, which is a inferior characteristic based on the Economies of Scale
Principle. This theory is based on the premise that when a product (in this case real property)
with a larger number of units (acres of land) is purchased/sold a lower / inferior per unit price
typically results compared to the per unit value indicated by a purchase/sale of a product with a
smaller number of units of the same product if all other variables are similar. Therefore, we have
made corresponding upward adjustments to both Sale 2 and Sale 3.
The subject property is considered to have overall average utility due to characteristics of the site
‘as vacant’, which is overall similar to comparable Sale 2, which was unapproved for
development at the time of the sale and / or the buyer sought and paid for approvals in addition
to the purchase of the property. Sale 1’s and Sale 3’s purchase prices include the soft costs and
engineer costs associated with the properties’ respective developments, so these sales have been
rated superior to the subject property and we have made downward adjustments to these sales.
Land Value Conclusion
The comparable sales indicate adjusted per acre values of $1,881,923, $929,054, and $1,625,250,
respectively, with an average of $1,478,742. All of the value indications have been considered,
and in the final analysis, we have projected that the subject property would be able to demand a
per acre value at or near the adjusted per acre value indicated by Sale 1 ($1,880,000+/- per acre)
as this sale is deemed to be overall most similar to the subject property. In our opinion the
subject property would likely demand a per acre value “as vacant” of $1,880,000.
Bennett Franklin File # BF 10898 Page 43
We have outlined our opinion of value below:
“As Vacant” Market Value
Indicated Value per Acre: $1,880,000
Subject Size: 0.33
Indicated Value: $628,394
Rounded: $630,000
Six Hundred Thirty Thousand Dollars
Valuation of the Improvements
Valuation of the improvements has been estimated on the basis of replacement costs. To
estimate the costs of construction and determine the cost of replacing the existing improvements,
we have consulted with and reviewed a number of sources, including local contractors as well as
information we have on file regarding the construction of similar buildings and improvements
and we reviewed information from national data sources (i.e. Marshall and Swift).
Building
Our research indicates that construction costs for commercial use improvements similar to those
at the subject property range from $225+/- to $275+/- per square foot of building area depending
on the amount of masonry work, size of the building, level of interior buildout, special
mechanical systems, etc. In our analysis, we have projected a per square foot cost at the middle
of the noted range ($250) due to the anticipated buildout and construction style of the
improvements, which equates to a projected expense of $3,625,000; we note that the projected
per square foot cost estimate we relied upon is from Marshall and Swift based on our description
of the improvements at the subject property with alternative variations of interior finishes / uses.
We completed multiple scenarios that include differing potential building occupancies (i.e., live
entertainment theater and government offices) and found that average to average/good quality
buildings with general characteristics similar to those that exist at the subject property with either
a live entertainment theater buildout or a government office buildout both indicated per square
foot cost estimates of $250+/- per square foot.
Site Improvements
Based on our inspection and review of mapping software, it appears the entire site (14,560+/- SF
of land) has some form of improvement. Site costs include grading, drainage, underground
utilities, asphalt paving, lined and lighted parking, fencing and all landscaping, etc. Site costs for
properties such as the subject will generally range from $5.00 to $10.00+ per square foot
depending upon site size, topography, soils, conservation requirements, etc. We have projected
an estimate of $109,200 or $7.50 per square foot of improved site area exclusive of soft costs.
Soft Costs
Soft costs for development/construction of the subject land and improvements include legal and
accounting, development fees, performance bond fee, general fees, insurance, architectural and
engineering fees, testing and inspection, municipal fees and permits, project administration,
interest expense, etc. These costs are usually based upon a percentage of all hard costs and vary
based upon the size, type and nature of the project. Soft costs at similar properties were
estimated by contractors and developers to range generally from 2% to 10% of all hard costs.
Bennett Franklin File # BF 10898 Page 44
Based upon estimates for soft costs rendered by developers of similar properties, and our
knowledge of these costs at similar properties we have estimated soft costs for the subject at
engineering at 4.0% of the building and site costs and architectural at 4.0% of building cost; both
of these estimates are in – line with actual estimates incurred by developers of similar properties
and are deemed reasonable. Permitting and legal costs have been projected at $20,000, which is
in-line with market costs incurred at comparable developments with which we are familiar. Our
total soft cost expense is projected at $315,000+/- for the development of the subject property or
a similar, comparable property, which we feel is reasonable and at market.
Entrepreneurial Incentive/Profit
Entrepreneurial Incentive/Profit is a line item typically included in the cost approach, which is
associated with the amount of profit that a developer would anticipate being able to demand on
the open market at the completion of the construction project. The incentive/profit that can be
demanded by an individual varies dependent on a number of factors, which include the amount
of development associated with a project, site selection, construction type, etc. with the most
notable factor being the demand for a particular property.
High profit can be anticipated for properties where there is a great demand for the finished
product in the investment community and/or the finished improvements will be able to generate
large amounts of revenue, which allow an entrepreneur to demand a higher profit (i.e. build to
suit nationally tenanted retail/commercial properties).
A lower amount of profit can be anticipated for properties where there is a smaller demand for
the finished product, a greater amount of existing competition within the market and/or the
product would not generate enough rental income to allow the entrepreneur to demand a high
profit (i.e. industrial buildings, general office buildings, multifamily properties, etc.).
It is preferred to “extract” profit amounts from sales that have occurred within the market that are
associated with comparable properties / similar investment properties; however, there are a few
factors that make this somewhat troublesome. First, build to suit or newly constructed properties
with similar characteristics as those of the proposed subject property improvements are typically
held by the developer / owner for extended periods of time following their completion; second,
obtaining actual construction costs associated with the development of build to suit
improvements is sometimes difficult making the determination of the “profit” or difference
between the sale price and costs of development hard to accurately determine. Lastly, there is a
dearth of comparable sales activity in the market area associated with newly constructed similar
properties that have recently sold. Regardless, based on some information we have been able to
uncover and other information we have on file associated with costs to construct similar
improvements as those that are projected for the subject property, we have been able to establish
a “typical” profit range that is sought and often realized by developers of such properties.
Following an analysis of the differences between the costs to construct properties and the sale
prices associated with those that sold recently after development, an incentive / profit range
between 5%+/- and 15%+/- of the total cost of the development are apparently being sought and
in many instances captured by developers / paid by investors above the cost of the development
for the completed investment product.
Bennett Franklin File # BF 10898 Page 45
In our analysis we have projected an incentive / developer's profit at 5.0% of construction costs;
this projected estimate is considered reasonable for the subject property. A rate from the lower
portion of the range is considered reasonable based on the values indicated for the subject
property in the following income approach and sales comparison approach to value considering
the projected costs associated with the development of the subject property.
Depreciation Analysis
Depreciation may be defined as any loss of value from any cause. There are three general areas
of depreciation: physical deterioration, functional obsolescence and external obsolescence.
Depreciation may be curable or incurable, the test being that money spent to cure the
depreciation be gained in value. If the depreciation costs more to fix than will be gained in
value, then the depreciation is considered incurable. Those factors affecting the value of this
property will be discussed in the following paragraphs.
The subject building are considered to have an effective age of 10 years due to the actual age of
the ‘bones’ of the improvements and their condition. The estimated physical life of the building
improvements is 50 years due to the quality and type of improvements. Thus, the building
improvements have been depreciated by 20%.
The subject site is considered to have an effective age of 15 years due to the actual age of the
improvements and their condition. The estimated physical life of the site improvements is 30
years due to the quality and type of improvements. Thus, the site improvements have been
depreciated by 50%.
The subject building and site improvements are not considered to suffer from functional
obsolescence as the building and site improvements appear to meet the demands of the market
for this type of property.
Depreciation Accrued to the Subject
Component Eff. Age Life Percent Amount
Physical Depreciation: Building 10 50 20%$827,267
Physical Depreciation: Site 15 30 50%$57,330
Functional Obsolescence Building …………………………………………………………………0%$0
External Obsolescence Building …………………………………………………………………0%$0
$884,597
$3,366,399
Total Depreciation
Depreciated Value of Improvements
Depreciation: Section 1 of 1
Applying the parameters previously defined, the cost approach is processed as follows on the
next page.
Bennett Franklin File # BF 10898 Page 46
Item Unit Type Cost Quantity Multiplier Total
Building Sq. Ft.$250.00 14,500 1.000 $3,625,000
Total Building Improvement Costs $3,625,000
$250.00
Item Unit Type Cost Quantity Total
Site Preparation & Improvements Sq. Ft.$7.50 14,560 $109,200
$109,200
$3,734,200
$257.53
Item Total
Engineering …………………………………………………………………4.0%$149,368
Architectural …………………………………………………………………4.0%$145,000
Permits & Legal ………………………………………………………………………………………………………..$20,000
Leasing ………………………………………………………………………………………………$0
Total Soft Costs $314,368
Insurable Value (Excludes Site Improvements, related Site Soft Costs and Developer's Profit)$3,935,000
$4,048,568
5.0%$202,428
$4,250,997
$293.17
Component Eff. Age Life Percent Amount
Physical Depreciation: Building 10 50 20%$827,267
Physical Depreciation: Site 15 30 50%$57,330
Functional Obsolescence Building …………………………………………………………………0%$0
External Obsolescence Building …………………………………………………………………0%$0
$884,597
$3,366,399
$232.17
Land Value ………………………………………………………………………………………$630,000
Other …………………………………………………………………………………$0
$3,996,399
$687,500
$3,308,899
$3,310,000
$228.28
Total Depreciation
% of Building Cost
Site Improvements
Total Site Improvement Costs
Percent Type
Soft Costs
Price per SF Gross Building Area
Price per SF Gross Building Area
% Bld. & Site Cost
Subtotal: Building & Site Costs
Depreciated Value of Improvements
Total Cost
Rounded
Cost Approach Value Indication
Land Value
Cost Per Square Foot Gross Building Area
Price per SF Gross Building Area
Building Improvements
Developer's Profit
Price per SF Gross Building Area
Subtotal: Building, Site & Soft Costs
Total Costs
Depreciation: Section 1 of 1
Buildout Deduction
*Buildout Deduction: This amount is associated with the projected $500,000 interior buildout cost, $125,000
elevator cost, and includes a 10% contingency / profit amount calculated off of the total projected buildout and
elevator costs.
Cost Approach to Value Conclusion
Based on the analysis provided, it is our opinion that the “as is” market value of the subject
property as of December 1, 2022 is:
“As Is” Market Value
Rounded: $3,310,000
Three Million Three Hundred Ten Thousand Dollars
Bennett Franklin File # BF 10898 Page 47
Sales Comparison Approach
For all types of real estate valued via the sales comparison approach, it is necessary to determine
the most correct element of comparison. In the valuation of similar properties, the regional
market dictates that the value of a property such as the subject is determined based on the
cost/value per square foot. This typically considers all usable interior building area divided into
the verified sale price. We note that the recorded sale price may or may not represent the actual
consideration paid, and as such, it is our responsibility to contact at least one of the parties
involved in a sale transaction to determine the circumstances of the sale. This allows us to
accurately reflect any adjustments to the recorded sale price such as real estate tax payments
made by the buyer beyond customary adjustments, extraordinary costs such as hazardous waste
removal costs to the buyer, corporate or individual tax payments/adjustments that may be part of
the sale price. Other matters necessary to uncover include if personal property or good will is
part of the sale price consideration, or if the property was sold under adverse conditions. All of
these matters directly impact the per square foot comparative unit of measurement. Based on the
foregoing, we have utilized the per square foot value of similar properties that have sold via
arms-length transactions to arrive at an opinion of value of the subject property.
Our due diligence effort included researching the Northampton area for sales data concerning the
most recent transfers of similar properties in the area to arrive at an opinion of value of the
subject property. The sales utilized were those properties which were considered to be most
similar to the subject property and were selected based on their comparability and similarity in
regard to critical characteristics such as date of sale, location, building area, condition of the
improvements, land area, and utility. The sales were compared to the subject to provide a per
square foot value for the subject property and they are outlined on the following pages.
Comparables
We have researched three comparables for this analysis; these are documented on the following
pages followed by a location map and analysis grid. All sales have been researched through
numerous sources, inspected and verified by a party to the transaction.
Bennett Franklin File # BF 10898 Page 48
ID 6670 Date 4/27/2021
Address 32 Masonic Street Price $1,990,000
City Northampton Price Per SF $236.88
State MA Transaction Type Closed Sale
Tax ID --Financing Conventional
Grantor Multiple Grantors Property Rights Fee Simple
Grantee 32 Masonic Street, LLC Days on Market --
Legal Description Book 14015, Page 263-293 Verification Listing Broker
Acres 0.4 Topography Level
Land SF 15,246 Zoning CB
Road Frontage 225+/-Flood Zone X
Shape Rectangular Encumbrance or Typical
Utilities Water, Sewer, Gas, Environmental Issues None Known
No. of Buildings 1 PGI $122,280
GBA 8,401 EGI $118,612
No. of Stories 3 Expense Ratio 33.98%
Year Built 1900 NOI $78,307
Ceiling Height --Cap Rate 3.94%
Condition Good Utility Average
Transaction
Comparable 1
This property is located on the corner of Masonic Street and Button Street approximately 100 hundred feet
north of the intersection of Main Street and Masonic Street in the CBD of Northampton, MA. Masonic
Street is a secondary roadway within the CBD of Northampton that is improved primarily with multi-story
mixed use properties. Main Street travels in a northeasterly/southwesterly-westerly direction through this
portion of Northampton and intersects with US Route 5 (Pleasant Street/King Street) in the easterly portion
of this neighborhood. Main Street turns to Bridge Street in the easterly portion of the CBD and allows
access to Interstate 91 at Interchange 19 approximately one mile northeast of this property. To the west of
this property, Main Street provides access to New South Street, State Street, West Street, and Elm Street,
which are other primary roadways that allow access to various points of Northampton. Overall, this
property is considered to be in an average/good location for a mixed use property.
The property is improved with a 3-story structure that contains approximately 8,401 square feet that is
divided into four commercial condominium units and three residential condominium units; reportedly the
commercial units consist of three office use units and one retail unit (lower level / basement unit) and the
apartment units consist of three one-bedroom units. It is reported that the property, most notably the
apartment units, had been recently extensively remodeled. The property was deemed to be in good overall
condition at the time of the sale.
Based on our inspection of this property preceding its sale, the improvements were considered to be in
average/good utility.
Based on the layout and buildout of the improvements at the time of the sale, this property was considered
to have average utility (mix of commercial use space and one bedroom apartment use space in a multi-story
mixed use building).
The buyers of this property purchased the 23 spot parking lot, the four commercial units, and two of the
apartment units on March 15, 2021 via six separate transactions with total consideration noted at $1,700,000.
Then on April 27, 2021 they purchased the remaining apartment unit for $290,000. Thus, the total purchase
price for this property is expressed at $1,990,000.
Site
Comments
Improvements & Financial Data
Bennett Franklin File # BF 10898 Page 49
ID 6737 Date 7/23/2021
Address 31 Trumbull Road Price $1,720,000
City Northampton Price Per SF $191.11
State MA Transaction Type Closed Sale
Tax ID Map 31B, Lot 149 Financing Market
Grantor TJS Properties, LLC Property Rights Fee Simple
Grantee Simple Abode, LLC Days on Market 22
Legal Description Book 14197, Page 58 Verification Broker/Appraisal
Acres 1.0 Topography Primarily Level
Land SF 41,818 Zoning URC (Urban Residential
Road Frontage 217+/-Flood Zone C
Shape Irregular Encumbrance or There are typical utility
Utilities Electric Company, Environmental Issues There are no known
No. of Buildings 2 PGI
GBA 9,000 EGI
No. of Stories --Expense Ratio
Year Built [1] 1900 [2]NOI
Ceiling Height 8+/-Cap Rate
Condition Average/Good Utility Average/Good
Improvements & Financial Data
This property is located on the corner of Trumbull Road and State Street in the northerly/northwesterly
portion of the CBD of Northampton, MA in close proximity to Smith College. Trumbull Road is a lightly to
lightly / moderately traveled roadway that provides access in an east – west direction through this
neighborhood. Trumbull Road originates at its intersection with King Street (US Route 5) approximately 250
yards east of this property and terminates at its intersection with Prospect Street approximately 100 yards
west of this property. State Street is a moderately traveled roadway that provides north-south travel
through this portion of Northampton; State Street provides access to Main Street in the western portion of
the “heart” of the Northampton CBD approximately 1/3rd of a mile south of this property location and
provides access to multiple secondary roadways in the northern portion of this neighborhood.
This property is improved with a 2.5-story structure that contains approximately 9,000 square feet of
building area. The building is presently divided into eleven commercial units that include a mix of eight
smaller, single room office use spaces (125+/- to 360+/- SF) and three larger office use spaces (1,000+/- to
2,245+/- SF) and two one-bedroom apartment units and one two-bedroom apartment unit. At the time of the
sale, with the exception of one of the single room office suites, the property was 100% occupied. The site is
improved with lawn areas, shrubs, walkways, trees, signage, a storage shed/garage, and an asphalt paved
parking lot that can accommodate 45+/- cars.
This property had been well maintained and was considered to be in average/good overall condition at the
time of the sale. Based on the layout and buildout of the improvements, we have deemed this property to
have average/good overall utility.
Comments
Comparable 2
Transaction
Site
Bennett Franklin File # BF 10898 Page 50
ID 6683 Date 6/21/2021
Address 208 Ashley Ave Price $4,285,000
City West Springfield Price Per SF $247.19
State MA Transaction Type Closed Sale
Tax ID 041-005-014 Financing Conventional
Grantor Lanere Holdings LLC Property Rights Fee Simple
Grantee AEI Net Lease Income Days on Market --
Legal Description Book 23949, Page 332 Verification Broker
Acres 3.5 Topography Level / Sloping
Land SF 154,202 Zoning Industrial
Road Frontage 232 Flood Zone None
Shape --Encumbrance or Tyipcal
Utilities W, S, G, E Environmental Issues None Known
No. of Buildings 1 PGI
GBA 17,335 EGI
No. of Stories 1 Expense Ratio
Year Built 1996 NOI
Ceiling Height --Cap Rate
Condition Good Utility Average/Good
Comparable 3
Transaction
Site
Comments
Improvements & Financial Data
This sale is located on the eastern side of Ashley Avenue in a heavily developed commercial area of West
Springfield. Located approximately a 1/4 mile off Riverdale Street / US Route 5 and within a 1/2 mile of
Interstate 91, the location provides average/good access and visibility for an office use tenant.
This sale is improved with a single story, 17,335 square foot medical office building. the building was
constructed in 1996 at which time it was a flex space building; it was converted to a full service medical
office facility in 1997 and again renovated in 2006. The property includes an extensive interior buildout and
is currently tenant occupied by Fresenius Medical Care and the Pioneer Valley Dialysis Center. The
property is subject to a net lease with the provider with numerous affiliated doctors appearing to operate
from the property on sub-leases. The building has a brick veneer exterior, a pitched asphalt shingled roof
and fixed framed windows. The interior includes an extensive number of private offices, exam rooms, break
rooms and conference rooms as well as common area waiting rooms and bathrooms. This property was in
good condition at the time of the sale with average / good utility based on the buildout and use.
Bennett Franklin File # BF 10898 Page 51
Analysis Grid
The previously outlined sales have been analyzed and compared with the subject property. The
below sales comparison grid displays the subject property, the comparables and the adjustments
applied.
Address
City
State
Date
Price
GBA
GBA Unit Price
Property Rights Fee Simple 0.0%Fee Simple 0.0%Leased Fee 0.0%
Financing Conventional 0.0%Market 0.0%Conventional 0.0%
Conditions of Sale Arms Length 0.0%Arm's Length 0.0%Arms Length 0.0%
Market Trends Through 12/1/2022 0.0%
Location
% Adjustment
$ Adjustment
Acres
% Adjustment
$ Adjustment
GBA
% Adjustment
$ Adjustment
Condition
% Adjustment
$ Adjustment
Utility
% Adjustment
$ Adjustment
Net Adjustments
Gross
Analysis Grid
15.0%
*Average
15%
Average/Good
$0.00
Average/Good
$12.36
-5%
-$11.84
Adjusted GBA Unit Price
0.0%
Average/Good Average/Good
$37.08$11.84 $28.67
Good
Average
$47.78
-5%
25%
-5%
-$9.56
9,000
-$9.56
17,335
-10%
$37.08
Average/Good
8,401
*Very Good
$35.53
0%
-$24.72
15%
Good
5%
15%
$247.19
17,335
Adjusted GBA Unit Price
Fee Simple
$0.00
$236.88 $191.11
$191.11
Northampton
$1,720,000
6/21/20217/23/2021
208 Ashley Ave
Comp 3
31 Trumbull Road
Comp 1 Comp 2
MA MA
West Springfield
298 Main Street
Northampton
MAMA
32 Masonic
StreetNorthampton
4/27/2021
Conventional
Cash
Transaction Adjustments
14,500
0.0%
15%5%
Good
Adjusted GBA Unit Price
Good
$236.88 $191.11
-$9.56 -$24.72
0.33 0.35 0.96 3.54
$0.00
0%-5%
14,500
25.0%
$272.41
55.0%
25.0%
$284.27$238.89
55.0%
15.0%
12/1/2022
$0 $4,285,000$1,990,000
-10%
$236.88
$247.19
0.0%
$247.19
8,401 9,000
*These ratings for the subject property are based on the extraordinary assumption that the
improvements are finished / builtout for commercial use purposes.
Bennett Franklin File # BF 10898 Page 52
Comparables Map
Subject property call out blocks Sale 1 and Sale 2 Call Outs
Analysis of Comparable Sales
The comparable sales represent the most similar properties that have sold in the general area in
the last few years. As indicated earlier, the unit of comparison that we are using to determine our
opinion of market value for the subject is the per square foot value. This index is typically the
value indicator used for properties such as the subject. Each sale has differences in its specific
characteristics that need to be analyzed and compared to the subject so that we can arrive at a
final opinion of value via our Sales Comparison Approach. The characteristics that we identified
and compared to the subject were the sale date, property rights conveyed, terms of financing,
conditions of sale, location, land area, building area, condition of the improvements and utility.
The differences are rated in comparison to the subject based on our opinion of each comparable
sale’s known characteristics. For purposes of this appraisal assignment, the differences are rated
as similar, inferior or superior.
Date of Sale
In analyzing market conditions in this appraisal assignment, we have applied the best available
means to measure the effect of changes in the market. Based on our research, which included
researching comparable sales data, current listings, conversations with market participants, etc.,
we have seen that over the past 12 to 18+/- months that market conditions as they relate to the
subject property and the comparable sales has remained relatively stable. As such, we have not
made any adjustments to the comparable sales.
Bennett Franklin File # BF 10898 Page 53
Property Rights Appraised
We are appraising the Fee Simple interest in the subject property with rates and terms deemed to
be at market. We are appraising the Fee Simple interest in the subject property. The buyers of
comparable sales purchased either the fee simple interest in these properties, as there were
reportedly no long term leases encumbering the properties, which is similar to the subject
property or the leased fee interest in the properties with rates and terms deemed to be at market;
in either situation, no adjustments are deemed necessary.
Financing
The financing of each sale was considered to be at market rates and no adjustment is required to
any of the sales for this element of comparison.
Conditions of Sale
Each sale was properly exposed to the market and none of the transfers evidenced unusual sale
adjustments or conditions. Thus, the Sales were not adjusted for this element of comparison.
Sale 1 is located at 32 Masonic Street, Northampton, MA on
a secondary roadway in the CBD of Northampton, MA.
Although this property is located in the greater
neighborhood of the subject property, we have made a slight
upward adjustment to this sale due to its inferior visibility
compared to the subject property.
This property has a similar land area as the subject property,
so we have made no adjustment for this element of
comparison. This sale has a smaller/superior building area compared to the subject property
which is based on the Economies of Scale Principle. This theory is based on the premise that
when a product (in this case real property) with a smaller number of units (square feet) is
purchased/sold a higher / superior per unit price typically results compared to the per unit value
indicated by a purchase/sale of a product with a larger number of units of the same product if all
other variables are similar.
This property was considered to be in Good condition at the time of the sale, which is inferior to
that of the subject property. This property was considered to have Average utility due to the
overall layout and build out of the improvements, which is similar to the subject; both this
property and the subject property have multi-story layouts with finished lower level space
included in their gross building area totals, so despite some inferior finish / use differences, we
have made no adjustment to this sale.
Sale 1 is considered superior to the subject with regard to building area, inferior in regard to
location and condition and similar in all other comparable fields. We feel the superior building
area characteristic of this sale is outweighed by the inferior location and condition
characteristics. Thus, this sale is considered overall inferior to the subject property and a value
index adjustment of 15.0% is required.
Bennett Franklin File # BF 10898 Page 54
Sale 2 is located at 31 Trumbull Road, Northampton, MA; this
property is located in a less heavily traveled and developed
area in the periphery of the Northampton CBD. Thus, this
property is considered to be in an inferior location than the
subject property.
This property has a larger land area with more available
parking than the subject property, which is a superior
characteristic. This sale has a smaller / superior building area
than the subject property, which is based on the Economies of Scale Principle. This property
was considered to be in Average/Good condition at the time of the sale, which is inferior to the
subject property. The utility of this sale is considered to be Average/Good due to this sale’s
layout and the build out of the improvements, which is superior to the subject property; this
property has a multi-story layout like the subject property, but as all of the building area is above
grade space, we have made a downward adjustment to this sale.
Sale 2 is considered superior to the subject with regard to land area, building area, and utility,
inferior in regard to location and condition and similar in all other comparable fields. We feel
the superior land area, building area, and utility characteristics of this sale are outweighed by the
inferior location and condition characteristics. As such, this sale is considered to be overall
inferior to the subject property and a value index adjustment of 25.0% is warranted.
Sale 3 is located at 208 Ashley Ave, West Springfield, MA.
This property is located in a less heavily traveled and
developed area than the subject property where properties
typically demand inferior rental rates and / or sale prices than
similar properties in the neighborhood of the subject property.
As such, this property is considered to be in an inferior
location than the subject property.
This property has a larger land area than the subject property, so this sale is deemed superior to
the subject property with regard to land area. This sale has a larger/inferior building area than
the subject property, which is based on the Economies of Scale Principle.
This property was considered to be in Good condition at the time of the sale, which is inferior to
the subject property. The utility of this sale is considered to be Average/Good due to this sale’s
layout and the build out of the improvements, which is deemed overall superior to the subject
property (this property has a single story office / medical office buildout, which is superior to the
subject property’s multi-story with finished lower level space included in the gross building area
layout-----we made a larger downward adjustment to this sale than Sale 2 as this Sale’s layout
and buildout is superior to Sale 2’s layout and buildout despite both being rated ‘average/good’).
Bennett Franklin File # BF 10898 Page 55
Sale 3 is considered superior to the subject with regard to land area and utility, inferior in regard
to location, building area, and condition and similar in all other comparable fields. We feel the
inferior location, building area, and condition characteristic of this sale outweigh the superior
land area and utility characteristics. As such, this sale is considered overall inferior to the subject
property and a value index adjustment of 15.0% has been applied to this sale.
Conclusion
The sales data presented indicates unadjusted price per square foot values of $236.88, $191.11,
and $247.19, respectively. The adjusted values of the comparable properties range from $238.89
to $284.27 and the average is $265.19. All of the value indications have been considered and in
our final analysis we relied upon the adjusted per square foot value indicated by Sale 1 ($272.41
per SF) as this sale required the least amounts of adjustments and is therefore considered overall
most similar to the subject property. Thus, we have reconciled a per square foot value of
$272.00. The “as is” market value of the subject property is calculated as follows:
As Is Market Value
Indicated Value per Square Foot: $272.00
Subject Size: 14,500 Square Feet
Indicated Value: $3,944,000
*Deduction: $ 687,500
Indicated Value: $3,256,500
Rounded: $3,260,000
Three Million Two Hundred Sixty Thousand Dollars
*Buildout Deduction: This amount is associated with the projected $500,000 interior buildout cost, $125,000
elevator cost, and includes a 10% contingency / profit amount calculated off of the total projected buildout and
elevator costs.
Bennett Franklin File # BF 10898 Page 56
Income Approach (As Is)
It is our opinion that the typical purchaser of the subject would be either an owner occupant who
would occupy the property or a local or regional investor who would look to lease the property to
a tenant and operate the property as an investment. As noted in our Market Analysis section of
this report there is average to average/good demand for rental space similar to the subject in the
Northampton area at this time. Based on the current market conditions and historical income and
expense information from comparable properties as well as conversations with investors in
properties similar to the subject they would anticipate the subject property attracting a long-term
tenant that would provide stable income and expenses into the future for the property. As such,
it is noted that the typical method of analysis of the subject property would be via direct
capitalization. We feel that direct capitalization is the most appropriate method to use to
estimate the value of the property.
Direct Capitalization Analysis
The steps involved in capitalizing the subject's net operating income are as follows:
• Develop the subject's Potential Gross Income (PGI) through analysis of the subject’s
actual historic income and an analysis of competitive current market income rates.
• Estimate and deduct vacancy and collection losses to develop the Effective Gross Income
(EGI).
• Develop and subtract operating expenses to derive the Net Operating Income (NOI).
• Develop the appropriate capitalization rate (Ro).
• Divide the net operating income by the capitalization rate for an estimate of value
through the income approach.
Rent Roll
The following rent roll details the “as is” occupancy and rent status of the subject space.
Rent Roll Suite No. of % of Contract Contract Asking $Market Cntr./Ask
Tenant/Unit Name No.Space Type Units SF Total Rent*Rent/SF Rent/SF Rent Variance
Commercial 1 Commercial 1 14,500 100.0%$0 $0.00 $22.50 NA
Totals 1 14,500 100.0%$0 #DIV/0!
Leased 0 0 0.0%$0 #DIV/0!Rent/SF/Year
Vacant 1 14,500 100.0%
*Contract Rent = Annualized rent as of appraisal date Rent per SF for occupied space
Rent Roll
Bennett Franklin File # BF 10898 Page 57
Comparable Rents
In an effort to determine market rental rates for office use space we have researched comparable
market data and those most similar to the subject are noted below.
Government / Municipal Use Spaces
Location Size (SF) Rent/SF Lease Terms / Remarks
195 Russell Street, Hadley
7,000+/- $35+/- Gross for office use space in an
approximately 40,000 square foot multi-
story and multi-tenanted office and
commercial use building. Includes State
rents on Gross terms at $35 / SF.
Confidential, Northampton 3,000+/- $33+/- Gross lease for second floor office use
space occupied by a municipal entity;
space was extensively renovated / built
out by the owner. 10 year lease with
annual increases during the term of the
lease.
106 Main Street, Greenfield 10,423+/- $21.75+/- Gross lease for approximately 10,423
square feet in a one and two story
50,000+ square foot building. Space
was renovated by the owner
($140,000+/-) prior to the agency /
tenant taking occupancy.
160 North Street, Pittsfield 55,000+/- $35-$40 Gross leases to three government
agencies in a multi-story 55,000+/-
square foot building.
State Road, Belchertown 30,000+/- $40+/- Gross lease to a government agency in a
built to suit building (2015).
Confidential, Northampton 18,800+/- $39+/- Gross lease to a government / municipal
entity in a multi-story mixed use
commercial building.
The comparable office / service provider use spaces that are leased to government / municipal
agencies in the area and region (similar to the likely tenant at the subject property), which range
in size from 3,000+/- to 55,000+/- square feet, indicate a rental range of $22+/- to $40+/- per
square foot on gross terms with all but one comparable indicating a per square foot rate in the
range of $33 to $40 per square foot. Based on the information provided by the prospective
owner of the property they have submitted an offer to purchase or lease the subject property; the
offer to lease the property ‘as is’ is reportedly for $235,000 on a NNN basis or $16.21+/- per
square foot. It is our understanding that in addition to paying this rent, the tenant would be
required to pay for buildout at the subject property, which is estimated at $675,000. As the
comparable rental data we uncovered is associated with spaces that were ‘turn-key’ or builtout
for the tenant by the owner of the property, we have projected our market rent for the subject
property assuming the interior is builtout / finished by the owner of the property.
Bennett Franklin File # BF 10898 Page 58
In our opinion, based on the comparable market data and our projected buildout and leasing
scenario for the subject property (i.e., owner would complete the interior buildout and finishes
and the tenant would lease the space on NNN terms), we have projected a market rental rate in
the range of $20 to $25 per square foot. All but one of the comparable properties indicate a
rental rate in the range of $33 to $40 per square foot on full service gross rental terms; it is our
experience that owners of comparable properties that are leased on full service gross rental terms
will incur operating expenses in the range of $10+/- to $15+/- per square foot as they are
responsible for all expenses associated with this type of lease (i.e. real estate taxes, insurance,
utilities, repairs/maintenance, janitorial, maintenance contracts, etc.). With these ownership
expenses directly impacting the rental rates being charged at these properties, we felt it most
appropriate to adjust the comparable rental rates downward to account for the projected NNN
rental terms for the subject property. Therefore, if the comparable properties’ rental rates are
adjusted downward ($10-$15+/- per SF) to account for the difference in rental terms between the
comparable properties and those projected for the subject property, the resultant range is $12+/-
to $25+/- per square foot with most in the range of $20+/- $25+/- per square foot. Based on our
analysis of the comparable data as it relates to the subject property, we feel a market rental rate
in the range of $20 to $25 per square foot on NNN terms is market for the subject property; we
note that our projected rate is based on the extraordinary assumption that the owner would incur
the projected costs to complete the interior buildout and finishes at the property for the tenant’s
occupancy and use.
We have outlined our projected gross income for the subject property in the following table:
Potential Gross Rent Market Market
Vacant Space SF Units Rent Rent/SF
Commercial 14,500 1 $326,250 $22.50
Vacant Space Totals 14,500 1 $326,250 $22.50
Potential Gross Income - Vacant Space
Vacancy and Collection Loss
All leased properties are subject to potential loss of income due to vacancy or from credit factors
such as non-payment or tenant/landlord disputes and a property such as the subject would be no
exception; thus, an average annual vacancy rate needs to be applied to the subject’s income.
Despite the current occupancy / vacancy at the subject property, it is necessary to project a
vacancy and credit loss factor to account for potential future periods of vacancy, tenant –
landlord disputes, etc.
The income stream of the subject property has been projected based on market rental rates. The
overall market for comparable space in the region is average to average/good and most
comparable properties in the area indicate little turnover as it is commonplace for tenants at this
property type to have initial lease terms in the range of 5 to 10 years with multiple option
periods; in addition, relocation costs and fit-up/buildout costs typically hinder tenants desire to
move to a new location once they are established at a location that accommodates their needs.
Bennett Franklin File # BF 10898 Page 59
Vacancy and credit loss factors at comparable properties in the market area and region typically
fluctuate between 0% and 5% over a typical 5 to 10 year holding period with most properties
indicating long-term periods of 100% occupancy once a tenant is procured; however, when and
if a property becomes available there is typically some type of marketing period required for the
property to attract a new tenant at the projected market rates and terms.
In our opinion considering the characteristics of the subject property, along with our projected
rental rates and terms, we feel a buyer of the ‘as is’ subject property would feel a vacancy and
collection loss rate at 5.00% for the subject property is reasonable. This anticipated vacancy rate
is intended to account for future periods of vacancy, an owner’s inability to achieve the projected
rental rates and terms, tenant-landlord disputes regarding pass-through reimbursements, etc.
Expenses
The proper analysis of expenses reflects typical expenditures experienced at similar properties
presuming prudent management. As such, it is necessary to project expenses just as we have
projected income and vacancy/credit loss levels. Rental terms for the subject property are and
are projected to be on NNN terms with the owner/landlord being responsible for real estate taxes,
insurance, repairs and maintenance, management, and a reserve account with the tenant
contracted / obligated to reimburse the owner for most of these expenses (we note that in some
instances the tenant pays these costs directly to the vendors and / or agencies owed, but in our
analysis, we have assumed the owner pay for these items and then the tenant would reimburse
the costs to the owner). We have considered information we have gathered from other
comparable properties in the market from which we have expense / cost information on file to
assist in projecting our ownership expenses for the subject property. An explanation of our
projected owner's expenses for these line items is as follows.
Real Estate Taxes: Real estate taxes have been discussed in a prior section of this report. The
Assessor’s Office indicated that the subject’s real estate tax expense is $24,830 annually.
Insurance: The reported cost for property insurance at comparable properties ranged from $0.25
to $0.75 per square foot. The cost is market sensitive and variable based on specific coverage.
Based on the usage and tenancy and market costs at comparable properties we have projected an
annual cost for this expense of $0.50 per square foot of total building area or $7,250 annually
and this expense is considered reasonable.
Repairs/Maintenance: Typical costs include labor and related supplies and equipment, janitorial,
HVAC and elevator maintenance contracts, snowplowing, etc. In this valuation scenario, the
subject property is considered to be in good condition with updated mechanical systems, new
interior buildout, etc. Owners and managers of comparable properties noted this expense
ranging from $1.00+/- to $2.00+/- per square foot. Considering the subject’s construction style,
building size, site size, age, usage, and tenancy we have projected an annual cost for this expense
of $1.00 per square foot or $14,500 annually. The expense is considered reasonable and in line
with market expectations.
Bennett Franklin File # BF 10898 Page 60
Management/Administration: The administrative/management expense includes items such as
marketing, employee salaries, wages, payroll taxes, office equipment supplies, telephone and
computer usage, licenses, legal and accounting fees, etc. A facility such as the subject does not
require full-time on-site personnel but does require some form of management. Owners and
managers of comparable properties noted this expense ranging from 2% to 5% of effective gross
income. This expense at the subject is projected at 3% ($10,626 annually), which is considered
reasonable due to the projected single tenant tenancy and long term lease.
Reserves: It is necessary to set aside some allocation for major repairs and necessary
replacement of room finishes, structural and mechanical systems, etc. which is typical in an
investment in real estate. Some structural items tend toward controlled costs for repairs and
replacement of capital items. Owners and managers of comparable multi-tenanted properties
that set aside appropriate reserves noted this expense ranging from $0.10 to $0.50 per square foot
or 1% to 10% of effective gross income. Considering the subject’s age, size, usage and tenancy
we have projected an annual cost for this expense of $0.30 per square foot ($4,350 annually) and
this expense is considered reasonable. This cost is in line with market expectations and appears
adequate considering the condition of the property and the maintenance completed at the subject
to date.
Expense Amount $/SF $/Unit
Taxes $24,830 $1.71 $24,830
Insurance $7,250 $0.50 $7,250
Repairs/Maintenance $14,500 $1.00 $14,500
Management $10,626 $0.73 $10,626
Reserves $4,350 $0.30 $4,350
Totals $61,556 $4.25 $61,556
Appraisal
Expense Summary
Expense Reimbursements
The subject property’s tenant is projected to lease the property on NNN terms. Therefore, the
owner of the property would anticipate receiving additional income in the form of
reimbursements of most operating expenses.
Expense Reimbursed Amount
Taxes Yes $24,830
Insurance Yes $7,250
Repairs/Maintenance Yes $14,500
Management No
Reserves No
Total $46,580
Expense Reimbursements
Bennett Franklin File # BF 10898 Page 61
Selection of Capitalization Rate
Capitalization rates are a measure of performance and an indication of value; they reflect
expectations for income growth and perceived risks. In general, lower initial capitalization rates
indicate a greater expectation of future durability and growth in net income and lower overall
risk. We have looked at national sources of capitalization rates which are outlined in the
following table.
Capitalization Rate Source Overall (Going In) Rates
Realty Rates
Office
2nd Quarter 2022
Average 8.82%
PwC Real Estate Investor Survey
CBD Office
1st Quarter 2022
4.25% - 8.50%
Average 5.64
The capitalization rates noted in the previous table are in the range of 4.25% to 8.82% with
averages in the range of 5.64% to 8.37% for office use properties. The rates at the low end of the
range tend to reflect properties in premier locations with long term leases to regional or national
credit tenant while the rates at the higher end of the range are typically associated with older
properties, with non-credit tenants on shorter leases that are in average to marginal locations.
There have been a few sales in the region of similar / somewhat similar properties that indicate
buyers of this type of property are purchasing comparable properties at values that would
indicate implied capitalization rates in the range of 5%+/- to 8%+/-, which indicates investors in
the market area are buying and selling properties at rates that are similar to those indicated in the
national surveys.
Based on the condition of the property, our projected income, and the overall characteristics of
the property (i.e. the location of the subject property in Northampton, the current market
conditions, etc.), it is our opinion that an investor in the subject property would employ a
capitalization rate in the subject property that would be from within the range indicated by the
national surveys and the range of implied capitalization rates extracted from the comparable
market data.
We projected a stabilized income at the subject and we believe a potential investor would
anticipate similar expectations of income from the subject. However, there is risk in the subject
property from maintaining tenants and the owner's responsibility for continued holding costs
such as utilities, taxes and insurance expenses, maintaining tenants at the projected rates, capital
investment and the questionable liquidity of the asset. The capitalization rate we have selected
considers these matters.
Bennett Franklin File # BF 10898 Page 62
To support our capitalization rate selection, we also derived a capitalization rate for our analysis
via the Simple Band of Investment Technique. We have based our analysis on a 70% loan to
value ratio and a 20-year amortization period in this analysis. Average interest rates during the
holding period for a loan on the subject property are estimated at approximately 5.50%. These
characteristics are used as a basis for establishing the mortgage constant. Factors involved in
equity returns include the reliability of the cash flow, the marketability of the investment
product, the stability of the value and other considerations such as the potential for increased
rental rates, etc. The selection of an appropriate equity rate should also be measured against
alternative investment vehicles. The yield rates most often looked to as a basis for investor
expectations are noted in the following table:
Investment Alternatives Rates as of 11/28/2022
Prime Rate 7.00%
US Treasury, 10 Year 3.69%
US Treasury, 20 Year 3.97%
US Treasury, 30 Year 3.74%
Source: Federal Reserve Board - http://www.federalreserve.gov/Releases/h15/Current/
Investment in US Treasuries and corporate bonds involve considerably less risk than an
investment in commercial real estate. The investment requirements of the subject property that
were revealed to us by local investors are greater than that of investment products such as US
Treasury Bills. This is due to a greater risk of the subject property as an investment versus other
investment products. Based on the implied capitalization rates that have been employed by
investors in the area, the noted desired return on equity from an investment in the subject
property or a property similar to the subject property would range from 5%+/- to 10%+/-. In our
analysis, we have used an equity dividend rate of 5.00% which was considered to be a reasonable
rate of return on an investment in the subject property. We have projected a rate at the lower end
of the range due to the current market conditions, the subject property’s investment
characteristics compared to those indicated by the comparable market data, and the most recent
market activity in the area / region that we feel indicates buyers of this property type are
accepting equity dividend rates at or near that which we have projected for the subject property.
The table below details the Band of Investment calculations.
Mortgage Interest Rate 5.50%
Loan Term (Years)20
Loan To Value Ratio 70%
Equity Dividend Rate 5.00%
Loan Ratio
x 70.%=5.78%
Equity Ratio
x 30.%=1.50%
7.28%
Capitalization Rate Calculations
Capitalization Rate Variables
Band of Investment Analysis
Mortgage Constant Contributions
0.082546477
Equity Dividend Rate
5.00%
Band of Investment Capitalization Rate
Bennett Franklin File # BF 10898 Page 63
Based on the national surveys, the Band of Investment, and the implied capitalization rates
indicated by the comparable sales, we determined that an overall capitalization rate of 7.30%
would be employed by a typical investor in the subject property. This rate, which is from upper-
middle of the ranges indicated by the national surveys, is similar to that determined via the band
of investment technique and is further supported by the implied rates indicated by the
comparable sales, is in our opinion reasonable and supportable for the subject property
considering the location, condition, and current market conditions. Based on our analysis, our
opinion of value for the subject property is calculated as follows.
Unit/Space Type Income Method Units/SF Annual % of PGI
Commercial $22.50 $/SF/Year 14,500 $326,250 100.0%
$326,250 100.0%
$46,580
5.00%$18,642
$0
$354,189 108.6%
Expense Amount Annual $/SF
Taxes $24,830 $24,830 $1.71
Insurance $0.50 $7,250 $0.50
Repairs/Maintenance $1.00 $14,500 $1.00
Management 3%$10,626 $0.73
Reserves $0.30 $4,350 $0.30
$61,556 $4.25
17.38%
$292,633 $20.18
7.30%
$4,008,669 $276.46
$687,500
$3,321,169
$3,320,000 $228.97
$/SF
Income Capitalization Analysis
Potential Gross Income:
Vacancy & Collection Loss
Expense Reimbursements:
Other Income:
Effective Gross Income (EGI):
Method
$/Year
$/SF
% of EGI
$/SF
Rounded:
Total Expenses:
Expense Ratio (Expenses/EGI):
Net Operating Income (NOI):
Capitalization Rate:
Value (NOI/Cap Rate):
Deduction:
Indicated Value:
*Buildout Deduction: This amount is associated with the projected $500,000 interior buildout cost, $125,000
elevator cost, and includes a 10% contingency / profit amount calculated off of the total projected buildout and
elevator costs.
Income Approach to Value Conclusion
Based on the analysis detailed above, is our opinion that the "as is" Market Value of the Fee
Simple interest in the subject property, as of December 1, 2022 is:
“As Is” Market Value
Rounded: $3,320,000
Three Million Three Hundred Twenty Thousand Dollars
Bennett Franklin File # BF 10898 Page 64
Final Reconciliation
The process of reconciliation involves the analysis of each approach to value. The quality of
data applied, the significance of each approach as it relates to market behavior and defensibility
of each approach are considered and weighed. Finally, each is considered separately and
comparatively with each other.
Opinion of “As Is” Value via Market Value
Cost Approach $3,310,000
Sales Comparison Approach $3,260,000
Income Approach $3,320,000
Cost Approach
The subject’s site value is estimated from vacant land sales that are considered comparable
(location, zoning, potential development options, recent sales) to the subject. The sales data
included some potentially competing sites with similar property characteristics as the subject.
Qualitative and quantitative comparisons were made to each of the land sales and there is market
data support for these comparisons. The per acre values are consistent with the market and as
such, it is our opinion that the site valuation is adequately supported and lends support to the
valuation of the subject. The cost estimates we used are from local and regional contractors and
published cost manuals and account for all hard and soft costs. The data utilized to determine
physical depreciation (curable and incurable), functional obsolescence (curable and incurable)
and external obsolescence is considered somewhat limited, but due to the fact that the
improvements were valued assuming they were in good condition, which somewhat limits the
risks of projecting depreciation estimates, the conclusion determined via this approach is
considered reasonable and reliable.
Sales Comparison Approach
The value of the subject property via the sales comparison approach is estimated from a number
of sales that are considered comparable / somewhat comparable to the subject, (location
comparison, recent sales, use comparisons, square foot sizes, etc.) and the sales are considered
competitive to the subject and the best available for comparison to the subject. Qualitative
comparisons were made to the sales, which are supported from market data, and the per square
foot values are consistent with the current market. The conclusion determined via the sales
comparison approach is considered reasonable and reliable.
Income Approach
The income approach analysis we utilized reflects the methods used in the current market. The
market data used is considered comparable and reliable. The income and expense data is
considered adequate and of good quality. The method of capitalization of income is well
supported, as it is often the method used by investors and purchasers of properties similar to the
subject. There is adequate data available to determine a capitalization rate by comparison to
other investments and risks associated with ownership of real estate. The conclusion determined
via the income approach is considered reasonable and reliable.
Bennett Franklin File # BF 10898 Page 65
Conclusion
It is our conclusion that the opinions of value determined from the approaches and methods of
valuation are well supported. We acknowledge that there are some shortcomings with the
approaches to value we employed, but we feel the information we gathered and analyzed in the
valuation approaches we employed result in a reasonable and credible opinion of value for the
subject property. In addition, it is our understanding that the various potential purchasers of a
property such as the subject (owner occupant, developer, investor, etc.) look at the values
indicated by all of the approaches to value we employed when determining an opinion of value
for a property like the subject property. As such, we have placed equal reliance on the
approaches to value we utilized and presented in this appraisal. As such it is our opinion that the
"as is" market value of the Fee Simple interest in the subject property, as of December 1, 2022 is:
Three Million Three Hundred Thousand Dollars
$3,300,000
(Equal reliance on all approaches to value and rounded to the nearest $10,000)
Bennett Franklin File # BF 10898 Page 66
Addenda
Bennett Franklin File # BF 10898 Page 67
Bennett Franklin File # BF 10898 Page 68
Bennett Franklin File # BF 10898 Page 69
Bennett Franklin File # BF 10898 Page 70
Bennett Franklin File # BF 10898 Page 71