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Assemblage may be the most difficult highest and best use conclusion to support. Discussed in this article are the elements necessary for an assemblage conclusion of highest and best use, including market value, bilateral monopoly, and the reasonably probable aspect of highest and best use. An understanding of these concepts is shown to be critical in the analysis and valuation of property where the highest and best use may be assemblage.
Of all the possible conclusions that can be drawn from a highest and best use analysis, assemblage is probably the least understood. If the goal is simply to determine what use will result in the highest property value, assemblage, on the surface, seems like a perfectly logical conclusion. Furthermore, it can often be contended that plottage value derives from an easily envisioned assemblage. Under such circumstances, how could assemblage not be concluded as the highest and best use of many properties? The fundamental requirements of a highest and best use analysis provide the impediment. As relating to assemblage, these requirements are very high and seldom met.
The purpose of this article is to explore the requirements necessary to conclude "assemblage" as the highest and best use of a property and to address the valuation issues when such a conclusion is proper.
What Is Assemblage and Why Is It Important?
"I don't want all the land in the world, just that which adjoins my property." That old saying expresses the feelings of most property owners. The recognition that more land is generally preferable to less explains why appraisers should always suspect a conditions of sale adjustment is warranted when an adjoining property owner purchases a property. Even if there is no resultant increase in utility, the desire to expand one's property often results in an inflated sale price. Unfortunately for most property owners, the actions of the adjoining property owners cannot be dictated. If they could, the highest and best use of every property would be for the adjacent property owner to purchase it. An absurd extension? Many assemblage conclusions are just as absurd.
The appraisal profession defines assemblage as, "The combining of two or more parcels, usually but not necessarily contiguous, into one ownership or use; the process that creates plottage value."1...