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Many appraisers fail to address some forms of functional obsolescence in warehouse space. Details on interior and exterior layout, dock design, and safety and security issues play an important role in the highest and best use and functional utility of a warehouse. The author describes in clear and helpful detail the practical considerations of good warehouse design, including modes of delivery and scheduling. He cautions against the oversimplied process of considering only clear heights in the appraisal of such properties.
Most industrial properties are either warehouses or contain warehouse space, and most appraisers explicitly and routinely consider only clear heights when they consider the functional utility of warehouses. In fact, many other factors are involved in appraising warehouse space, which also plays an important role in other types of property.
One important consideration is whether the purpose of the appraisal is to estimate use value or market value. If the appraisal is to be used to allocate the purchase price in a merger or acquisition, use value is usually more appropriate; appraisals to be used for financing or tax appeals are typically based on market value. In a use value appraisal, the functional utility of the property for a particular use (i.e., warehousing a particular product) should be considered. In a market value appraisal, the appeal of the property to the general market is the standard. A use value appraisal requires the appraiser to meet with the warehouse manager to determine how well the warehouse serves his particular needs. A market value appraisal requires the appraiser to understand the kinds of warehouse features desirable to the general market. Some of the more common warehouse features are presented here.
INTERIOR LAYOUT
The interior space of a warehouse can be divided into the receiving, storage, and shipping areas. A good layout is essential to the operation of a warehouse.l Floors typically consist of a reinforced concrete slab on a compacted fill. If this is not practical, a structural floor is used in which reinforced concrete is supported by column footers. Dock-height floors are generally preferred to on-grade floors, although on-grade floors can serve well for warehousing large objects in buildings equipped with overhead cranes. Ideally, the static load capacity should be sufficient to support stacks of...