APPRAISAL REPORT
14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS 60044
Second City Appraisal, LLC 420 Lake Cook Road, Suite 116 Deerfield, IL 60015 www.secondcityappraisal.com (224) 804-6533 [email protected]
SECOND CITY APPRAISAL, LLC Appraising Chicago for Three Generations 420 Lake Cook Road, Suite 116 Deerfield, IL 60015 (847) 858-0176 (Voice) ANDREW J. RICHTER, MAI PRESIDENT [email protected]
Mr. Dan Rogers March 5, 2019 President Rockland Fire Protection District 14 North Skokie Highway Lake Bluff, Illinois 60044
Dear Mr. Rogers:
As you recently requested, we have prepared an appraisal valuing the fee simple interest in the property commonly known as 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY, near LAKE BLUFF, ILLINOIS. The property consists of the 26,087 square foot (0.60 acre), virtually rectangular shaped interior site, improved with a 12,242 square foot, one and part two-story on slab, masonry constructed fire house, built in 1970. The fully- sprinklered building has a five-bay fire truck garage at the front, and 7,742 square feet (63.2%) of finished space on two floors, providing training, classroom and on-duty staff lounge and kitchen areas. At the date of our inspection, the building was vacant, with the fire protection equipment and staff only recently relocated.
We hereby certify that we have no past, present or contemplated future interest in the property; that neither this appraisal, nor the compensation therefore, are contingent upon the value reported; that we have most recently inspected the property on February 20, 2019; and that this appraisal report has been made in conformity with Standard 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP); the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA); and the Appraisal Institute, which has the right of review.
We herewith deliver our appraisal report, which describes the property and the methods used to arrive at a final opinion of value for the described interest in the property.
As supported in this report, it is our considered opinion that the market value of the fee simple interest in the subject real estate, subject to the terms and conditions of this report, but with no property-specific hypothetical conditions or extraordinary assumptions, as of the date of our inspection on February 20, 2019, was:
SIX HUNDRED THIRTY THOUSAND DOLLARS
($630,000)
Respectfully submitted,
Andrew Richter, MAI President
SUMMARY OF SALIENT FACTS
Property Address: 14 N. Skokie Highway in Unincorporated Lake County near Lake Bluff, Illinois
Property Type: Fire-house building
Lot Size (Land Area Ratio): 26,087 square feet (2.13:1)
Building Size: 12,242 square feet
Building Description: A 12,242 square foot, one and part two-story on slab, masonry constructed fire house, built in 1970. The fully- sprinklered building has a five-bay fire truck garage at the front, and 7,742 square feet (63.2%) of finished space on two floors, providing training, classroom and on-duty staff lounge and kitchen areas.
At the date of our inspection, the building was vacant, with the fire protection equipment and staff only recently relocated.
Condition: Good
Highest and Best Use: If vacant: Interim holding of the site until new development is deemed to be financially feasible.
As Improved: Conversion to an auto service garage.
Hypothetical Conditions & Extraordinary Assumptions: None.
Date of Valuation & Inspection: February 20, 2019
OPINION OF MARKET VALUE –FEE SIMPLE INTEREST
AS IS - AS OF FEBRUARY 20, 2019
SIX HUNDRED THIRTY THOUSAND DOLLARS
($630,000)
TABLE OF CONTENTS
INTRODUCTION
Title Page ...... i Letter of Transmittal ...... ii Summary of Salient Facts ...... iii Table of Contents ...... iv
DESCRIPTION, ANALYSIS AND CONCLUSIONS
Property Identification ...... 1 Legal Description ...... 1 Intended Use and User of the Appraisal ...... 1 Hypothetical Conditions & Extraordinary Assumptions ...... 2 History of Recent Conveyances ...... 2 Definition of Market Value ...... 2 Scope of Work Performed ...... 3 Competency Provision ...... 4 Designated Flood Plain ...... 4 Zoning ...... 5 Tax Data ...... 6 Area Data ...... 7 Site Data ...... 10 Description of Improvements ...... 12 Highest and Best Use ...... 15 Opinion of Market Value ...... 19 Comparable Sales #1 - #6 ...... 19 Comparable Sales Map ...... 24 Alternate Building Sales ...... 27 Certification ...... 31
ADDENDA
Subject Photos ...... 32 Lake County Tax Parcel Map ...... 43 Area Statistics ...... 44 Lake Bluff Infographic ...... 45 Subject Map ...... 48 Chicago and Vicinity Map ...... 49 Assumptions and Limiting Conditions ...... 50 Qualifications of the Appraisers ...... 51
Page No. 1 PROPERTY IDENTIFICATION
The subject property is commonly known as 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY, near LAKE BLUFF, ILLINOIS (Census Tact #8632.02). The property consists of the 26,087 square foot (0.60 acre), virtually rectangular shaped interior site, improved with a 12,242 square foot, one and part two-story on slab, masonry constructed fire house, built in 1970. The fully-sprinklered building has a five-bay fire truck garage at the front, and 7,742 square feet (63.2%) of finished space on two floors, providing training, classroom and on-duty staff lounge and kitchen areas.
At the date of our inspection, the building was vacant, with the fire protection equipment and staff only recently relocated.
LEGAL DESCRIPTION
The Lake County GIS/Mapping Division Tax Parcel Map Page 150 describes the property as follows:
Lot 1 in Knollwood Fire Department/Rockland Fire Protection District Consolidation in the Northeast 1/4 of the Northeast 1/4 of Section 19, Township 44 North, Range 12 East of the Third Principal Meridian, in Lake County, Illinois.
This legal description was taken from our reading of the Lake County Tax Parcel Map which is reproduced in the Addenda of this report and is for informational purposes only. It should be confirmed by a licensed surveyor prior to any transfer or encumbrance of the property.
INTENDED USE AND USER OF THE APPRAISAL
This appraisal will develop our opinion of the market value, as herein defined, of the fee simple interest in the property described above, in its “as is” condition as of the date of our inspection on February 20, 2019. The opinion of market value developed in this appraisal is subject to the terms and conditions set forth in this report, including those specified in the standard Assumptions and Limiting Conditions in the Addenda, with no property-specific hypothetical conditions or extraordinary assumptions. Our opinion applies solely to the above date, and there are no representations or warranties, expressed or implied or otherwise made by us, pertaining to the future value of real or personal property.
This appraisal has been prepared at the request of Mr. Dan Rogers of the Rockland Fire Protection District (the RFPD). The RFPD is our client and the intended users of this report, which is intended to assist the RFBD in planning for the property’s possible disposition. It thus excludes any personal property, as only the real estate would be included in a typical sale or the security for a mortgage.
This appraisal applies solely to the above date, and there are no representations or warranties, expressed or implied or otherwise made by the appraiser, pertaining to the future value of real or personal property. It assumes title to the property to be held in fee simple, free and clear of any mortgages, liens or encumbrances which might adversely affect its value. Page No. 2 HYPOTHETICAL CONDITIONS and EXTRAORDINARY ASSUMPTIONS
This appraisal is subject to the terms and conditions set forth in this report, including those specified in the standard Assumptions and Limiting Conditions in the Addenda. It includes no property-specific hypothetical conditions (matters contrary to fact) or extraordinary assumptions (items presumed as fact which, if found to be false, would significantly impact the opinion of market value) which are directly related to this appraisal assignment.
HISTORY OF RECENT CONVEYANCES
An examination of Lake County real estate tax records reveals no conveyance pertaining to the property within the past three years.
We have no knowledge of any recorded or unrecorded sale during the previous three-year period, or listings for sale or offer(s) to purchase the property in whole or part within that same period. The property is now offered for lease at a gross annual rental of $12.50 per square foot, with Interstate Realty, Inc. as the leasing agent.
DEFINITION OF MARKET VALUE
The Office of the Comptroller of the Currency of the United States defines Market Value as "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 is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
a. buyer and seller are typically motivated;
b. both parties are well informed or well advised, and each acting in what they consider their own best interests;
c. a reasonable time is allowed for exposure in the open market;
d. payment is made in terms of cash in U.S. dollars or in terms of financial agreements comparable thereto; and
e. 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."
Page No. 3 SCOPE OF WORK PERFORMED
To demonstrate the basis of our opinion of the market value of the fee simple interest in the property, we have prepared this appraisal report, consistent with Standard 2-2(a) of the current edition of the Uniform Standards of Professional Appraisal Practice (USPAP) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). As with all appraisals prepared by this office, it also complies with the standards of the Appraisal Institute, which has the right of review for compliance and educational purposes. The scope of our independent investigation and analysis is briefly described here.
Descriptive data pertaining to the property, its legal status and location factors have been gathered from public sources identified in this report, and demographic data and other support materials maintained in our office; as well as our inspection of both the exterior and interior of the building on of February 20, 2019. We were not provided with either a Plat of Survey or building plans.
To arrive at our opinion of the Market Value of the fee simple interest in the property, we have utilized one of the three approaches to value commonly applied in the appraisal of real estate, the Sales Comparison Approach. This method makes direct comparison with the reported sales of comparable properties. Sale data utilized is taken from public records, broker's reports and interviews with parties to the reported.
We have not considered the Cost Approach in valuing this property, which approach sums the depreciated replacement cost of the building and site improvements with our opinion of the market value of the land, if vacant. This type of analysis is not usually considered by prospective purchasers of this type and quality of property, except for very recently constructed buildings, if then. We have included the very few recent sales of vacant or under-developed sites with similar development potential, however, to demonstrate that the existing building does contribute to the value of the under-lying land, if vacant.
We similarly have not applied the Income Capitalization Approach, which develops an opinion of value by capitalizing the stabilized net income generated by a leased property, as the special use building will require a substantial renovation before it can be tenanted for any alternate use, the cost of which renovation will need to be recover over an extended period. Thus, the cost of renovation would likely be undertaken only by a potential user, and not in anticipation of leasing the premises to a tenant under a leased of shorter duration.
Any published sources referred to in our analysis are identified in the text. All information provided by others is believed to be reliable, but may or may not have been independently verified. Other limiting conditions to this appraisal, and the extent of the appraiser's responsibility, are set forth in the Certification and the Assumptions and Limiting Conditions in the Addenda to this report, and should be carefully considered.
Page No. 4 COMPETENCY PROVISION
The professional education and experience of the appraisers assures us that we are competent to prepare this appraisal without undisclosed outside assistance.
DESIGNATED FLOOD PLAIN
As shown on the applicable portion of Flood Hazard Map Panel #170970188K, dated September 18, 2013, published by the Federal Emergency Management Agency, the subject property does not lie in a designated Zone A or Zone B flood hazard area. The applicable portion, prepared by CoreLogic, is reproduced below.
This information has been obtained from our examination of the applicable flood insurance rate map panel and confirmed by our visual inspection of the property. However, these maps do not display all streets or landmarks, and are subject to varying interpretations, and we have no expertise in these matters. Therefore, this information is provided for the purpose of comparison with surveyed comparable properties only, and is not considered in any way to be a guarantee of the flood status of the subject property.
Page No. 5 ZONING
According to the Lake County Zoning Map of Shields Township, the property is zoned R-3, Residential District. The Lake County Unified Development Ordinance (adopted April 11, 2000) states that the R-3 district is designed to accommodate moderate density development. Permitted uses in this district include, but are not necessarily limited to, the following: 1. Single family detached house. 2. Government uses. 3. Schools. 4. Parks, golf courses, and open space. 5. Caretaker’s dwelling unit (accessory use). 6. Religious institutions (with special use).
In an R-3 district, the maximum density is 2 units per acre. There is a minimum lot area of 12,000 square feet, a minimum lot width of 60’, and a maximum building height of 40’. Yard setbacks of 30’ at the front, 7’ at the side, and 15’ at the rear are required. For residential uses, two off-street parking spaces per dwelling unit are required.
The present use as a fire station, while permitted under the R-3 zoning classification, was only possible by the granting of numerous variances, as the bulk regulations were not intended to serve this type of use.
As the resumption of the building’s prior use as a fire station will not be practical, as that responsibility has been relocated to an alternate facility, any future use of the property will require either demolition of the building – which will be demonstrated in the Highest and Best Use analysis to be impractical – or its rezoning. A non-residential zoning classification is found to be both consistent with the adjacent uses as: 1) the properties which also front Skokie Highway both North and South of the subject are already zoned GC, General Commercial District; 2) would not be opposed by the only adjacent residential property owners – who’s properties only back to the subject site and have been adjacent to a noise- generating non-residential use for many years; and, 3) benefit only a not-for-profit entity, the long term goals of which are not incompatible with the zoning authority. As the anticipated rezoning is a necessary step in converting the property to a less objectionable use than a fire station, we have anticipated the rezoning of the property to GC, General Commercial District, can be achieved at a nominal cost and without significant delay. Page No. 6 TAX DATA
According to the Lake County Treasurer’s office, the property is identified for real estate tax purposes as:
Permanent Index Number: 12-19-206-009
The subject property is now owned by a not-for-profit entity, the Rockland Fire Protection District, and was most recently used as a fire house. It is, therefore, appropriately exempt from real estate taxes by the Lake County Treasurer, and is not assessed at this date.
As all appraisals anticipate an arm’s length sale to a “typical” buyer, at or about the opinion of market value developed therein, we presume the buyer would be a for-profit entity, and a prudent purchaser (consistent with the definition of market value) would anticipate the property will be assessed at parity with the market following the sale.
Page No. 7 AREA DATA
The appraised property is in Unincorporated Lake County (Shields Township), with a Lake Bluff mailing address. Lake Bluff, the corporate limits of which are within one block East of the subject, but across Illinois Route 41, is an affluent, primarily residential community that is the Northerlymost of Chicago’s “North Shore” suburbs. This well-regarded community is 33 miles North of Chicago's Loop, on the Western shore of Lake Michigan. This is an older, well-established residential community, although the population has declined modestly in recent years, largely due to a reduction in average household size as its population ages.
Lake Bluff has an affluent economic profile that has ranked among the highest 10% of all Chicago-area communities for many decades. This is evident in the statistical profile we have reproduce in the Addenda, which includes the following key economic indicators:
2000 2010 2018 2023 Population 6,271 5,722 5,797 5,853 Per Capita Income N/A N/A $83,554 $87,967 Median Household Income N/A N/A $160,272 $162,509 # of Households 2,275 2,055 2,102 2,127 # of Housing Units 2,350 2,178 2,227 2,274 % Owner-Occupied 77.7% 85.8% 81.7% 81.5% % Renter-Occupied 19.1% 8.6% 12.7% 12.0% % Vacant 3.2% 5.6% 5.6% 6.5%
Lake Bluff is primarily homeowner-occupied, although the high-priced homes in the community were very hard-hit by the economic slow-down that began with the collapse of the sub-prime mortgage market in mid-2007. The number of homes sold in Lake Bluff fell only slightly, but the prices paid fell sharply. This led to a decline in the community ranking which has not yet been fully recovered, when compared to others among the approximately 248 Chicago-area communities as classified by the Multiple Listing Service of Northern Illinois, as reported in their annual home sales reports.
Detached Units
Units Avg. Sale % of Avg. Marketing Community Year Sold Price Change Time Ranking 2007 100 $891,571 +2.9% 169 days 13th 2008 76 $642,709 -27.9% 192 days 27th 2009 64 $643,938 +0.2% 282 days 18th 2010 81 $597,490 -7.2% 240 days 20th 2011 99 $628,563 +5.2% 229 days 15th 2012 112 $501,111 -20.3% 181 days 27th 2013 136 $629,717 +25.66% 119 days 17th 2014 123 $674,156 +7.06% 120 days 17th 2015 149 $576,397 -14.5% 101 days 25th 2016 137 $685,829 +18.9% 122 days 18th 2017 132 $631,542 -8.6% 124 days 18th 2018 124 $636,949 +0.85% 122 days N/A Page No. 8 AREA DATA (continued)
Attached Units
Units Avg. Sale % of Avg. Marketing Community Year Sold Price Change Time Ranking 2007 32 $292,306 +28.0% 119 days 30th 2008 22 $227,814 -22.1% 284 days 49th 2009 26 $249,900 +9.7% 211 days 21st 2010 21 $235,119 -5.9% 167 days 27th 2011 26 $211,512 -10.0% 148 days 27th 2012 32 $209,619 -0.9% 165 days 24th 2013 48 $201,602 -3.82% 72 days 31st 2014 44 $206,069 +2.22% 70 days 33rd 2015 44 $200,337 -2.78% 57 days 42nd 2016 46 $223,627 +11.63% 98 days 33rd 2017 43 $236,120 +5.29% 56 days 33rd 2018 49 $247,445 +4.58% 70 days N/A
All municipal services are available in Lake Bluff, although the downtown district about two miles East of the subject, is only two blocks in length. Full municipal utilities and infrastructure are available, and convenient access to Chicago’s “Loop” central business district is provided by U. S. Route 41, a North/South limited access highway that connects to the Interstate 94, between Chicago and Milwaukee. Sheridan Road, a scenic North/South route that parallels the lakeshore near the Eastern village limits, connects the downtown business districts of Lake Bluff and Lake Forest before turning East to become the best known street for lakefront and other estate quality homes. Waukegan Road, which is ½ mile West of the subject, is also a well-trafficked thoroughfare extending through the Western edge of most of the North Shore suburbs, and is improved with a variety of commercial buildings serving the many affluent residents of the surrounding communities.
The subject is in an unincorporated “pocket” just West of the Lake Bluff, near its Northern limits, known as Knollwood. Knollwood includes a few square blocks just opposite the subject on the East side of Route 41, and then extend North of Rockland Road (Illinois Route 176) for about a mile North to the South limits of North Chicago, and West for about a mile to Green Oaks, where Route 1276 is renamed Park Avenue, and Knollwood has absorbed the unincorporated area once known as Rondout (the site of the nation’s largest and most famous historic train robbery). Park Avenue has a partial interchange to Interstate 94, connecting to Milwaukee and Chicago’s Loop, about 1½ miles West of the subject, where Lamb’s Farm, a renown residential facility for the developmentally disabled and recreational attraction for children from throughout Chicagoland, is located.
Knollwood’s economic profile is very distinct from that of Lake Bluff, as the statistical profile in the Addenda, as summarized on the following page, demonstrates:
Page No. 9 AREA DATA (continued)
Knollwood Economic Indicators
2000 2010 2018 2023 Population 2,143 1,747 1,787 1,817 Per Capita Income N/A N/A $46,463 $50.560 Median Household Income N/A N/A $94.461 $100.687 # of Households 755 668 695 709 # of Housing Units 782 716 744 763 % Owner-Occupied 63.8% 66.3% 61.3% 62.4% % Renter-Occupied 32.7% 27.0% 32.1% 30.5% % Vacant 3.5% 6.7% 6.6% 7.1%
The subject property fronts the frontage road on the West side of U.S. Route 41 (Skokie Highway), with the highway being a divided, four lane, limited access highway in this vicinity; and the subject three properties North of its underpass at Illinois Route 176 (Rockland Road). As the subject and other improved properties in the vicinity front only frontage roads on both sides of U.S. Route 41, the surrounding development is almost entirely industrial in character. As there is no direct access from the highway to most of these properties, the area is not conducive to commercial uses, even though Route 41 is a preferred route to I-94 for many local distance travelers and interstate truckers due to the tolls charged on I-94. Roadside retail development is instead more common on Waukegan Road to the West or Green Bay Road to the East, each about mile North on Route 41, at Buckley Road. There are a few commercial properties uses fronting Illinois Route 176, which is just 1/2 block South of the subject, but these can not be directly accessed due to the circuitous traffic pattern described in the Site Data. Thus, the only properties in close proximity to the subject are a garage/service building to the North, an older two-story office building to the South, and a non-franchise motel further South, facing Rockland Road, with a few older homes backing to these buildings.
Based upon our examination of this market, it is our opinion that only a non-retail commercial use would be anticipate for the subject site in future, whether or not the existing building is found to be economically viable. While residential se is both incompatible with the adjacent properties and at a disadvantaged by the noise generated by traffic on Route 41, any retail use is precluded by the very poor ingress and egress (as detailed below). The same factors limit truck access and deter industrial development, for which alternate sites are readily available in the surrounding communities, where modern industrial parks are marketing fully accessible sites just off Illinois 41 and I-94. Thus while adequate infrastructure exists to support more intense use of the site, including good highway access and all public utilities, and the property’s proximity to Route 41 provides access for the skilled and semi-skilled labor force Lake Bluff’s high home prices excludes, viable reuse of the subject property is limited to non- retail commercial uses, or an industrial-type use not dependent on truck access.
Page No. 10 SITE DATA
The 26,087 square foot, virtually rectangular shaped interior site has 200’ of frontage along the West side of the Southbound exit ramp from Skokie Highway to Illinois Route 176, which is in effect a frontage road, and an even depth of about 130’. These dimensions were taken from Lake County Plat, prepared by Lake County GIS/Mapping Division Map, a copy of which is reproduced in the Addenda section of this report.
The site is generally level and at street grade. All utilities are available, including public water service from Lake County and sewer service from the North Shore Sanitary District, with gas, electricity and telephone service by commercial providers. We assume that all easements for these public utilities have been legally and perpetually established, and not adverse to development of the property. All utilities that serve the subject are typical of this entire area, and are similarly available to all comparable properties that have been selected for analysis later in this report.
Drainage appears to be adequate, with surface run-off apparently diverted to storm sewer catch basins in the Northerly parking lot, and to the adjoining street to the East. We have not been provided with a copy of any environmental studies or soil testing, and nothing in our inspection provides a basis to presume that any adverse conditions exist. Thus, we assume that no adverse easements or encroachments exist which might adversely affect the Market Value of the property. However, we have no expertise in these matters and we both recommend that qualified engineers be retained and reserve the right to defer to such professionals, based upon future adverse discoveries, if any occur.
The building occupies the Southwest portion of the site, with a 5’ side setback from the South line and a rear (West) setback of 15’. The front 40’ of the site, in front of the building, is concrete paved to provide truck access to the five overhead drive-in doors on the building’s front elevation. The North portion of the site is asphalt paved providing marked parking for 23 vehicles, including two spaces designated for handicap use. The parking lot is accessed by a two-lane curb cut in the East lot line. The Northernmost 20’ of the site is grass covered with some trees. There is a monument sign near the front of the North lot line to property identification, and a tall, pole-mounted siren about mid-way back near the North lot line.
The subject site has only limited access, however, as it fronts only an unnamed two-lane asphalt paved North/South road that serves both as the only access to the three properties along the West side of Skokie Highway in this vicinity, and as a South-bound exit ramp from Route 41, which is a four-lane, limited access highway, as it continues for about a block West along the North side of Rockland Road before terminating where it enters that street. This unnamed North/South road also extends about 200’ North from the subject to Washington Avenue, providing access to/from the subject for local traffic without having to use Rockland Road (Illinois Route 176), about 250’ South of the subject.
Access from Northbound U.S. Route 41 is even more complicated, as vehicles exiting the highway must use Washington Avenue, directly opposite the subject, then proceed one block East and turn South for a block to Rockland Road. To access the subject, vehicles must then turn onto Westbound Route 176, crossing Route 41, then turn North for a block and East for a block to enter the frontage road, North of the subject. Page No. 11 SITE DATA (continued)
Thus, while the subject site is visible from Skokie Highway, Southbound traffic must know to exit the highway before reaching the property and cannot exit directly to the highway in either direction. Northbound traffic on Route 41 does not view the property in time to exit, due to the Rockland Road overpass, and cannot exit or enter the highway to access the property without using a circuitous route of more than a ½ mile, with five turns. This, in effect, precludes any retail use of the site, or most non-destination commercial uses.
Page No. 12 DESCRIPTION OF IMPROVEMENTS
The primary improvement is a 12,242 square foot, one and part two-story on slab, masonry constructed fire house, built in 1970. The fully-sprinklered building has 7,742 square feet (63.2%) of finished staff space, with classrooms and offices as well as a kitchen, equally divided on two floors at the rear; and a 4,500 square foot (36.8%) five-bay service garage with five overhead drive-in doors at the front, facing Skokie Highway (Illinois Route 41). The building is more fully described as follows:
Structural
Foundation: Poured concrete slab at grade.
Basement: None.
Exterior Walls: Decorative concrete block on all elevations.
Framing: Load bearing walls.
Windows: The office section has insulated glass casement windows on the side and rear elevations. Fixed, insulated glass windows are provided on the side elevations of the garage portion at the front.
Roof: The front section has a slightly pitched roof, with composition covering on a metal deck at the 18’ height at the front, sloping to the 16.5’ height at the rear. The two-story section has a flat roof with composition cover on a metal deck.
Interior Finish
Entries: Primary entry to the building is via a 3' wide, glass in metal frame door with glass sidelights, near the rear of the North (side) elevation, near the parking lot. Egress is via 3’ wide metal with inset glass doors on the front, rear, and South elevations.
Truck Access: There are five 12’ x 14’ overhead drive-in doors on the front elevation.
Floors: Concrete floors throughout. The finished staff areas are mostly carpeted, with ceramic tile in the first floor hallway, washrooms and kitchen, and the second floor bathrooms. The former gym on the second floor has an exposed concrete floor. The stairways have vinyl tile. The garage has an epoxy finished concrete floor, with floor drains.
Walls: All perimeter walls are painted concrete block. Interior partitions are painted drywall throughout. The washrooms and bathrooms have ceramic tile on the walls in the showers and around the toilets and sinks. Page No. 13 DESCRIPTION OF IMPROVEMENTS (continued)
Ceiling: The finished areas have suspended acoustic tile ceilings at the 8’ height, except that the former gym has a 10’ ceiling height. The bathrooms on the second floor have drywall ceilings. The garage area has an exposed metal roof deck and trusses. The ceiling is slightly pitched with an 18’ height at the front (16’ clear) and 16.5’ at the rear (14.5’ clear).
Interior Layout: The front 46’ of the building is the one-story truck service garage. It has five overhead drive-in doors on the front elevation and is unpartitioned, except for an equipment storage bay along the North wall, a single two-fixture washroom at the rear, a storage closet, and an electrical room. A 15’ x 13’ sprinkler room at the Northeast (front) corner of the building has an unfinished storage mezzanine above it.
The rear 38’ is the two-story finished area. The first floor has a dispatch room, two private offices, a large classroom, a kitchen, a lounge/dining room, and a washroom. There is an elevator at the North end of the building, and a stairway at each the North and South ends. The second floor has a bunk room, four private offices, a room formerly used as a gym, two full bathrooms, a conference room and a storage room.
Washrooms: There are two, two-fixture washrooms on the first floor; one accessed from the hallway in the office area and the other accessed directly from the garage. There are two full bathrooms on the second floor, each with one toilet, one wall-mounted sink, and a shower stall.
Mechanical
Heating & Air Conditioning: The finished areas are heated and cooled by two roof-top HVAC units. The garage has radiant heating, with five tubes.
Hot Water: Adequate hot water for the bathrooms is assumed.
Lighting: Recessed fluorescent light fixtures throughout the finished areas, with truss-mounted fluorescent light fixtures in the garage.
Electrical: 400 ampere, 3 phase service.
Sprinkler System: Full sprinkler system, with a wet system.
Page No. 14 DESCRIPTION OF IMPROVEMENTS (continued)
Condition: The property was inspected on February 20, 2019 and was found to be in good condition, with no evidence of deferred maintenance noted. All mechanical systems were reported to be operable, and no evidence to the contrary was noted. The effective age of the building is, therefore, substantially less than its actual average age of 49 years, due as well to the periodic replacement of short-lived items. Comparing an estimated effective age of 25 years to a physical life for a predominately metal panel industrial building of 50 years, results in a remaining economic life of about 25 years, indicating physical deterioration of about 50%.
Note: The appraiser is not a building or environmental inspector. The appraiser provides an opinion of value, but does not guarantee that the property is free of defects or environmental problems. The appraiser performs an inspection of visible and accessible areas only. Mold, ureafoam insulation or other adverse conditions may be present in areas the appraiser did not note or cannot see. A professional property inspection or environmental inspection is recommended, as we have no expertise in these areas.
The presence of substances such as asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The opinion of value is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.
The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific compliance survey and analysis of the subject property to determine whether or not the property is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property together with a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non-compliance with the requirements of the ADA in developing an opinion of value for the property.
Page No. 15 HIGHEST AND BEST USE
Introduction
Highest and best use is defined as:
"The reasonably probable and legal use of vacant land or an improved property that is legally permissible, physically possible, appropriately supported, financially feasible, and that results in the highest value."1
The highest and best use is first applied to the land, if vacant, even in cases where the property is improved with seemingly economically viable improvements. This analysis is necessary to establish the methodology used in the Opinion of Land Value section of the Cost Approach, and forms the basis of comparison to ascertain the contributory value of the improvements, if any. Further, if the property does not conform to the ideal improvements if the site were vacant, the resulting functional and/or external obsolescence would need to be reflected in each of the three approaches to value that would typically follow this section of the appraisal report.
Although the highest and best use of the land, assuming it to be vacant and available for use, is estimated first, improved sites must also be considered as indivisible units. Thus, highest and best use for an improved property would recognize the economic contribution of the existing improvements, if any. Comparison of the values of the property as vacant and as improved will establish whether the improvements contribute to the value of the land, if vacant, or the degree of obsolescence observed.
The four tests that would be applied in the highest and best use analysis are the same for both a vacant site and improved properties. In order to be highest and best, a use must be 1) legally permissible; 2) physically possible; 3) financially feasible; and 4) maximally productive. These tests will be applied simultaneously to the land, if vacant, and to the site as now improved with a single-user industrial building. Comparison of the value if vacant and “as is” will indicate which one use meets the definition of highest and best use. The conclusion to the highest and best use analysis provides the basis for the valuation opinions, which follow in the approaches to value applied.
Highest and Best Use of the Site
Legally permitted uses of a site can be limited by either public agencies (e.g. through zoning, environmental restrictions or police powers), or private parties (e.g. through easements or deed restrictions). For most properties, zoning restrictions are the most significant, and they are, therefore, usually addressed first.
1 The Appraisal of Real Estate (13th Edition), Page #278 Page No. 16 HIGHEST AND BEST USE (continued)
The subject is currently zoned for residential use, with numerous variances in place, as was required to permit construction of the fire house. This zoning would not have been permitted for conventional, for-profit development of the site originally, however, nor would it likely be maintained if the site were marketed for alternate use at this time. The adjacent properties fronting the Route 41 exit ramp/frontage road are zoned GC, General Commercial District, for commercial use, and already developed consistent with that zoning classification, as would be expected fronting a heavily trafficked limited access highway, approaching an interchange with a state designated highway (Rockland Road). As pursuit of the same GC zoning of the site at this time would be compatible with these neighboring uses, consistent with the intent of the GC zoning classification and not adverse to any of the neighboring property owners – with even the older residences which back to the property accustomed to a more adverse use – it should be achievable without unreasonable delay, at a nominal cost. Long term commercial use of the exiting building may also be permitted under the current residential zoning if only minor building renovation is required, but this would not be assumed by a prospective purchaser without prior approval, suggesting rezoning be pursued by the current owners prior to a sale.
The existing building conforms to the existing land use patterns in the area, and no change in these land uses is expected. It approaches the maximum development potential of the site if zoned CG, and the building is adaptable to a number of uses permitted under the GC classification.
There are no known legal restrictions, other than zoning, to the use of the site. In the absence of data to the contrary, clear title is assumed, with no deed restrictions or other limiting covenants known.
Physically possible uses of a site would relate to limitations due to poor soil quality, limited frontage, lack of utilities or other geographic factors, none of which are known to adversely affect the subject. The site does not appear to be in flood hazard area, and the generally level terrain would not adversely limit building placement and floor elevation for any future building improvements, nor does it negatively impact the existing building. Soil quality is assumed to be adequate to support the existing as well as any proposed improvements. We have not been provided with the results of any environmental audit but have no reason to suspect any adverse environmental concerns. The site is adequate in size, shape and terrain to support the existing improvements, as is, or any alternate commercial use which might be contemplated for new construction. The subject building has the good visibility from Route 41 which benefits any commercial use, although it lacks the convenient access and egress required for retail use in this mixed residential/commercial area. The property is thus physically best suited to a non- retail commercial use.
Our research finds that demolition of the existing improvements to permit redevelopment of the site is not financially feasible at the current time, even if and when the site is rezoned CG to maximize its development potential. We have reviewed the most recent sales of vacant or under-developed commercial sites in the subject’s Southern Lake County market area, as summarized on the following page, details of which are retained in our files:
Page No. 17 HIGHEST AND BEST USE (continued)
Date of Land Zoning Price/ Address Sale Size Proposed Use Sq. Ft. 1095 Rand Road, B-1 7/18 43,560 sf $18.37 Lake Zurich Fast Food 1800 N. Milwaukee Avenue, BP 2/2018 99,752 sf $15.15 Vernon Hills Grocery 2745 Skokie Valley Road, B-3 1/2018 87,120 sf $22.96 Highland Park Auto Dealership 716 S. Milwaukee Avenue, C-3 10/2017 84,393 sf $18.96 Libertyville Medical Facility 1050 Barclay Boulevard, I 7/2017 93,218 sf $ 8.05 Buffalo Grove School 6590 W. Grand Avenue, C 10/2016 53,143 sf $24.46 Gurnee Walmart
As the opinion of value developed for the subject property on an “as is” basis developed in this report of $630,000 equates to more than $24.00 per square foot of land area for the 26,087 square foot site, which fronts only an unnamed street with difficult ingress and egress make it unsuitable for retail use, it is apparent from these land sales that the existing building contributes to the value of the underlying land.
The maximally productive use of any property is that singular use among all financially feasible alternatives that develops the highest value on an “as is” basis. While a detailed analysis of all legally permitted uses of property lies beyond the scope of this analysis, it is apparent that the existing building is adaptable to only a few of these uses, unless an extensive and costly full renovation is contemplated, the scope of which would likely approach or exceed the market value of an existing building of comparable physical age, such as a medical or professional office building. Among the more conventional uses requiring less extensive remodeling costs, two uses are suggested by the building’s existing design, with a mix of one-story garage space and minimally appointed but finished office/training areas on two floors.
The conventional use which would require the least remodeling is a service garage, utilizing the existing five-bay garage portion – which already has overhead doors and under-floor drains in place – as the service area, with the reminder of the first floor requiring only minimal reconfiguration for use as the customer service counter, waiting area with kitchenette and a public washroom, and the Southwest portion utilized as a parts storage and sales area. The existing pedestrian entry on the North side of the building could be retained, but the second floor would not be of contributory value for this type of use. It would instead be available for lease to an unrelated party, utilizing the space for general office use or inactive storage even though either use would generate only minimal income. Any more intense use is unlikely, as demand for upper floor space at a location with only limited access is unlikely to generate sufficient income to justify more extensive build-out. Page No. 18 HIGHEST AND BEST USE (continued)
We also considered marketing the property for its reconfiguring as a “flex”-type industrial building, which is the term now commonly applied to buildings designed for industrial use(s) but reconfigured by substantial increasing the size and/or quality of the office space to provide a showroom, space for sales staff, bullpen offices, or other non-industrial uses. We researched recent sales of flex buildings in the subject’s market area – including but not limited to the four additional sales described in the Addenda to this report – and concluded that, a prospective buyer of the subject building on an “as is” basis could anticipate that, following an additional investment of $50 per square foot per square foot of finished space, or (say) $385,000, the 12,424 square foot “flex” building, with about 60% office space and 40% shop and second floor service space, would develop a market value of about $80.00 per square foot, or (say) $980,000. Deducting from this opinion of market value the direct cost of build-out of $385,000, and a return on the indirect costs (including risk) of 12% or (say) $45,000, the net value of the property under this scenario on an “as is” basis is $550,000 ($980,000, less $385,000 and $45,000).
By comparison, we found – and have presented in the following section of this report – that a prospective purchaser acquiring the property on an “as is” basis, but anticipating building-out the ground floor space for use as an auto service facility, will anticipate a cost of about $20 per square foot to build out only the +/- 3,800 square feet of space to be reconfigured, resulting in an adjustment of about $76,000, or about $9.00 per square foot for the total ground floor area of 8,371 square feet; resulting in a building with a market value of about $75.00 per square foot of ground floor area after renovation, or (say) $630,000. Including the contributory value of the 3,871 square foot second floor on an “as is” basis at $22.00 per square foot of second floor building area, or (say) $85,000, and deducting 112% of the renovation cost, or (say) $85,000 (to include 12% indirect costs), the net value of the property under this scenario on an “as is “ basis is $630,000 ($630,000, plus $85,000 and less $45,000).
Conclusion
The highest and best use analysis has as its objective the determination of that use which will develop the highest value, consistent with the definition of market value. It also helps identify the key property characteristics that will be reflected in each of the approaches to value that follow. Those characteristics should be reflected in the comparable properties selected for analysis, and any factors that impact on value should be reflected in each of the preliminary value opinions.
In this case, the highest and best use of the property is found to be its marketing on an “as is” basis, while pursuing GC zoning compatible with the adjoining properties, in anticipation of the buyer’s converting the building to use as a service garage or similar non- retail commercial use.
Page No. 19 OPINION OF MARKET VALUE
Our opinion of market value is developed utilizing the Sales Comparison Approach: that is, the comparison of the prices paid for similar properties, relative to the appraised. The data is not offered as independent evidence of value, but rather as a consideration used in arriving at an opinion of value for the appraised. To arrive at our opinion of value, we have compared the subject with the most recent reported sales of properties with similar highest and best use characteristics: namely, the use of the subject’s first floor as an auto and/or truck service garage. The price per square foot of gross building was used as the unit of comparison, as this is the method most often used and best understood by prospective purchasers, with the limited contributory value of the subject’s partial second floor – which is of special purpose design – considered separately. The following sales have been gathered and analyzed:
Sale #1 - 183 South US Highway 45, Grayslake (Lake County P.I. #’s 07-31-108-058, 07- 31-108-036, 07-31-108-042, and 07-31-108-043) – This is a 17,338 square foot (per the Assessor), one-story on slab, masonry constructed auto service building, built in 2007 on a 35,238 square foot (0.81 acre, per Assessor) rectangular corner site, with frontages of 167’ on the East side of US Highway 45 and 296’ on the North side of Country Drive. The site is zoned GB for general business and has an indicated land-to-building ratio of 2.03:1, providing 32 off-street parking spaces. Building features include nine drive-in tandem service bays, a car wash, and an over-sized waiting area for customers. The building was occupied by “Goodyear US Auto Service & Collision Center” when CoStar Comps reported its sale in August 2018, which was confirmed by Realist, @ $900,000, assumed to be on a conventional basis, or $51.91 per square foot of building area.
This property is in a still only sparsely developed area of Grayslake, opposite the former Lake County Fairgrounds and just West of the unincorporated community of Wildwood. This property fronts well trafficked Route 45, just North of Belvidere Road (Illinois Route 120), entry through the adjacent community shopping center. The location is thus very similar to that of the subject, with no adjustment required.
Page No. 20 OPINION OF MARKET VALUE (continued)
Sale #1 – (continued) - This building is very similar in its mix of uses to the first floor portion of the subject, as the subject’s classrooms and lounge, and even the kitchen, could function as a customer waiting area. An upward adjustment in the price per square foot is require, relative to the subject’s first floor area, however, in spite of this building’s more recent construction and purpose-built design, due to the much larger size of the space, with none service bays, versus the subject’s five bays. Page No. 21 OPINION OF MARKET VALUE (continued)
Sale #2 – 801 W. Golf Road, Schaumburg (Cook County P.I. #07-16-101-037-0000) – This is a 3,663 square foot, one-story on slab, masonry and concrete brick constructed auto service building, built in 1990 on an 18,975 square foot corner site, with frontages of 140’ on the South side of Golf Road and 130’ on the West side of Salem Drive. The building features four drive-through service bays, five off-street parking spaces, and a +/- 1,851 square foot office/customer lobby area. The property is zoned B-4 for motor vehicle service uses and has an indicated land-to-building ratio of 5.18:1. CoStar Comps reports and Realist confirms that this property sold in June 2018 for $420,000, assumed to be on a conventional basis, or $114.66 per square foot of gross building area. The building was occupied by “Jiffy Lube” at the date of sale.
This property is in an intensely developed retail area, one block West and South of Higgins Road, about two miles West of Woodfield regional shopping center. However, the location has no specific competitive advantage over the several other auto service centers in this vicinity, as Golf Road is the less trafficked of these two streets and Salem Drive is a lightly traveled connector street. Thus, this is only a moderately superior location to that of the subject. A substantial downward adjustment in the price per square foot is require, relative to the subject’s first floor area, however, due to the much smaller size of the building, the more desirable drive-through service bays and the more efficient purpose-built design, as well as the high land to building ratio, which provide more on-site vehicle storage. Page No. 22 OPINION OF MARKET VALUE (continued)
Sale #3 – 910 W. Northwest Highway, Arlington Heights (Cook County P.I. #’s 03-30- 220-026-0000 and 03-30-220-071-0000) – This is an 8,431 square foot, one-story on slab, masonry constructed auto service building, built in 1956 on a 15,934 square foot (0.37 acre) rectangular shaped interior site, with 79’ of frontage on the Northeast side of Northwest Highway. The site is zoned B3 for commercial use and has an indicated land-to-building ratio of 1.90:1, providing 12 parking spaces at the rear of the building. Building features include only one drive-in door and central heating and air conditioning throughout, as it was not originally designed for auto service use. The building was occupied by “Richard’s Auto Body Shop Inc” when CoStar Comps reported and Relist confirmed its sale in January 2018 @ $310,000. The property was marketed for three months at an initial asking price of $529,000 before going under contract, which price included two hydraulic lifts, a frame straightener, a laser wheel alignment rack, and a spray booth as the only personal property.
The selling broker reported the actual purchase price to be $510,000, which is consistent with the asking price and relatively short marketing time, or $60.49 per square foot of building, with the recorded price reported by CoStar and Realist to be a self-serving allocation to the personalty, which had a contributory value of less than $50,000. We have, therefore, disregarded the personalty in our analysis of the sale, as the purchaser’s real estate tax savings due to the favorable allocation would offset any value attributable to the personalty. On the other hand, we believe it would be misleading to disregard this sale, as it is a very recent sale of a similar auto service building.
The price per square foot develop by this sale, as reported by the listing broker, requires only minor upward adjustment, as this is a similar size building, with only a single drive-in door and thus a less efficient layout for its continuing use servicing vehicles, although the ratio of garage space is similar to the first floor of the subject. Some upward adjustment is required, due to the low land to building ratio and more advanced age of the building (which was remodeled after the sale), but no net location adjustment is made in spite of the higher economic profile of Arlington Heights, as this property is in a less trafficked section of the arterial street it fronts, at the far North end of Arlington Heights, near Arlington Park race track.
Page No. 23 OPINION OF MARKET VALUE (continued)
Sale #4 – 920 N. Elmhurst Avenue, Mount Prospect (Cook County P.I. #03-27-307-021- 0000) – This is an 8,347 square foot, one-story on slab, masonry constructed auto service building, built in 1968 on a 29,620 square foot, irregular shaped interior site, with 203’ of frontage on the West side of Elmhurst Road. The building features seven tandem service bays, for 14 service spots, and a +/-3,000 square foot sales room. The property is zoned B4 for commercial use and has an indicated land-to-building ratio of 3.55:1, providing 30 off- street parking spaces. The building was occupied by “Firestone Complete Auto Repair” when CoStar Comps reported its sale in December 2017 for $900,000, confirmed by Realist, or $107.82 per square foot of building.
This property is opposite the primary West entrance to Randhurst Plaza, the multi-building redevelopment of the former Randhurst regional shopping center, and thus has a much superior specific location, relative to the subject. However, this property has several competing auto service buildings in the immediate vicinity, moderating this adjustment somewhat. This property is very similar to the first floor of the subject in building size and actual and effective age, as well as the land to building ratio and parking ratio. However, it has a more efficient “L”-shaped building design, providing more service spots and the customer area is already built-out.
Page No. 24 OPINION OF MARKET VALUE (continued) Sales Comparison Map
Comparable Sales Summary
Sale Sale Building Land Price/ # Location Date Size Ratio Year Built Sq. Ft. 183 S. U.S. Route 45, 1 8/18 17,338 sf 2.03:1 2007 $ 51.91 Grayslake 801 W. Golf Road, 2 6/18 3,663 sf 5.18:1 1990 $114.66 Schaumburg 910 W. Northwest Hwy., 3 1/18 8,431 sf 1.90:1 1956 $ 60.49 Arlington Heights 920 N. Elmhurst Avenue, 4 12/17 8,347 sf 3.55:1 1968 $107.82 Mount Prospect 14 Skokie Highway, Subject Current 12,242 sf 2.13:1 1970 TBD Lake Bluff
Page No. 25 OPINION OF MARKET VALUE (continued)
Analysis
The foregoing sales develop prices ranging from a low of $51.91 per square foot of gross building area, to a high of $114.66 per square foot of gross building area, with this broad range not unexpected as we limited our research to auto service buildings with above average ratios of finished customer waiting areas, or more extensive build-out than is typical, which is the type of use for which the first floor area of the subject is best suited. The individual sales have been adjusted relative to only this portion of the subject building, with appropriate adjustments made for differences in location, building size and actual/effective age, and other physical characteristics, as indicated in our comments regarding each sale.
In each case, we have made adjustments based on the prospective purchaser acquiring the property on an “as is” basis, anticipating all costs associated with building-out the ground floor space now used as a dispatch room, two private offices, a large classroom and the lounge/dining room for the use of customers and employees, while retaining the kitchen and washroom will be borne by the purchaser after the sale. This will require a cost of not less than $20 per square foot for the +/- 3,800 square feet of space to be reconfigured, resulting in an adjustment of about $76,000, or about $9.00 per square foot for the total ground floor area of 8,371 square feet. Thus, it is our opinion that this portion of the subject property in its “as is” condition on its fully buildable site, would develop a market value of $65.00 per square foot of first floor building area.
The contributory value of the second floor finished area is substantially less than that of the first floor, due to the limited demand for second floor office space in this market area, the poor access to the building and this space for office use, and the greater cost per square foot to build out this space for office use. Estimating its contributory value at about one-third that of the first floor space, of office build-out versus – due both to the restricted access and very limited demand for second floor office space in this market area - to access to include the buyer’s cost to build-out the space for office use. Thus, it is our opinion that this portion of the subject property in its “as is” condition, without double-counting the site value, develops a contributory value of $22.00 per square foot of second floor building area.
Applying these estimated values to the ground floor area of 8,371 square feet, and the second floor area of 3,871 square feet, it is our opinion that the market value of the fee simple interest in the subject property, in its “as is” condition as of the date of our inspection on February 20, 2019, subject to the usual term and conditions of our appraisal reports but with no property-specific hypothetical conditions or extraordinary assumptions, of:
SIX HUNDRED THIRTY THOUSAND DOLLARS
($630,000)
Page No. 26 OPINION OF MARKET VALUE (continued)
Marketing time is defined by the Appraisal Institute’s Online Dictionary of Real Estate Appraisal2 as “An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal.” It is our opinion that an estimated marketing time of approximately six to nine months should be anticipated for the subject property, if offered for arm's length sale at the opinion of value developed in this report. This is based on our perception of the active market in this active industrial area and is corroborated by the marketing times that have been reported in the Sales Comparison Approach section of this report or maintained in our files.
Exposure time is defined as “The estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective estimate based on an analysis of past events assuming a competitive and open market.” A similar exposure time of six to nine months is anticipated, as there is no evidence of a change in supply and demand factors at this time.
Our opinion of the property's Market Value is related to the real estate only and has not considered investor specific tax or investment consequences. In our opinion, no items of personal property would be included in the sale of a property of this type, which is vacant land.
2 http://www.myappraisalinstitute.org/dictionary/welcome.aspx?id=H1FSHE8S93EALX0WZY
Page No. 27 ALTERNATE BUILDING SALES
The following pages describe four recent sales of buildings in the subject’s market area, each of which would now be commonly described as “flex” buildings. These properties are each of industrial design and zoning originally but have expanded office areas and/or higher quality interior build-out than conventional industrial buildings. These are representative of the type of buildings described in the Highest and Best Use Analysis section of this appraisal report, but are not directly comparable to the subject property, as now configured.
1171 Northpoint Boulevard, Building 1, Waukegan (Lake County P.I. #’s 07-36-203-022 through 07-36-203-204 and 07-36-203-033) – This is a 19,687 square foot, one-story, precast concrete constructed industrial building, built in 2000 on a 62,291 square foot (1.43 acre) irregular shaped interior site, with 150’ of frontage on the North side of Northpoint Boulevard. The site is zoned R/LI for research and light industrial use and has an indicated land-to-building ratio of 3.16:1, providing 32 off-street parking spaces. Building features include 5,987 square feet (30.4%) of office space, 18’ clear ceiling height, two exterior loading docks, one overhead drive-in door, and 400-ampere, 208-volt, three-phase electric system. CoStar Comps reports and Realist confirms that this property sold in July 2018 for $1,275,000, assumed to be on a conventional basis, or $64.76 per square foot of building area. The building was reportedly marketed for approximately four years before going under contract.
Page No. 28 ALTERNATE BUILDING SALES (continued)
1360 Abbot Court, Buffalo Grove (Lake County P.I. #15-28-215-007) – This is a 14,270 square foot, one-story, masonry constructed industrial building, built in 1998 on a 40,075 square foot (0.92 acre) irregular shaped interior site, with 118’ of frontage on the North side of Abbott Court. The site is zoned I for industrial use and has an indicated land-to-building ratio of 2.81:1, providing 33 off-street parking spaces. Building features include 6,500 square feet (46%) of office space, 17’ clear ceiling height, one exterior loading dock with levelator, two overhead drive-in doors, wet fire suppression system, full security system including indoor/outdoor cameras, a data center, back-up generator, and 400-ampere, 208- volt, three-phase electric system. CoStar Comps reports and the Lake County Assessor confirms that this property sold in May 2018 for $1,375,000, assumed to be on a conventional basis, or $96.36 per square foot of building area. The property was reportedly marketed for five months before going under contract.
Page No. 29 ALTERNATE BUILDING SALES (continued)
14100 West Lambs Lane, Green Oaks (Lake County P.I. #11-23-200-021) – This is an 18,750 square foot, one-story, masonry constructed, multi-tenant industrial building, built in 1986 on a 63,647 square foot (1.46 acres), rectangular shaped interior site with approximately 415’ of frontage on the South side of Lambs Lane. The site is zoned LI for limited industrial use and has an indicated land-to-building ratio of 3.39:1, providing 32 off- street parking spaces. Building features include an estimated 25% office area ratio, one exterior loading dock and two drive-in doors. CoStar Comps reports and Realist confirms that this property sold in January 2018 for $1,450,000, assumed to be on a conventional basis, or $77.33 per square foot of building area.
Page No. 30 ALTERNATE BUILDING SALES (continued)
850 Forest Edge Drive, Vernon Hills (P.I. #’s 15-15-101-003 through 15-15-101-006) – This is a 12,649 square foot, one-story on slab, masonry constructed single-user building, built in 1990 and now fully built-out for “bullpen” office use. The building is situated on an 81,458 square foot (1.87 acre, per Assessor), generally rectangular shaped interior site, with 204’ of frontage on Forest Edge Drive. The building site is cut into a heavily wood lot within the Corporate Woods of Vernon Hills business park. The site is zoned BP, Business Park district, and the indicated land-to-building ratio of 6.44:1 provides 50 off-street parking spaces. CoStar Comps reported and Realist confirms that this property was sold in January 2018 for $1,095,000, with a $600,000 mortgage from Lake Forest Bank and Trust, or $86.57 per square foot of gross building area. The property was vacant while it was marketed for 17 months at an initial asking price of $1,250,000 before going under contract, with the Northeast Council of Boy Scouts of America, Inc. as the purchaser.
As described in the Highest and Best Use section of this report, these sales have been provided to demonstrate the opinion of value of the subject property if it were converted to flex/industrial use. It is our opinion that the subject would develop a market value of about $80.00 per square foot, or (say) $980,000. Deducting from this opinion of market value the direct cost of build-out of $385,000, and a return on the indirect costs (including risk) of 12% or (say) $45,000, the net value of the property under this scenario on an “as is” basis is $550,000 ($980,000, less $385,000 and $45,000).
Page No. 31 CERTIFICATION for 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
The undersigned does hereby certify that, to the best of his knowledge and belief, except as otherwise noted in this appraisal report:
The appraisers have no past, present or contemplated future interest in the property that is the subject of this report; that neither the employment to prepare the appraisal, nor the compensation therefore, are contingent upon a requested minimum or maximum valuation, a specific valuation or the approval of a loan. Nor is he dependent on an action or event resulting from the analyses, opinions, conclu- sions in, or the use of this report.
The appraisers have not performed any real estate or other services involving the subject property within the three years immediately preceding our engagement for appraisal services.
The appraisers have no personal interest in or bias with respect to the subject matter of the appraisal report or the parties involved. The value(s) estimated in the appraisal report is (are) not based in whole or in part upon the race, color, or national origin of the present or prospective owners or occupants of the property appraised, or of the present owners or occupants of properties in the vicinity of the property appraised.
The appraiser has personally inspected the property to the extent indicated below. To the best of the appraiser’s knowledge and belief, all statements of fact in this report are true and correct. I have not knowingly withheld any significant information.
The reported analyses, opinions and conclusions are limited only by the assumptions and limiting conditions, and are my personal, unbiased professional analyses, opinions and conclusions.
This appraisal report has been prepared in conformity with and is subject to the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute, the Uniform Standards of Professional Appraisal Practice (USPAP), and the standards of all appraisal organizations with which the appraisers are affiliated. The appraisers certify that the use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.
The appraisers are competent to complete this assignment in accordance with the Competency Provision of the Uniform Standards of Professional Appraisal Practice.
No one provided significant professional assistance to the persons signing this certification. All conclusions and opinions concerning the real estate that are set forth in the appraisal report were prepared by the appraisers whose signatures appear below. No change of any item in the appraisal report shall be made by anyone other than the appraisers, and the appraisers shall have no respon- sibility for any unauthorized change.
The Appraisal Institute conducts a voluntary program of continuing education for designated members. MAI's, SRPA’s and SRA's who meet the minimum standards are awarded periodic educational recertification. As of the date of this report, Howard B. Richter, MAI, AI-GRS and Andrew J. Richter, MAI, have completed the requirements of the continuing education program of the Appraisal Institute.
March 5, 2019 Howard B. Richter, MAI, AI-GRS Andrew Richter, MAI Date Illinois License #553.000101 Illinois License #553.001885 Did not inspect the property Did inspect the property Expiration Date: 9/30/19 Expiration Date: 9/30/19
Page No. 32 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
FRONT VIEW EAST AND NORTH ELEVATIONS, LOOKING SOUTHWEST
FRONT VIEW EAST AND SOUTH ELEVATIONS, LOOKING NORTHWEST
Photographed: February 2019 Page No. 33 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
SIDE VIEW NORTH ELEVATION, LOOKING SOUTH
REAR VIEW WEST ELEVATION, LOOKING SOUTHEAST
Photographed: February 2019 Page No. 34 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
GARAGE
GARAGE
Photographed: February 2019 Page No. 35 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
DISPATCH ROOM
CLASSROOM
Photographed: February 2019 Page No. 36 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
KITCHEN
LOUNGE
Photographed: February 2019 Page No. 37 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
KITCHEN
LOUNGE
Photographed: February 2019 Page No. 38 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
OFFICE
OFFICE
Photographed: February 2019 Page No. 39 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
BUNK ROOM
GYM
Photographed: February 2019 Page No. 40 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
SECOND FLOOR CONFERENCE ROOM
BATHROOM
Photographed: February 2019 Page No. 41 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
STREET VIEW FRONTAGE ROAD LOOKING NORTH
STREET VIEW FRONTAGE ROAD LOOKING SOUTH
Photographed: February 2019 Page No. 42 14 SKOKIE HIGHWAY in UNINCORPORATED LAKE COUNTY near LAKE BLUFF, ILLINOIS
STREET VIEW SKOKIE HIGHWAY LOOKING SOUTH
STREET VIEW SKOKIE HIGHWAY LOOKING NORTH
Photographed: February 2019 Page No. 43 LAKE COUNTY TAX PARCEL MAP
Page No. 44 AREA STATISTICS
Page No. 45 LAKE BLUFF INFOGRAPHIC
Page No. 46 KNOLLWOOD STATISTICS
Page No. 47 KNOLLWOOD INFOGRAPHIC
Page No. 48 SUBJECT MAP
Page No. 49 CHICAGO AND VICINITY MAP
Page No. 50 ASSUMPTIONS AND LIMITING CONDITIONS
The Certification of the appraisers appearing in the appraisal report is subject to the following conditions and to such other specific and limiting conditions as are set forth by the Appraisers in the report.
The information identified in this report, as furnished by others, is believed to be reliable, but no responsibility for its accuracy is assumed.
This appraisal covers the property as described in this report. The locations and dimensions as shown herein are assumed to be correct, but should be confirmed by a surveyor.
Any sketches contained in this report are included only to assist the reader in visualizing the property. The appraisers have made no survey of the premises and assume no responsibility in connection with such matters. All improvements are assumed to be within the property lines and constructed in accordance with all zoning and building ordinances, unless otherwise noted.
The appraiser assumes that there are no hidden or unapparent conditions of the property, subsoil or structures, which would render it more or less valuable, unless specifically mentioned. The appraiser assumes no responsibility for such conditions, or for engineering, which might be required to discover such factors.
The appraisers have no specific qualifications regarding property inspections, and this report should not be relied upon as to the condition of the property being appraised. Nothing contained in this report shall be construed as warranting, expressing, or otherwise implying any future value of the real or personal property. This appraisal applies solely to the date of valuation stated herein.
The legal description furnished to the appraiser is assumed to be correct. No responsibility for matters that are legal in character is assumed, and no opinion as to the title is rendered here- with. The title is assumed to be merchantable, and all existing liens and other encumbrances have been disregarded, unless otherwise specifically noted. The property is appraised as though the title was free and clear, under responsible ownership and competent management.
Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose, by any but the client for whom it was made, without the written consent of the appraisers. The content of this report is governed by the Bylaws and Regulations of the professional organizations with which the appraisers are affiliated.
The appraisers are not required to testify or attend any legal proceedings in regard to this appraisal, unless prior arrangements have been made therefore. Any allocation of total value to land or buildings, as shown in this report, is invalidated when used separately and/or in conjunction with any other appraisal.
Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales or other media, without the written consent of its author; especially where this entails valuation conclusions, or the identity of the appraiser the firm, and reference to the Appraisal Institute, or the MAI or AI-GRS designations.
Page No. 51 QUALIFICATIONS OF ANDREW J. RICHTER, MAI
Andrew J. Richter, MAI is President and Owner of Second City Appraisal, Inc. He previously served as Director of Commercial Valuation for Real Valuation Services and Valucentric. Prior to that, he served as Vice President of Howard B. Richter and Associates. He has been engaged full time in the appraisal of commercial real estate since 2002. Through 2017, Mr. Richter prepared appraisals of approximately 80 income producing properties annually, in addition to numerous residential and unimproved properties. He has completed appraisals throughout the Chicago market area, as well as Indiana and Wisconsin.
Designations Held Member of the Appraisal Institute, MAI Designation conferred November 2014 Illinois Certified General Real Estate Appraiser - License #553.001885 Wisconsin Certified General Real Estate Appraiser – License #1981-10 Indiana Certified General Real Estate Appraiser – License #CG41500041
General Education BA - Washington University in St. Louis, 2002
Appraisal Institute Courses Completed Advanced Market Analysis and Highest & Best Use Business Practices and Ethics Advanced Income Capitalization Report Writing and Valuation Analysis Advanced Concepts & Case Studies 7-Hour National USPAP Update Course
Memberships Designated Member of the Appraisal Institute Alternate Region Representative for the Chicago Chapter of the Appraisal Institute Former President of Illinois Association of Certified Real Estate Appraisers (IACREA) Member of Illinois Coalition of Appraisal Professionals (ICAP)
Types of properties appraised include: Residential Apartment buildings Individual condominium units Apartments with stores/offices Nursing homes Assisted living for the elderly Single-family homes Condominium developments Subdivision analysis Congregate/Independent Living Facilities
Industrial Cold storage facilities Light and heavy manufacturing Crane industrial buildings Multi-tenant incubator buildings Flex Buildings Research & development Food processing plants Warehouse facilities
Commercial Banks and Savings & Loans Regional shopping centers Commercial and professional office Retail stores Community shopping centers Strip centers Grocery and discount stores
Special Purpose Automobile sales & service Funeral homes Bowling alleys Hotels & motels Golf courses Restaurants Churches Service stations
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Page No. 53 QUALIFICATIONS OF HOWARD B. RICHTER, MAI, AI-GRS
Howard B. Richter served as President of Howard B. Richter & Associates from the organization of that firm in 1984 until 2015, and still serves as Director of Appraisal Review for both that company and its current parent organization, Second City Appraisal, Inc. He previously completed three years as President and owner of Donald A. Engel Associates, Inc., their predecessor organization, having been Vice President of that firm since its incorporation in January 1976. He has been engaged full time in the appraisal of real estate since 1974.
Since 1984, Mr. Richter has prepared appraisals of approximately 80 income producing properties annually, in addition to numerous residential and unimproved properties. He also supervised the preparation of more than 300 income property appraisals annually, as well as about 1,200 residential appraisals annually from 1991 to 1996, while Chief Appraiser for Midland Appraisal Incorporated. He has completed appraisals throughout the Chicago market area and downstate Illinois, as well as in 17 other states; and still performs both valuation and consulting assignments personally.
Designations Held
Member, Appraisal Institute (MAI) - (Continuing Education Completed) Designated, Appraisal Institute – General Review Specialist (AI-GRS) Illinois Certified General Real Estate Appraiser - License #553.000101.
Related Positions
Formerly, Adjunct Professor of Finance and Real Estate – DePaul University. Formerly, Adjunct Professor of Real Estate Appraising – Triton College. President, Illinois Association of Certified Real Estate Appraisers, 2011 & 1993. Member of the Admissions and Candidate Guidance Committees of the Appraisal Institute (Illinois Chapter), 1992 to 1997. Chaired, Appraisal Institute Experience Review Panels, 1996 through 2002. Member, Appraisal Institute Experience Panel, 1994 - 2012 Assistant Regional Member, Review and Counseling Division of the Appraisal Institute (Midwest Region), 1994 to 2001. Illinois Approved Real Estate Continuing Education Instructor - License #163-000777, expired Member of the General Demonstration Appraisal Reports Subcommittee of the Appraisal Institute (National), 1992 to 1994. Grader, Demonstration Appraisal Reports, 1993 to 2012. Member, Appraiser's Council of the Chicago Real Estate Board, 1990 to 1992. Faculty Member of the Real Estate Institute of the Chicago Real Estate Board, 1991 to 1995. Seminar Instructor for the Appraisal Institute Seminar Instructor for the International Association of Assessing Officers Past President, Great Lakes Real Estate Analysts Computer Users Group. Regular columnist in "Chicagoland Real Estate Digest." (1995-96)
General Education
MA - University of Chicago, 1974. BA - Lake Forest College, 1969. Elected to Phi Beta Kappa.
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