Knowing your unit yields and variance tolerances is the key to knowing Current “as is” Value and garnering timely approval!
Case Study: 74 William Street, Belleville, New Jersey
The Seller Consultation…
- A micro analysis of possible within zoning uses
- Determination of Highest and Best Use (HBU)
- Elements of a within Zoning Preliminary Application were developed/considered in support of HBU:
- Informal Site Plan
- Ground level and underground level parking
- Footprint and FAR
- Impervious Surface limitations
- Net Usable and Gross per floor square footage
- Unit size and room configuration
- Retail configuration and location
- Loading Zone size and placement
- Height and Set back requirements
- Amenity location, type and size
- Three proposed elevations and one showing roof top amenities
- There were three separate roof top amenities
- Two larger interior amenities on three levels
- media/recreation area and a duplex fitness facility
- Fully supported income/return analysis for HBU
- Included Affordable obligation
- Incorporated a 5 yr Tax Abatement solidified by TWG with township
- Soft and hard Development costs and Income were aged for five years
After a review of our findings ownership, comprised of two second generation real estate attorneys/investors, hired us to broker the asset. We moved to the For Sale presentation stage of the assignment converting primary elements of the informal “by right” or variance free “Preliminary Development Application” to an Offering Memorandum format that included professionally rendered elevations and site plans incorporating all ordinance provisions.
After completion the OM we distributed to the regional Development Community. Multiple offers were consolidated over a six-week period and we went under contract. The contract provided sought yield constraints for the application. We did not represent the buyer on the acquisition, and they chose to apply for a yield at the very top of the constraint range…contrary to our recommendation.
Our original findings and OM outlined a ground up development of 33 residential units and 2,500 SF of Retail. A variance was granted eliminating the need for the retail availing additional parking increasing the approved yield to 36 units.
Our DFV identified the at that time Current “as is” Development Market Value for the Subject/Land at $1,400,000. The Offering Price was $1,400,000. We closed at $1,435,000