3 Waterfront Lots 87 River Street, 105 River Street and West 1St Street Brooklyn, Ny 11249
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3 WATERFRONT LOTS 87 RIVER STREET, 105 RIVER STREET AND WEST 1ST STREET BROOKLYN, NY 11249 APPRAISAL AS OF OCTOBER 15, 2015 FOR: Consolidated Edison 4 Irving Place, 2nd Floor New York, NY 10003 BY: Landauer Valuation & Advisory A division of Newmark Grubb Knight Frank 125 Park Avenue New York, NY 10017 March 3, 2016 Robert H. Mayer, MAI Managing Director Consolidated Edison 212-359-8511 - Phone [email protected] 4 Irving Place, 2nd Floor New York, NY 10003 Attn: Mr. Scott Sanders Re: Three Waterfront Sites, Brooklyn, NY (Block 2361, Lot 1; Block 2355, Lot 1; Block 2376, Lot 50) Dear Mr. Sanders: In accordance with your request, we have prepared an appraisal of the three properties located at 87 River Street, 105 River Street and West 1st Street in the neighborhood of Williamsburg, Borough of Brooklyn, City and State of New York. The purpose of the appraisal to estimate the fair market values of: (1) each site individually as currently zoned; (2) the aggregate of all 3 sites as currently zoned; (3) each site individually under its highest and best use, considering the likelihood of rezoning to residential use; and, (4) and the aggregate of all 3 sites as if rezoned for residential use from M3-1 Industrial to R6 Residential with a C2-4 commercial overlay. The intended use of the appraisal report is to assist you in managing the subject assets. In each case, we will value the property as if vacant and remediated to a level of restricted residential. We have employed the hypothetical condition that the subject property is free of environmental contamination. The subject properties are known as 87 River Street (hereinafter “Lot A”), 105 River Street (“Lot B”) and West North 1st Street (“Lot C”). They are situated on the eastern riverbank of the East River on the west side of River Street between North 3rd Street and Grand Ferry Park/Grand Street. The irregularly-shaped sites are non-contiguous and separated by Metropolitan Avenue and North 1st Street. The parcels contain an aggregate upland area of 119,434 square feet, or 2.74 acres. Each site includes riparian rights to land under water of the East River with total area of 196,771 square feet, or 4.52 acres. There are no standing building improvements as they have been demolished. Site improvements include loose gravel ground cover, steel fencing, bulkhead and concrete piers on wood piling. All three properties are located within an M3-1 manufacturing zoning district, which is designated for areas with heavy industries that generate noise, traffic and pollutants. Pursuant to our scope of work, we have appraised the property based on its highest and best use, taking into consideration in the rezoning scenarios the likelihood of it being rezoned from manufacturing to residential or other use, the cost and time required for such rezoning, as well as the risk involved with rezoning from its current M3-1 manufacturing zone to residential zoning district R6 with a C2-4 commercial overlay. We anticipate that the Greenpoint-Williamsburg Waterfront Access Plan zone (WAP), which ends immediately adjacent to the northern boundary of Lot B at North 3rd Street, will be extended southward to include the subject lots. The WAP provides for public access to the waterfront along the East River and Visual Corridor that restricts building development at various points along the shoreline. 125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank March 3, 2016 Mr. Scott Sanders Page -2- This valuation considers the three traditional appraisal approaches: the Income, Sales Comparison, and Cost approaches to value. The Sales Comparison Approach is relied upon for this appraisal as it is the primary method to estimate the value of land. The Cost Approach and the Income Approach were not applicable for this analysis. Concluded Values Before Rezoning Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 87 River Street (Lot A), subject to its current zoning regulations, as of October 15, 2015, is: FIFTY-FOUR MILLION FOUR HUNDRED THOUSAND DOLLARS $54,400,000 ($550 Per SF of ZFA) Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 105 River Street (Lot B), subject to its current zoning regulations, as of October 15, 2015, is: SIXTY-THREE MILLION TWO HUNDRED THOUSAND DOLLARS $63,200,000 ($550 Per SF of ZFA) Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in West 1st Street (Lot C), subject to its current zoning regulations, as of October 15, 2015, is: NINE MILLION FIVE HUNDRED DOLLARS $9,500,000 ($379 Per SF of ZFA) 125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank March 3, 2016 Mr. Scott Sanders Page -3- Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the 3 sites known as 87 River Street, 105 River Street and West 1st Street (Lots A, B and C), assuming that they could be assembled into a single development site, subject to its current zoning regulations, as of October 15, 2015, is: ONE HUNDRED THIRTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS $133,500,000 ($559 Per SF of ZFA) Concluded Values After Rezoning Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 87 River Street (Lot A), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is: SEVENTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS $73,500,000 ($612 Per SF of ZFA) Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 105 River Street (Lot B), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is: EIGHTY-FOUR MILLION TWO HUNDRED THOUSAND DOLLARS $84,200,000 ($603 Per SF of ZFA) Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in West 1st Street (Lot C), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is: EIGHT MILLION SIX HUNDRED THOUSAND DOLLARS $8,600,000 ($343 Per SF of ZFA) 125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank March 3, 2016 Mr. Scott Sanders Page -4- Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the 3 sites known as 87 River Street, 105 River Street and West 1st Street (Lots A, B and C), assuming that they could be assembled into a single development site and that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is: ONE HUNDRED SEVENTY-FOUR MILLION SIX HUNDRED THOUSAND DOLLARS $174,600,000 ($613 Per SF of ZFA) This appraisal is subject to certain basic underlying assumptions and limiting conditions, which are detailed in the Addenda of this report. This letter is not an appraisal in and of itself and is therefore invalid unless used in conjunction with the following report. This appraisal is prepared as an Appraisal Report and conforms with and is subject to the Code of Professional Ethics and Standards of Professional Appraisal Practice set forth by the Appraisal Institute. This report complies with the reporting requirements set forth under the Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP). We are not responsible for unauthorized use of this report. Carrie C. Lee participated in the production of this report. Attached hereto is our appraisal report indicating our findings. Respectfully submitted, Robert H. Mayer, MAI Managing Director NYS Certified General Real Estate Appraiser NYS ID #46000020549 cc: Mr. Jeffrey Earle, Consolidated Edison N:\!New York Litigation (2519)\2015 Appraisal Reports\15-2519-0070_Three Waterfront Sites.Brooklyn 125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank TABLE OF CONTENTS SUMMARY OF SALIENT FACTS AND CONCLUSIONS ........................................................ 1 DIGITAL TAX MAP ..................................................................................................................... 9 AERIAL PHOTOGRAPHS .......................................................................................................... 11 SUBJECT PHOTOGRAPHS........................................................................................................ 13 INTRODUCTION ........................................................................................................................ 19 SCOPE OF WORK ....................................................................................................................... 22 EXTRAORDINARY ASSUMPTIONS ....................................................................................... 22 HYPOTHETICAL CONDITIONS ............................................................................................... 22 U.S. ECONOMIC OVERVIEW ................................................................................................... 23 NEW YORK CITY ECONOMIC OVERVIEW .......................................................................... 24 BROOKLYN LAND DEVELOPMENT MARKET