HomeMy WebLinkAboutAppraisal_24-0032, KF, City of Denton Elec Easement
APPRAISAL REPORT
MASCH BRANCH STREET TO BONNIE BRAE STREET
FASTENAL COMPANY
3833 AIRPORT ROAD
DENTON, DENTON COUNTY, TEXAS
FOR
7ARROWS LAND STAFF, LLC
777 MAIN STREET, SUITE 600
FORT WORTH, TEXAS 76102
16910 DALLAS PARKWAY, SUITE 100
DALLAS, TEXAS 75248
24-0032
16910 Dallas Parkway, Suite 100 Dallas, Texas 75248
Ofc: 214.340.5880 www.PylesWhatley.com Appraisals@pyleswhatley.com
February 6, 2024
Ms. Nikki Costanza, Managing Partner
7Arrows Land Staff, LLC
777 Main Street, Suite 600
Fort Worth, Texas 76102
Re: A real estate appraisal of a distribution warehouse for the Masch Branch Street to Bonnie Brae
Street project located at 3833 Airport Road, Denton, Denton County, Texas.
Dear Ms. Costanza:
At your request, we submit this appraisal report to estimate the market value of the above referenced
property. We have made an on-site inspection of the property and considered factors pertinent to and
indicative of value including the Denton area characteristics, market area data and trends, locational
amenities, highest and best use, and other elements of value.
This is an Appraisal Report, intended to comply with the reporting requirements set forth under
Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for the preparation of
an Appraisal Report. As such, it presents summary discussions of the data, reasoning, and analyses that
were used in the appraisal process to develop the appraiser's opinion of value. Methodology and
terminology used throughout the report may be found in The Appraisal of Real Estate, Fifteenth Edition,
as published by the Appraisal Institute.
The subject property is a tract of land totaling 1,861,856 square feet, improved with a distribution
warehouse, located at the southwest corner of Airport Road and Corbin Road. Our opinions of value for
the subject are effective as of January 25, 2024.
The appraisal problem, as applied to the subject, is to determine the property’s market value and the
total compensation due to the property owner for the proposed acquisition. “Market Value is the price
which the property would bring when it is offered for sale by one who desires, but is not obliged to sell,
and is bought by one who is under no necessity of buying it, taking into consideration all of the uses to
which it is reasonably adaptable and for which it either is or in all reasonable probability will become
available within the reasonable future.” City of Austin v. Cannizzo, 267 S.W. 2d 808 (Tex. 1954).
24-0032
Page 2
Ms. Nikki Costanza
February 6, 2024
With reference to the preceding definition, our opinions of value are as follows:
Whole Property 30,000,000$
Part To Be Acquired in Easement 64,033$
Remainder - Before the Acquisition 29,935,967$
Remainder - After the Acquisition 29,935,967$
Damages 0$
Costs-to-Cure 1,000$
Total Compensation 65,033$
Any personal property, fixtures, or intangible items that are not real property - that are included in the
valuation - are identified as personal property and discussed herein.
The following report sets forth a description of the property along with a summary of the market data
considered and the conclusions derived from such data. Your attention is directed to the general
assumptions and limiting conditions on the following pages, as well as the extraordinary assumptions
and hypothetical conditions.
If you should have questions concerning any portion of this appraisal report, please contact our office.
Respectfully submitted,
PYLESWHATLEY CORPORATION
Richard McBride Kathleen Foley
State of Texas Certification # TX-1380335-G State of Texas Certification #TX-1380509-G
24-0032
SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS
MASCH BRANCH STREET TO BONNIE BRAE STREET PROJECT
Parcel Owner
Location
Whole Property Land Area 42.742 acres (or 1,861,856 SF)
Part To Be Acquired - Permanent Utility Easement 0.4080 acres (or 17,787 SF)
Zoning
Highest & Best Use
Reasonable Exposure Time
Effective Date of the Appraisal
Date of Appraisal Report
Whole Property 30,000,000$
Part To Be Acquired in Easement 64,033$
Remainder - Before the Acquisition 29,935,967$
Remainder - After the Acquisition 29,935,967$
Damages 0$
Costs-to-Cure 1,000$
Total Compensation 65,033$
9 to 12 months
January 25, 2024
February 6, 2024
Industrial Development
Fastenal, Company
3833 Airport Road
Denton, Texas 76207
HI, Heavy Industrial
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TABLE OF CONTENTS
LETTER OF TRANSMITTAL
SUMMARY OF IMPORTANT FACTS
PAGE
SCOPE OF THE ASSIGNMENT ............................................................................................... 1
DEFINITION OF MARKET VALUE ........................................................................................ 8
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS .............................................. 9
EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS .................... 12
REGIONAL MAP ....................................................................................................................... 13
MARKET AREA ........................................................................................................................ 14
LOCATION MAP ....................................................................................................................... 22
SUBJECT PROPERTY.............................................................................................................. 23
REAL ESTATE TAX ANALYSIS ............................................................................................ 28
AERIAL PHOTOGRAPH ......................................................................................................... 29
SUBJECT PHOTOGRAPHS .................................................................................................... 31
WHOLE PROPERTY SKETCH .............................................................................................. 39
ZONING MAP ............................................................................................................................ 40
FLOOD MAP .............................................................................................................................. 41
HIGHEST AND BEST USE ...................................................................................................... 42
LAND VALUATION .................................................................................................................. 44
COST APPROACH .................................................................................................................... 54
SALES COMPARISON APPROACH ..................................................................................... 58
INCOME CAPITALIZATION APPROACH .......................................................................... 72
RECONCILIATION – WHOLE PROPERTY VALUE ......................................................... 85
PART TO BE ACQUIRED ........................................................................................................ 87
REMAINDER BEFORE THE ACQUISITION ...................................................................... 90
REMAINDER AFTER THE ACQUISITION ......................................................................... 91
SUMMARY OF COMPENSATION......................................................................................... 94
APPRAISER’S CERTIFICATE ............................................................................................... 95
APPRAISER QUALIFICATIONS ........................................................................................... 96
ADDENDA
PARCEL SURVEY/FIELD NOTES
TAX INFORMATION
ZONING INFORMATION
LETTER OF NOTICE
USPS RETURN RECEIPTS
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SCOPE OF THE ASSIGNMENT
1
Purpose of the Appraisal
SCOPE OF THE ASSIGNMENT
The purpose of this appraisal is to estimate the market value of the subject property: the whole
property, part to be acquired, remainder property, and any damages to the remainder property.
This is an Appraisal Report, intended to comply with the reporting requirements set forth under
Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice for an
Appraisal Report. As such, it presents summary discussions of the data, reasoning, and analyses
that were used in the appraisal process to develop the appraiser's opinion of value. Supporting
documentation concerning the data, reasoning, and analyses is retained in the appraiser's file.
The depth of discussion contained in this report is specific to the needs of the client and intended
user(s) for the intended use stated below. The appraisers are not responsible for unauthorized
use of this report.
Client, Intended Use, and Intended User
7Arrows Land Staff, LLC is the client of Pyles Whatley Corporation. The intended use of this
appraisal is to assist the client in their determination of total compensation due to the property
owner - the market value of the property to be acquired and any remainder damages. The
intended users are 7Arrows Land Staff, LLC and the City of Denton, its officers, employees, and
agents. Any other user or uses are not intended or authorized. Use of this appraisal for any other
use or by another user may invalidate the findings and conclusions.
The client has been notified that the appraiser has not appraised the subject property in the three
years preceding the date of this report.
Effective Date of the Appraisal
The subject property is appraised as of January 25, 2024, the effective date, and is subject to the
market influences and economic conditions, which existed on that date. The subject property was
inspected on January 25, 2024.
Date of the Report: February 6, 2024
Interest(s) Valued: Fee Simple Estate and Easement Estate
A Fee Simple Estate is definable as absolute ownership, unencumbered by another interest or
estate, and subject only to the limitations of eminent domain, escheat, police power, or taxation.
An Easement Estate is defined as an interest in real property that conveys use, but not ownership,
of a portion of an owner's property.
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SCOPE OF THE ASSIGNMENT
2
Identification of Property
The subject is located at the southwest corner of Airport Road and Corbin Road, in the city of
Denton, in Denton County, Texas. The subject is physically addressed as 3833 Airport Road,
Denton, Texas 76207. The subject is improved with a distribution warehouse building. According
to the information provided, the subject tract comprises 1,861,856 square feet (42.7423 acres).
Abutting uses are industrial development across Airport Road along the north side, industrial
development across Corbin Road along the east side, and vacant industrial land to the south and
west sides.
The subject is currently used as a distribution warehouse. The property appraised is identified as the
subject property, as improved.
Legal Description
The subject is legally described as being a tract of land in the William Neill Survey, Abstract No.
970, Fastenal Addition, Block A, Lot 1, and being that same tract conveyed as Tract Six, Section 3,
in deed to Rayzor Investments, Ltd, recorded in Volume 1796, Page 601, of the Denton County,
Deed Records, Denton County, Texas.
Subject History
According to public records, ownership is vested in Fastenal, Company. The property is the result
of two transactions. A 1,095,649 square foot lot transferred to Fastenal Company on April 7, 2004,
from Chester Properties Limited as recorded in Document Number 2004-46499. An adjoining
807,778 square foot lot transferred to Fastenal Company on April 16, 2004, from Rayzor
Investments, LTD as recorded in Document Number 2004-48713. The two adjoining lots were re-
plated as one on July 19, 2007, as recorded in Document Number 2007-86273 resulting in a
combined area of 1,903,427 square feet. The Texas Department of Transportation acquired a 41,571
square foot right-or-way along the northern property line on April 15, 2022, as recorded in
Document Number 2022-93309. After this acquisition, the net square footage of the subject
property is 1,861,856. This land area is utilized in the following analysis. The price and terms of the
two sale transactions are unknown. No other known transactions have occurred in the last five
years. To our knowledge, the property is not for sale or under a purchase contract.
The subject is owner occupied and operated. Operating income and expenses are not available for
analysis or consideration.
This information is included only to satisfy the requirements of USPAP. It is not intended as a
guarantee of title or chain of title. Any interested party should obtain a title search performed by a
qualified title expert as needed.
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SCOPE OF THE ASSIGNMENT
3
Inspection Information
We contacted the subject property owner by certified mail. A copy of the letter and return receipt
are included in the addenda of this report. The property owner received the certified letter but did
not contact the appraiser. The property owner, or representative, was not present at the time of the
inspection on January 25, 2024.
Project Description
The Denton Municipal Electric Company proposes to relocate the existing overhead electric
utility lines to accommodate the road widening project by TXDOT. Permanent easements are
required.
The proposed right of way project is part of the Farm-to-Market 1515 Reconstruction and
Widening from Masch Branch Street to Bonnie Brae Street project. The project will include two
12-foot wide inside travel lanes and one 14-foot outside shared-use lane (for bicycle
accommodation) with raised median and curb and gutter in each direction: and continuous 5-foot
wide sidewalks along both sides of the road. The project is outlined in orange on the project map
below.
Part To Be Acquired
The City of Denton proposes to acquire a permanent easement of the subject property for the
Masch Branch Street to Bonnie Brae Street Project. The proposed acquisition is comprised of a
permanent utility easement. Per the enclosed parcel surveys and field notes, the part to be acquired
in permanent easement totals 17,787 square feet (0.4080 acres).
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SCOPE OF THE ASSIGNMENT
4
Appraisal Problem
The appraisal problem, as applied to the subject, is to determine the market value of the fee
simple interest in the subject property and determine the total compensation due to the property
owner for the proposed acquisition. In addressing this problem, the principles of utility,
substitution, and anticipation are considered in the following valuation.
Data Researched
For this report, the subject market was researched for all pertinent data relating to the appraisal
problem including the following: collecting and confirming data through brokers, appraisers,
property owners, lessees/lessors, and others familiar with the real estate market. The information
provided by these sources is deemed reliable but is not guaranteed.
In addition, verifiable third-party sources were utilized including CoStar, the Multiple Listing
Service (MLS) and others. Where applicable, additional market data was extracted from market
reports and data circulated and purchased from, Real Estate Research Corporation, Price
Waterhouse Coopers Korpacz Investor Survey, Yieldstar and others. The information provided
by these sources is deemed reliable but is not guaranteed.
Competency
The appraisers involved in this assignment have experience in appraising this property type and
have adequate knowledge of the property type and location to meet the competency requirements
of the Uniform Standards of Professional Appraisal Practice. In addition, other appraisers in the
market would perform similar actions in the appraisal process to fulfill the scope of work in this
assignment and the appraisal meets or exceeds the expectations of parties who are regularly
intended users for similar assignments.
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SCOPE OF THE ASSIGNMENT
5
Procedure
The proposed acquisition traverses the subject tract along the northern and eastern property lines.
The proposed acquisition is not considered to affect the current use of the property.
For this appraisal, the subject property was inspected, and the highest and best use analyzed
considering the factors of physically possible, legally permissible, financially feasible, and
maximally productive. The cost, sales comparison and income capitalization approaches are
applicable for appraisal purposes and are included in the valuation of the subject. The market
was researched for all pertinent land sale data and improved sales and rentals relating to the
valuation. These data are analyzed and adjusted using commonly accepted appraisal techniques.
The subject land is valued by market comparison of similar tracts of land using the sales
comparison approach. The resulting value indications are reconciled to one final opinion of
value of the whole property.
Exposure Time
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 opinion based on an analysis
of past events assuming a competitive and open market.
Considering the state of the economy, properties of the subject type, and market participants’
actions, an exposure time of 9 to 12 months is concluded for the subject property – at a value
consistent with the conclusions of this report.
Project Influence
The subject property is appraised excluding consideration of the effect, if any, on value of the
whole property and the part to be acquired caused by the proposed public improvements and
excluding any non-compensable damages to the remainder property that result because of the
part acquired or the public project. We conclude that the impending project has no effect on the
whole property or on the comparable market data used herein.
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SCOPE OF THE ASSIGNMENT
6
JURISDICTIONAL EXCEPTION
The Uniform Standards of Professional Appraisal Practice (USPAP) requires that “When
analyzing anticipated public or private improvements, located on or off the site, an appraiser
must analyze the effect on value, if any, of such anticipated improvements to the extent they are
reflected in market actions.” USPAP, Standards Rule 1-4 (f)
USPAP provides that in developing a real property appraisal, an appraiser must: “determine the
scope of work necessary to produce credible assignment results in accordance with the SCOPE
OF WORK RULE.” USPAP, Standards Rule 1-2 (h)
The USPAP Comment section of the SCOPE OF WORK RULE states in part:
“Comment: The scope of work is acceptable when it meets or exceeds:
• the expectations of parties who are regularly intended users for similar
assignments; and
• what the appraiser’s peers’ actions would be in performing the same or a
similar assignment.”
It is generally an accepted public policy that the appraisal of rights-of-way excludes the effect on
value, if any, that a proposed public improvement may have on the whole property and the part
to be acquired. The appraisal of the remainder property must include the effects of the part
acquired and the public project, except elements that are considered non-compensable are
excluded from the remainder analysis. In keeping with this policy, a Jurisdictional Exception is
invoked – the subject property is appraised excluding the consideration of any effect on value of
the whole property and the part to be acquired caused by the proposed public improvements and
excludes any non-compensable damages to the remainder property that may result because of the
part acquired or the public project. The impending project has no effect on the whole property or
on the comparable sales used herein. City of Fort Worth v. Corbin. 504 S.W. 2d 828 (Tex. 1974)
and Fuller v. State, 461 S.W. 2d 595, 598 (Tex. 1970)
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SCOPE OF THE ASSIGNMENT
7
Scope of Work
Pyles Whatley Corporation, through its licensed appraisers has performed all aspects of the real
estate appraisal report, to include the following:
- Identified the property and interests to be appraised;
- Communicated with 7Arrows Land Staff, LLC personnel, and as appropriate, other
service providers, and landowners, regarding the appraisal assignment;
- When possible, communicated with the property owner regarding the history and the
condition of the subject property;
- Researched public records regarding the history and the condition of the subject property;
- Researched the public records for data on the subject property, including zoning,
assessments, taxes, acreage, buildings and site improvements, and maps;
- Performed a preliminary search of all available resources to determine market trends,
influences and other significant factors pertinent to the subject properties. Inspected the
subject property and subject area, and photographed the subject and relevant comparable
sales and income properties; although due diligence has been exercised in inspection of
the properties, the appraiser is not an expert in such matters as soils, structural
engineering, hazardous waste, environmental conditions, the ADA, and other similar
matters, and no warranty is given as to these elements; An interior inspection of the
subject improvements was not available.
- Performed an analysis of the highest and best use of the subject property;
- Researched and collected relevant data (improved sales, escrow sales, listings, and
income and other market data) as present in the market area (from public and private
sources) and of sufficient quality to express an opinion of value as defined in the
appraisal reports;
- Gathered and analyzed the market data to reach an estimate of market value for the
appropriate interest in the subject, using the methodology and valuation approaches that
are relevant to the assignment;
- Assembled and wrote the narrative report, complete with maps, photos, and supporting
addenda;
- Prepared and submitted a written appraisal report of the subject property, as requested by
the client;
- A narrative appraisal report meets the client’s requirements.
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DEFINITION OF MARKET VALUE
8
The definition of market value is:
Definition of Market Value
“Market Value is the price which the property would bring when it is offered for sale by one who
desires, but is not obliged to sell, and is bought by one who is under no necessity of buying it,
taking into consideration all of the uses to which it is reasonably adaptable and for which it either
is or in all reasonable probability will become available within the reasonable future.” City of
Austin v. Cannizzo, 267 S.W. 2d 808 (Tex. 1954).
In this report, a market value opinion of the fee simple interest in the real property is developed.
24-0032
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
9
The Uniform Standards of Professional Appraisal Practice and the Code of Professional Ethics
and Standards of Professional Practice of the Appraisal Institute require the appraiser to "set
forth all assumptions and limiting conditions that affect the analyses, opinions, and conclusions
in the report”. In compliance therewith, and to assist the reader in interpreting this report, such
general assumptions and limiting conditions are set forth below. Specific assumptions, if any,
are referred to in the transmittal letter and their location in the report detailed.
GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
Title is assumed to be marketable and free and clear of all liens and encumbrances, easements,
and restrictions except those specifically discussed in the report. The property is appraised
assuming it to be under responsible ownership and competent management and available for its
highest and best use.
No opinion is intended to be expressed for legal matters or that would require specialized
investigation or knowledge beyond that ordinarily employed by real estate appraisers,
notwithstanding the fact that such matters may be discussed in the report.
No opinion is expressed on the value of subsurface oil, gas, water, or mineral rights or whether
the property is subject to surface entry for the exploration or removal of such except as expressly
stated.
The date of value to which the opinions expressed in this report apply is set forth in the letter of
transmittal. The appraiser assumes no responsibility for economic or physical factors occurring
at some later date, which may affect the opinions herein stated.
The valuation is reported in dollars of U.S. currency prevailing on the date of the appraisal.
Maps, plats, and exhibits included herein are for illustration only as an aid in visualizing matters
discussed within the report. They should not be considered as surveys or relied upon for any
other purpose unless specifically identified as such.
All information and comments pertaining to this and other properties included in the report
represent the personal opinion of the appraiser, formed after examination and study of the subject
and other properties. While it is believed the information, estimates and analyses are correct, the
appraiser does not guarantee them and assumes no liability for errors in fact, analysis or
judgment.
Neither all nor any part of the contents of this report (especially any conclusions as to value, the
identity of the appraiser or the firm with which they are connected, or any reference to the
Appraisal Institute or to the MAI or SRA designation) shall be disseminated to the public
through advertising media, public relations media, sales media, or any other public means of
communication without written consent and approval of the undersigned.
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GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
10
The appraiser is not required to give testimony or to appear in court by reason of this appraisal,
unless prior arrangements have been made.
The distribution of the total valuation in this report between land and improvements applies only
under the existing or proposed/completed program of utilization. The separate valuations for
land and buildings must not be used in conjunction with any other appraisal and are invalid if so
used.
Certain information concerning market and operating data were obtained from others. This
information is verified and checked, where possible, and is used in this appraisal only if it is
believed to be accurate and correct. However, such information is not guaranteed.
Opinions of value contained herein are opinions only. There is no guarantee, written or implied,
that the subject property will sell for such amounts. Prospective values are based on market
conditions as of the effective date of the appraisal. The appraiser is not responsible if
unforeseeable events alter market conditions subsequent to the effective date of the appraisal. As
a personal opinion, valuation may vary between appraisers based on the same facts.
No responsibility for hidden defects or conformity to specific governmental requirements, such
as fire, building and safety, earthquake, or occupancy codes can be assumed without provision of
specific professional or governmental inspections. While the general conditions of the property
were observed, no guarantee can be made concerning the individual components of the structures
including but not limited to the heating system, plumbing, electrical services, roof, possible
termite damage or building foundation, wells or septic systems. This appraiser is not qualified to
make a complete physical inspection of the property. Such an inspection is beyond the scope of
this report and no statements can be made concerning the adequacy or condition of these or other
systems.
No investigation - unless presented in other sections of this report - was made by the appraiser to
determine if asbestos, fiberglass, or synthetic mineral fiber products are present in improved
properties. The existence of such products, if any, would have to be determined by a qualified
inspector. It is assumed that there is no asbestos, fiberglass, synthetic mineral fiber products, nor
other contaminates present that would materially affect value.
The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not
made a specific compliance survey and analysis of this property to determine whether or not it 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 noncompliance with
the requirements of ADA in estimating the value of the property.
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GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
11
No investigation - unless presented in other sections of this report - was made by the appraiser to
determine if any toxic materials are present on the subject tract. The existence of such materials,
if any, would have to be determined by a qualified inspector. It is assumed that no toxic
materials are present that would materially affect value or development costs.
A reasonable investigation was made to determine the existence of any underground storage
tanks (UST) on the subject site. If USTs are present on the subject site details are provided in
other sections of this report. It is assumed there are no USTs present that would materially affect
value.
Any personal property, fixtures, or intangible items that are not real property, that are included in
the valuation- are identified as personal property and discussed herein.
Due to the multiplicity of mathematical calculations used in standard appraisal practice, rounded
values, e.g., rounded to whole dollars or whole units of measure such as linear feet or square feet,
may result in inexact sums of components. The typical difference in such cases does not
materially affect the value conclusions of this appraisal report or the total compensation due to
the property owner.
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EXTRAORDINARY ASSUMPTIONS/HYPOTHETICAL CONDITIONS
12
Extraordinary Assumptions/Hypothetical Conditions: The Uniform Standards of Professional
Appraisal Practice require the disclosure of hypothetical conditions and extraordinary
assumptions when employed in the development of an appraisal.
As defined in the Uniform Standards of Professional Appraisal Practice, an extraordinary
assumption is “an assignment-specific assumption as of the effective date regarding uncertain
information used in an analysis which, if found to be false, could alter the appraiser’s opinions or
conclusions.”
As defined in the Uniform Standards of Professional Appraisal Practice, a hypothetical condition
is “a condition, directly related to a specific assignment, which is contrary to what is known by
the appraiser to exist on the effective date of the assignment results but is used for the purpose of
analysis.” The use of these assumptions and/or conditions may have affected the assignment
results.
EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS
The subject is appraised conditioned upon the following extraordinary assumptions:
The subject site is located at the southwest corner of Airport Road and Corbin
Road. Adequate, legal access to the subject is assumed available as of the
appraisal date.
It is assumed that access will be continually available to the subject and the
parking area during construction of the project.
A complete survey of the subject is not available. A title commitment/history
covering the subject was not provided. Typical easements for utilities, drainage, and
access are assumed, but none that would be detrimental to the property.
Due to a jurisdictional exception, the subject is appraised with the hypothetical condition that, in
the remainder condition, the project is complete and in place.
The above are set forth for appraisal purposes and no legal reasoning is intended. The reader
should be aware that in the event any of the above proves false or improperly applied, the
conclusions of this appraisal could be changed or invalidated.
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REGIONAL MAP
13
REGIONAL MAP
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MARKET AREA
14
A market area, as defined in The Dictionary of Real Estate Appraisal, 7th Edition, copyrighted
2022, is:
MARKET AREA
"The geographic region from which a majority of demand comes and in which the majority of
competition is located.”
When analyzing value influences, the focus is on market area. A market area is defined in terms
of the market for a specific category of real estate and thus, is the area in which alternative,
similar properties effectively compete with the subject property in the minds of probable,
potential purchasers, and users. A market area can encompass one or multiple neighborhoods or
districts.
MARKET AREA INFLUENCES
The subject property is located in the city of Denton, Texas, situated in the Dallas-Fort Worth
metropolitan area. Area analysis and subject vicinity are presented in the following pages.
Metropolitan Statistical Area (MSA) and Metropolitan Division (MD)
With a population of over 7.7 million in 2021, Dallas/Fort Worth and the surrounding area is the
fourth largest MSA under this classification. The DFW MSA is comprised of two Metropolitan
Divisions: Dallas-Plano-Irving (or Dallas MD) on the east and Fort Worth-Arlington (or Fort
Worth MD) on the west. The Dallas MD includes Collin, Dallas, Denton, Ellis, Hunt, Kaufman,
and Rockwall Counties with a 2021 population of over 5.2 million. The Fort Worth MD is
comprised of Johnson, Parker, Tarrant, and Wise Counties with a 2021 population of over 2.5
million. The DFW MSA has grown 19.5% since 2010, with Collin, Denton, Kaufman, and
Rockwall experiencing the greatest growth.
= Dallas-Fort Worth Arlington MSA
Fort Worth-Arlington
Metropolitan Division
Dallas-Plano-Irving
Metropolitan Division
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MARKET AREA
15
LOCATION
Denton County is located in the northern quadrant of the state of Texas, comprising the northern
portion of the Dallas/Fort Worth/Arlington Metropolitan Statistical Area. The locale is
approximately thirty miles northwest of the Dallas CBD and thirty miles northeast of the Fort
Worth CBD, with the Dallas/Fort Worth International Airport eighteen miles south. Adjoining
suburban neighborhoods are similar as to make-up and land uses. These include the suburban
cities of Lewisville and Flower Mound. Properties in the area compete with other similar market
areas.
The accessibility and location amenities of the above-delineated general area have been
significant in its development, redevelopment, and sustenance of commerce in the area. The
general area is well serviced by major freeways, benefits from high intensity commercial as well
as residential development, and is convenient to both the Dallas CBD and the Fort Worth CBD.
Traffic Routes
The traffic system is efficient and provides average access amenities to the area. Interstate
Highway-35 which travels north to south, is a six-lane freeway connecting the Denton area to the
cities of Dallas and Fort Worth. The other major freeway that services the neighborhood is US
Highway 380 (University Drive), a six-lane undivided roadway, which is the main east-west
highway through the city of Denton connecting Interstate 35, U.S. 377, and Loop 288.
The primary north-south traffic route near the subject is Loop 288, a six-lane divided roadway.
Additional north-south traffic routes include Teasley Lane and Dallas Drive. East to west traffic
routes include Shady Oaks Drive and Morse Street.
Population and Economics
Denton is a larger medium sized city with a 2022 population of 148,164 people, and 25
constituent neighborhoods. Denton is the 20th largest community in Texas. The projected
population for the city of Denton in 2023 is 160,564 and in 2029 is 204,000. Denton is currently
growing at an average rate of 4.11% annually.
The most prevalent occupations for people in the area are a mix of both white and blue collar
jobs. Overall the city is a mix of professionals, sales and office workers, and service providers.
Approximately 13.01% work in office and administrative support, 10.86% in sales jobs, and
10.57% in the teaching profession.
The aggregate U.S. unemployment rate was 3.7% in November 2023. In comparison, the Bureau
of Labor Statistics reported an unemployment rate of 4.1% for the state of Texas, 3.3% for the
Dallas/Fort Worth MSA, 3.1% for Denton County, and 3.1% for the city of Denton.
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The outbreak of the Coronavirus (COVID-19) had reaching effects worldwide since the onset of
the pandemic beginning March 2020 in the US. While a slight setback was experienced, overall,
the United States as a whole and specifically the Texas economy has seen significant economic
recovery from the COVID-19 pandemic.
The metropolitan area boasts a long list of national and international corporate headquarters, with
many major companies relocating to DFW in the past twenty years. The availability of
reasonably priced land, lower living cost for employees, favorable climate, and reasonable
housing are great incentives.
Education
The schood district’s student population has grown by almost 28 percent since the 2007 bond
election. The current estimated student population is 30,265 with a student teacher ratio of 13:1.
The school district ranks in the top 20% of public schools in the state of Texas.
In addition to 24 elementary schools, eight middle schools, four high schools, the district has two
early childhood centers, an advance technology complex, and an alternative high school.
Higher education facilities include University of North Texas, Texas Woman’s University, and
North Central Texas College.
University of North Texas, with a current student population of 38,081, is a public research
university, with eleven colleges, two schools, and offers 38 doctoral degree programs.
Texas Woman’s University, with a current student population of 15,472, is a private co-
educational university with two health science center branches in Dallas and Houston. The
school has a Carnegie classification as a comprehensive research and doctoral university.
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Medical
In addition to private practices, Denton County is served by numerous medical facilities which
includes The Heart Hospital Baylor Denton. The center offers comprehensive surgical and
interventional, noninvasive, diagnostic cardiac and vascular services, and cardiovascular
rehabilitation services to Denton County and the fast-growing North Texas region.
Additional facilities include Texas Health Presbyterian Hospital Denton, Medical City Denton
and Select Rehabilitation Hospital-Denton.
Rayzor Ranch Development
Rayzor Ranch is a 410-acre master planned community located in Denton, Denton County,
Texas, at the intersection of Interstate Highway 35 and State Highway 380. The development
was started in 2008 and is currently still being developed as a cohesive, pedestrian friendly area
inspired by historical Texas Architecture. The development includes large anchor tenants such
as Walmart, and Sam’s Club, as well as, other large retail, junior anchors, specialty retailers,
restaurant and financial institutions. When completed, it will be the largest super-regional retail
development between Dallas, Texas and Oklahoma City, Oklahoma.
TRANSPORTATION
Dallas/Fort Worth International Airport
The Dallas/Fort Worth International Airport, which opened January 1974 and covers more than
26.9 square miles, has had an enormous impact on the economy. There are approximately
60,000 on-airport employees and $37 billion dollars of economic activity across North Texas is
attributable to the airport.
DFW airport ranks third in the world, in terms of operations and tenth in terms of passengers.
Twenty-six passenger airlines, 165 gates, and 7 total runways serve the airport. The Terminal
Renewal and Improvement Program began in February 2011 and was completed by year-end
2021. The improvement program includes expanding security checkpoints, enhanced
concessions and self-serve ticketing areas, improved parking, and implementation of green
technology. Total cost is estimated at $2.69 billion over the course of the program.
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AREA DEMOGRAPHICS
The following Market Profile provided by Site to Do Business provides demographic and income
data for a 1-mile, 3-mile, and 5-mile radius centered on the subject’s vicinity.
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CONCLUSIONS
The transportation network in the area is good and surrounding land uses are considered to be
compatible and homogenous. The subject area is in a growth phase of development and in
proximity to employment centers and quality schools and services. Most developments in the
immediate area were constructed in the 1970’s to 1980’s. New developments are centered around
Rayzor Ranch, a 410-acre master planned community located at the intersection of Interstate
Highway 35 and State Highway 380. The development was started in 2008 and is currently still
being developed as a cohesive, pedestrian friendly area inspired by historical Texas Architecture.
The development includes large anchor tenants such as Walmart, and Sam’s Club, as well as,
other large retail, junior anchors, specialty retailers, restaurant and financial institutions. When
completed, it will be the largest super-regional retail development between Dallas, Texas and
Oklahoma City, Oklahoma.
No noticeable nuisances or hazards are in the area and the majority of improvements are in the early
to middle stages of economic life, and sufficient area services are accessible to service the
community.
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LOCATION MAP
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LOCATION MAP
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SUBJECT PROPERTY
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The whole subject property is improved with a distribution warehouse building, located at the
southwest corner of Airport Road and Corbin Road, Denton, Denton County, Texas.
Subject property
SITE DATA
Site/Dimensions/Frontage
Based on the information available, the whole property tract is rectangular in shape, and contains
1,861,856 square feet or 42.7423 acres. The subject fronts the southern line of Airport Road for
approximately 1,400 linear feet and the western line of Corbin Road for approximately 1,320
linear feet. The subject is approximately 1,450 feet deep, along the southern property line.
Subject Vicinity and Abutting Uses
The subject abuts industrial development across Airport Road along the north side, industrial
development across Corbin Road to the east side, and vacant industrial land along the south and
west sides. Types of properties located in the subject vicinity are commercial and both light and
heavy industrial uses along the main arterials, and residential on the interior roadways.
Linkages
The subject is accessible to arterial linkages and the distance to employment centers, retailers,
restaurants, and schools is considered within reason in the city of Denton. In terms of travel time
and actual distances by road, the subject property is within community standards.
Access
Overall, access for the neighborhood is rated as average. Access to and from the subject is
average and via two curb cuts along western line of Corbin Road. Visibility and exposure of the
subject are rated average.
Topography/Flood Zone
The topography of the tract is mostly level and at street grade and is not problematic to
development with appropriate engineering. According to FEMA flood hazard map 48121C0360G
dated April 18, 2011, approximately 15% of the subject property is determined to have base flood
elevations within the 100-year floodplain, being within Zone 'AE'. Drainage of the site appears
graded. No representation is made that the site will or will not flood. A hydrological study or
survey is required for confirmation of flood-designated boundaries.
Wetlands
No visual evidence was observed to indicate whether wetlands exist on the subject site. Wetlands,
as defined by Section 404 of the Clean Water Act, are those areas that are inundated or saturated by
surface or groundwater at a frequency and duration sufficient to support, and under normal
circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil
conditions. Swamps, bogs, fens, marshes, and estuaries are subject to federal environmental law.
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SUBJECT PROPERTY
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Utilities/Community Services
Electricity, water, sewer, gas, and telecommunication services are available to the subject.
Electric service and telecommunication services are available by various providers. Natural gas
service is available from Atmos Energy. Water and wastewater is provided by the City of
Denton. Police and fire protection are provided by the City of Denton. The property is located
within the Denton Independent School District.
Zoning
The site is zoned HI, Light Industrial by the City of Denton. The HI, Heavy Industrial district is
intended to provide locations suitable for development and operation of indoor and outdoor
industrial, distribution, and manufacturing uses. The HI district applies to areas primarily west of
Highway I-35 W near the Denton Enterprise Airport that supports the most intense industrial
uses and may require access to major rail, truck or aircraft, shipping facilities. The HI district
applies to areas that can accommodate the intensity of uses while also being sensitive to the
adjacent built and natural context.
Minimum lot area 20,000 square feet
Minimum lot width 100 feet
Minimum lot depth 200 feet
Front yard setback 10 feet
Side yard setback 20 feet
Rear yard setback 20 feet
Maximum building height (max) 140 feet
Maximum building coverage (max) 85%
Soils, Development Limitation, and Productivity
This report assumes the soils are capable of supporting the structures, as numerous
improvements are located within the subject area and adjoining area. A study of the
development, limitations, and productivity were not completed in this appraisal report, as it is not
necessary to the scope of the appraisal.
Easements
A complete survey of the whole site is not available for analysis. According to the parcel survey
provided, a 20-foot gas line easement traverses from east to west along the northern portion of
the site and from north to south along the eastern property line (being within the proposed
permanent easement acquisition), This valuation assumes that utility and access easements
typical of this property type are present and that no detrimental easement conditions exist. This
should not be considered as a guaranty or warranty, however, that adverse easements do not
exist. Were the property to have any easements detrimental to the subject, the opinion of value
concluded herein may be invalid.
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SUBJECT PROPERTY
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Deed Restrictions
To our knowledge, no deed restrictions affect or limit the use of the property; however, this
should not be considered as a guaranty or warranty that no such restrictions exist. Deed
restrictions are a legal matter: normally discoverable only by a title search by a title attorney. It
is recommended that a title search be made if any questions regarding deed restrictions arise.
Environmental Conditions
To our knowledge, a Phase I Environmental Site Assessment has not been completed for the
subject property as of the date of inspection. The subject is appraised predicated on the absence
of detrimental environmental conditions. The conclusions of this appraisal report would be
materially changed if detrimental environmental conditions affect the subject.
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SUBJECT PROPERTY
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SUBJECT IMPROVEMENTS
The land is improved with a distribution warehouse building. According to the tax card, the
buildings consist of a total of 311,680 square feet of gross building area.
Orientation
The building is mostly rectangular in shape and oriented toward Corbin Road.
Age, Construction and Condition
According to tax records, the building was constructed in 2007/2022. The building is Class D with
concrete tilt up walls, painted stucco exterior, on a concrete slab foundation. Quality is rated as
average, and the improvements appear to be in average condition.
Our opinion of the improvements' overall effective age is 5 years. According to Marshall &
Swift Valuation Service, the typical economic life span for buildings of the same construction
class and design as the subject is typically 45 years. Therefore, the subject is said to have a
remaining economic life of 40 years (45 years less the effective age of 5 years).
No functional or economic obsolescence is noted. No items of deferred maintenance are
observable.
Site Improvements
Site improvements are comprised of concrete parking and drives, concrete curbing, building-
mounted signage, and landscaping. The landscaping includes trees, shrubs, grass, and an
irrigation system. Overall, the improvements appear to be adequately maintained and in average
condition. Quality is rated as average. No items of deferred maintenance are observable.
Parking
The site has approximately 430 striped parking spaces, which include handicap enabled spaces.
The parking requirement for the subject improvements is one space per employee and each
company-operated vehicle based at the facility, or one space per 2.000 square feet of building
area for warehouses, whichever is greater. The subject has 311,680 square feet of building space.
The number of employees is unknown, however, based on the square footage of the buildings,
the parking, access, and circulation are sufficiently parked based on the current requirements and
assumed a legal conforming condition.
Occupancy and Rentals
The property is owner occupied and operated. Property income and expense data are not available.
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SUBJECT PROPERTY
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Functional Utility
Functional utility is defined as the ability of a property or building to be useful and to perform
the function for which it is intended according to current market tastes and standards. The
subject is distribution warehouse space. The improvements are functionally adequate given the
architectural style, design and layout, traffic patterns, and the size and configuration of the
improvements for this property type.
External Obsolescence
External obsolescence is considered to be the loss in value of the property resulting from an
influence of negative forces not inherent with the property. It can be caused by the exertion of
detrimental external forces upon the area or property itself. Specific examples are significant
fluctuations in the local economy, noise from nearby expressways or airports, excessive taxes,
supply and demand imbalances, special assessments or certain other governmental actions, the lack
of financial liquidity in the marketplace, or the infiltration of unharmonious groups or land uses.
This form of obsolescence is rarely, if ever, curable.
The subject regional area is currently experiencing stable rental rates and occupancy levels. Based
upon the stable market conditions within the extended area the property does not appear to suffer
from external obsolescence.
CONCLUSIONS
The subject is an industrial distribution warehouse building, with adequate frontage and access
via two curb cuts along the western line of Corbin Street. Our opinion of the improvements
effective age is 5 years. According to the Marshall & Swift Valuation Service, the typical
economic life span for buildings of the same construction class and design as the subject is
typically 45 years. Therefore, the subject improvements are said to have a remaining economic
life of 40 years. Condition of the improvements is average. The property appears to be a legal
conforming use.
RE Classification:Distribution Warehouse
Class:D
Type:Average
Section:14
Page:23
Life Expectancy:45 years
Marshall Swift Data
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REAL ESTATE TAX ANALYSIS
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The Texas legislature created a system of centralized appraisal districts for each Texas county so
that all real estate within a given county is valued for tax purposes through a standard appraisal
process. Property assessments are based on market value.
Real Estate Tax Analysis
In Denton County, the Denton Central Appraisal District is responsible for ad valorem tax
appraisals of all real estate within the county. Based on the ad valorem tax appraisal, various tax
districts levy annual taxes on property located within their respective districts. Typical taxing
jurisdictions include assessments from the county, city, and school districts in which the property
is located. The total ad valorem tax burden is the sum of the assessments for the various taxing
authorities.
The subject property is located in Denton County and falls within the taxing jurisdictions
summarized in the following table. The 2023 Denton Central Appraisal District tax rates and
account information for the subject are detailed below.
City of Denton 0.560682$
Denton County 0.189485$
Denton Independent School District 1.159200$
Total 1.909367$
2023 TAX RATES (per $100)
The following table indicates the 2023 assessed value used for determination of tax liability.
Account Number Land Improvements Total
526551 5,585,485$ 8,414,515$ 14,000,000$
Based on the preceding assessed value and pertinent tax rates, the subject's annual tax liability is
calculated as follows:
Assessed Value Tax Rate/$100
$14,000,000 x $0.01909367
Indicated Tax Liability
267,311= $
The assessed value equates to $14,000,000, or $44.92 per square foot of building area, and is
below the concluded market value in this appraisal. This difference is typically due to the
valuation methods of the appraisal district.
Additionally, the assessed land value equates to $3.00 per square foot of land area and is below
the concluded market value in this appraisal. This difference is typically due to the valuation
methods of the appraisal district.
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AERIAL PHOTOGRAPH
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Aerial Photograph
Source: Google Maps
Red line - approximate subject property boundary – appraiser’s estimate.
Yellow line - approximate location of proposed permanent utility easement – appraiser’s estimate.
SUBJECT
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AERIAL PHOTOGRAPH
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Source: Google Maps
Red line - approximate subject property boundary – appraiser’s estimate.
SUBJECT
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SUBJECT PHOTOGRAPHS
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PHOTOGRAPHED JANUARY 25, 2024
Subject photographs
Looking southwesterly toward the subject improvements
Looking southeasterly toward the subject improvements
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SUBJECT PHOTOGRAPHS
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Looking northeasterly toward the subject improvements
Looking northwesterly toward the subject improvements
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SUBJECT PHOTOGRAPHS
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Looking northerly along the eastern line of the proposed acquisition area
Looking southerly along the eastern line of the proposed acquisition area
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SUBJECT PHOTOGRAPHS
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Looking westerly along the proposed acquisition area
Looking southwesterly toward the proposed acquisition area
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SUBJECT PHOTOGRAPHS
35
Looking westerly along the proposed acquisition area
Looking easterly along the proposed acquisition area
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SUBJECT PHOTOGRAPHS
36
Looking northerly along the western line of the proposed acquisition area
Looking southeasterly across the subject parking area
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SUBJECT PHOTOGRAPHS
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Looking westerly along Airport Road with the subject to the left
Looking easterly along Airport Road with the subject to the right
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SUBJECT PHOTOGRAPHS
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Looking northerly along Corbin Road with the subject to the left
Looking southerly along Corbin Road with the subject to the right
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WHOLE PROPERTY SKETCH
39
Source: Denton CAD
Whole Property Sketch
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ZONING MAP
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Source: City of Denton
Zoning map
SUBJECT
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FLOOD MAP
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Flood map
Red line - approximate subject property boundary – appraiser’s estimate.
SUBJECT
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HIGHEST AND BEST USE
42
Four basic criteria are examined in estimating the Highest and Best Use of a property both as
vacant and as improved. These are:
a) Physically Possible Use - the uses to which it is physically possible to put on the
site in question.
b) Legally Permissible Use - the uses that are permitted by zoning and deed
restrictions on the site in question.
c) Financially Feasible Use - the possible and permissible uses that will produce any
net return to the owner of the site.
d) Maximally Productive Use - among the feasible uses, the use that will produce the
highest net return on the highest present worth.
The subject is a 42.7423-acre tract of land and is rectangular in shape. The size and shape of the
tract is supportive of a number of potential developments.
HIGHEST AND BEST USE
HIGHEST & BEST USE AS IF VACANT
Physically Possible Use: In arriving at an opinion of highest and best use for the subject, it is
first necessary to determine if the physical characteristics of the site - such as soil conditions,
topography, shape and frontage were favorable for development. Soil conditions vary
throughout the area and sometimes require particular engineering. The subject fronts the
southern line of Airport Road for approximately 1,400 linear feet and the western line of Corbin
Road for approximately 1,320 linear feet. The subject is approximately 1,450 feet deep along the
southern property line. According to the enclosed flood map No. 48121C0360G, approximately
15% of the subject property is determined to have base elevations within the 100-year floodplain,
being within Zone 'AE'. This area is situated along the western portion of the site. The site is of
sufficient size, shape, and frontage to be economically adaptable to numerous uses. The size and
shape of the site is adequate for development.
Legally Permissible Use: The site is zoned HI, Heavy Industrial by the City of Denton. The HI,
Heavy Industrial district is intended to provide locations suitable for development and operation
of indoor and outdoor industrial, distribution, and manufacturing uses. The HI district applies to
areas primarily west of Highway I-35 W near the Denton Enterprise Airport that supports the
most intense industrial uses and may require access to major rail, truck or aircraft, shipping
facilities. The HI district applies to areas that can accommodate the intensity of uses while also
being sensitive to the adjacent built and natural context.
Financially Feasible Use: As defined in The Dictionary of Real Estate Appraisal, Seventh Edition,
is “the capability of a physically possible and legal use of property to produce a positive return to
the land after considering risk and all costs to create and maintain the use”.
The surrounding properties and land uses are considered for compatibility in determination of
feasible use. The subject abuts industrial development across Airport Road along the north side,
industrial development across Corbin Road along the east side, and vacant industrial land along
the south and west sides. Based on the land usage pattern of the surrounding area, the layout,
location and frontage/visibility of the site, the most feasible use is considered to be for industrial
development.
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HIGHEST AND BEST USE
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Maximally Productive Highest & Best Use: For industrial development, the location is
considered good for appeal within the submarket. Access is rated as average and exposure of the
subject is rated as average. Electricity, water, sewer, gas, and telecommunication services are
available to the subject. Based on the foregoing and land use patterns, the highest and best use of
the subject tract is for industrial development.
HIGHEST & BEST USE AS IMPROVED
Possible Use: The improvements were built in 2007/2022 according to the Denton County
Appraisal District. The improvements are of average quality and in average condition. Overall,
the improvements are adequately maintained and have no deferred maintenance. The intended
use of the improvements is for distribution warehouse use. The physical characteristics and
accompanying amenities support the continued use as such.
Permissible Use: The site is zoned HI, Heavy Industrial by the City of Denton. The HI, Heavy
Industrial district is intended to provide locations suitable for development and operation of
indoor and outdoor industrial, distribution, and manufacturing uses. The HI district applies to
areas primarily west of Highway I-35 W near the Denton Enterprise Airport that supports the
most intense industrial uses and may require access to major rail, truck or aircraft, shipping
facilities. The HI district applies to areas that can accommodate the intensity of uses while also
being sensitive to the adjacent built and natural context. Distribution warehouses are allowed in
this zoning district.
Feasible Use: The existing improvements have an effective age of approximately 5 years based
on the modified economic life concept. With proper maintenance, a property of this type
typically has a useful life of 45 years. Remaining economic life of the improvements is
estimated at 40 years, based on a useful life of 45 years and an effective age of 5 years, and no
other use of the improvements could provide a greater return in the current market.
Maximally Productive Highest & Best Use: As improved, the property is improved with a
distribution warehouse building and is suitable for that use. Therefore, the continued use as a
distribution warehouse represents the highest and best use of the land and improvements.
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LAND VALUATION
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The sales comparison method is the best method of developing an opinion of value of the
subject. In this method, known sales of similar use land in the market area are compared to the
subject to arrive at an indication of value. In arriving at value conclusions, the tracts are
compared as to the rights conveyed, financing terms, sale conditions, market conditions,
location, and physical characteristics. This approach is used to value land that is vacant or
considered vacant for appraisal purposes.
LAND VALUATION
The market was researched for recent sales, listings, or other transactions, which would provide a
valid basis for developing an opinion of the market value of the subject by comparison. After
reviewing and analyzing the sales, the sales detailed on the following pages were extracted from
this sample and utilized for the land valuation.
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LAND VALUATION
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LAND SALES MAP
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LAND VALUATION
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Land Sale No. 1
Location W/s of Darby Smith Road, W terminus of North Masch Branch Road
Denton County, Texas
Legal Description
Grantor Penny Lee Darby
Grantee LNS Signs, Inc.
Date of Sale November 29, 2023
Record Data
Document No.2023-126480
Consideration $659,900
Conditions of Sale Cash (or cash equivalent) to the seller
Land Area
Acres 14.553
Square Feet 633,929
Price Per SF $1.04
Zoning None
Comments The property is rectangular in shpae and located along the western line of
Darby Smith Road at the western terminus of North Masch Branch Road.The
site has approximately 50 feet of frontage along Darby Smith Road.The tract
is level with electric and water available and is not located within a
floodplain.
Being all that certain lot,tract or parcel of land situated in the S.Huizar
Survey,Abstract Number 514 in Denton County,Texas,being a part of that
certain tract of land conveyed by deed from Mildred Bernice Smith to Penny
Lee Darby recorded under Clerk's File Number 94-R0057915,Real Property
Records, Denton County, Texas
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Land Sale No. 2
Location S/s of West University Drive, W of Western Boulevard
Denton, Denton County, Texas
Legal Description
Grantor Wendell Mullins, aka W.J.O. Mullins
Grantee Ring Power Corporation
Date of Sale December 29, 2022
Record Data
Document No.2023-1051
Consideration $1,100,000
Conditions of Sale Cash (or cash equivalent) to the seller
Land Area
Acres 9.385
Square Feet 408,811
Price Per SF $2.69
Zoning LI, Light Industrial
Comments The property consists of two adjoining tracts of land located along the
southern line of West University Drive,approximately 700 feet west of
Western Boulevard.The tract has approximately 875 feet of frontage on
West University Drive.All municipal utilities are available.A drainage
easement traverses the property from north to south through the eastern
portion of the site with approximately 30%of the tract located in the
floodplain Zone "AE".
Situated in the William Bryan Survey,Abstract No.148 and being part of
Tracts 1 and 2 as conveyed to W.J.O.Mullins as recorded in Document No.
97-R0083577, Real Property Records, Denton County, Texas
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LAND VALUATION
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Land Sale No. 3
Location E/s of Corbin Road, E terminus of Spring Side Road
Denton, Denton County, Texas
Legal Description
Grantor Corbin Realty II, LP
Grantee Moises Flores
Date of Sale February 18, 2022
Record Data
Document No.2022-29557
Consideration $500,000
Conditions of Sale Cash to the seller
Land Area
Acres 11.81
Square Feet 514,444
Price Per SF $0.97
Zoning HI, Heavy Industrial
Comments The tract is irregular in shape and located along the eastern line of Corbin
Road at the eastern terminus of Spring Side Road.The site has no utilities.
The Dry Fork Hickory Creek traverses the eastern property line with
approximately 80% of the tract located in the floodplain Zone "AE".
Being an 11.81 acre tract of land situated in the Thomas W.Dougherty
Survey,Abstract Number 357,City of Denton,Denton County,Texas,and
being a portion of a called 51.359 acre tract described in deed to Corbin
Realty II,LP,recorded in Document Number 2013-27948 of the Official
Records of Denton County, Texas
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LAND VALUATION
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Land Sale No. 4
Location N/s of West University Drive between Gay Drive and Georgetown Drive
Denton, Denton County, Texas
Legal Description
Grantor M. Douglas Adkins and Lee Roy Mitchell
Grantee Denton Capital, LLC
Date of Sale January 25, 2022
Record Data
Document No.2022-12803
Consideration $1,375,000
Conditions of Sale Cash (or cash equivalent) to the seller
Land Area
Acres 6.64
Square Feet 289,238
Price Per SF $4.75
Zoning SC, Suburban Corridor
Comments The tract is irregular in shape,with mostly level terrain on the northern
portion of the property.The property has approximately 233 feet of frontage
along the western line of Georgetown Drive and approximately 255 feet along
the eastern line of Gay Drive.While the property fronts the northern line of
West Unitversity Drive (US 80)for approximately 13 feet,the property does
not have access to the roadway.All utilities are available.A drainage
easement extends along the southern boundary with approximately 15%of the
area located in the floodplain Zone "AE".According to the grantee,the
subject was purchased for the future development as a 240-unit apartment
complex.
Land situated in the Robert Beaumont Survey, Abstract Number 31, and being
the remainder of that 7.426 acre tract of land described in a deed from M.
Douglas Adkins,Trustee to M.Douglas Adkins and Lee Roy Mitchell,as
Tenants in Common,recorded under Instrument No.93-R0022220,and being
a part of the called 1.2949 acre tract of land described in a deed from Rayzor
Investments,LTD,to M.Douglas Adkins,Trustee,recorded under Instrument
No. 93-R0028817, Real Property Records, Denton County, Texas
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LAND VALUATION
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SF AC
1 W/s of Darby Smith Road, W terminus of North Masch Branch Road 633,929 14.55 $1.04 Nov-23
2 S/s of West University Drive, W of Western Boulevard 408,811 9.39 $2.69 Dec-22
3 E/s of Corbin Road, E terminus of Spring Side Road 514,444 11.81 $0.97 Feb-22
4 N/s of West University Drive between Gay Drive and Georgetown Drive 289,238 6.64 $4.75 Jan-22
Subject at the southwest corner of Airport Road and Corbin Road 1,861,856 42.74
LAND SALES SUMMARY
Sale No. Location
Size
Price/SF
Date of
Sale
Comparable Adjustments
Adjustments to the comparable sales are considered in the categories of financing terms,
conditions of sale, market conditions/time, location, size, zoning, and availability of utilities and
other factors. Adjustments for each factor are typically made after a comparison indicates the
appropriate direction and size of each adjustment. Adjustments are based on experience and
extrapolations of market indicators.
EXPLANATION OF ADJUSTMENTS
Property Interest Transferred
Adjustments are not necessary.
Financing Terms
Adjustments are not necessary.
Sale Conditions
Adjustments for conditions of sale usually reflect the motivations of the buyer and the seller.
Any sales that reflect unusual sale conditions are adjusted accordingly and the circumstances of
these non-arm’s length transactions are detailed on the sale summary pages. No adjustments are
warranted as each of the sales transpired with no reported uncommon sale conditions.
Market Conditions
The sales occurred between January 2022 and November 2023. Adjustments for market
conditions are applied if property values have increased or decreased since the transaction dates.
Based on our observations and analysis, real estate has appreciated approximately 4% annually.
Each sale is adjusted accordingly.
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LAND VALUATION
51
Location
An adjustment for location within a market area may be required when the locational
characteristics of a comparable property are different from those of the property. Most
comparable properties in the same market area have similar locational characteristics, but
variations may exist within that area of analysis. The sales are similarly located as the subject,
requiring no adjustment.
Access
Access is defined as the points, or number of points available for ingress/egress to the subject
site, or ease of access to a site from major routes in the area. Sale properties are adjusted based
on their inferiority/superiority as compared with the subject. The subject is accessible via two
curb cuts along Corbin Road. Sale 1 is inferior as compared to the subject and is adjusted
upward 10%. Sales 2, 3, and 4 have similar access available, requiring no adjustments.
Frontage
Frontage is the number of feet of frontage along the subject roadway or roadways. Sale
properties are adjusted based on their inferiority/superiority as compared with the property.
Sale 1 has inferior frontage as compared to the subject and is adjusted upward 20%. Sales 2, 3,
and 4 are similar in terms of frontage as compared to the subject and are not adjusted.
Size
The subject is 42.742 acres. The size adjustment is based on the premise that, in general, the
larger the tract, the less its selling price on a per unit basis. Recent experience with other
properties indicates an approximate 5% - 15% adjustment for each doubling/halving (100%) in
size. A 5% adjustment for each doubling/halving (100%) in size is utilized. Each sale is
adjusted accordingly for size.
Zoning
The property is zoned HI, Heavy Industrial, by the City of Denton. The HI, Heavy Industrial
district is intended to provide locations suitable for development and operation of indoor and
outdoor industrial, distribution, and manufacturing uses. The HI district applies to areas
primarily west of Highway I-35 W near the Denton Enterprise Airport that supports the most
intense industrial uses and may require access to major rail, truck or aircraft, shipping facilities.
The HI district applies to areas that can accommodate the intensity of uses while also being
sensitive to the adjacent built and natural context. All four sales are considered similar in zoning
or highest and best use with no adjustments necessary.
24-0032
LAND VALUATION
52
Utilities
Electricity, water, sewer, gas, and telecommunication services are available to the subject. Sales
1 and 3 are inferior in available utilities and are adjusted upward 5% and 10% respectively. Sales
2 and 4 are similar to the subject and are not adjusted.
Topography
The terrain is characterized as mostly level and drainage is considered adequate. According to
FEMA flood hazard map 48121C0360G, approximately 15% of the subject is determined to have
base flood elevations within the 100-year floodplain, being within Zone 'AE'. Sale 1 is not
located within a floodplain and is adjusted downward 10%. Sale 2 has approximately 30% of the
tract located within a floodplain and is adjusted upward 10%. Sale 3 has approximately 80% of
the tract located within a floodplain and is adjusted upward 30%, and Sale 4 has approximately
15% of the tract located within a floodplain, similar to the subject, and is not adjusted.
ADJUSTMENTS
The grid below outlines the pertinent characteristics of each of the comparable sales and the
adjustments applied.
Sale No.1 2 3 4
No. of Acres 14.553 9.385 11.810 6.640
Size - SF 633,929 408,811 514,444 289238.000
Sale Date Nov-23 Dec-22 Feb-22 Jan-22
Sale Price $659,900 $1,100,000 $500,000 $1,375,000
Sale Price Per SF $1.04 $2.69 $0.97 $4.75
Rights Conveyed 0%0%0%0%
Financing 0%0%0%0%
Sale Conditions 0%0%0%0%
Market Conditions 1%4%8%8%
Adjusted Price $1.05 $2.80 $1.05 $5.13
Location 0%0%0%0%
Access 10%0%0%0%
Frontage 20%0%0%0%
Size -8%-11%-9%-13%
Zoning 0%0%0%0%
Utilities 5%0%10%0%
Topography -10%10%30%0%
Net Adjustment 17%-1%31%-13%
Adjusted Price/SF $1.23 $2.77 $1.38 $4.46
LAND SALES ADJUSTMENTS
24-0032
LAND VALUATION
53
Land Value Opinion
After the adjustment process, the comparable sales range from $1.23 to $4.46 per square foot.
Based on the foregoing and giving emphasis to the upper end of the range, it is our opinion that
the market data support an estimated fee simple value of $4.00 per square foot for the subject
land, with an indicated value opinion of the subject land of $7,447,424.
No. of Square Feet $/SF Indicated Value
1,861,856 x $4.00 x 100%$7,447,424
Total Land Area
24-0032
COST APPROACH
54
The purpose of the cost approach is to develop an opinion of the cost to construct a reproduction of,
or replacement for, the existing structure and then deduct all accrued depreciation in the property
being appraised from the cost new of the reproduction or replacement structure. When the value of
the land and an entrepreneurial profit, if appropriate, are added to this figure, the result is an
indication of the value of the fee simple interest in the property.
COST APPROACH
When applicable, the cost approach reflects market thinking by recognizing that market
participants relate value to cost. Investors tend to judge the value of an existing structure by
considering the prices and rents of similar buildings and the cost to create a new building with
optimal physical and functional utility. Investors adjust the prices they are willing to pay by
estimating the costs to bring an existing structure up to the level of physical and functional utility
they desire.
The cost approach is based on the estimated replacement cost of the improvements less
depreciation from all causes, to which is added the market value of the land based on comparable
sales.
The concept of highest and best use is fundamental to real property value. In one application of
the concept, land is valued as though vacant and available for its highest and best use; in the
other application, the highest and best use of the property as improved is estimated. Thus, a site
may have one highest and best use as though vacant, and the existing combination of site and
improvements may have another highest and best use. Existing improvements have a value
equal to the amount they contribute to the site, or they penalize value by an amount equal to the
cost to remove them from the site. Existing improvements that do not develop the land to its
highest and best use are usually worth less than their reproduction or replacement cost.
REPLACEMENT COST
The cost estimates in the following tables are abstracted from the Marshall Valuation Service.
The Marshall Valuation Service is a national cost index providing cost data for determining
replacement costs of buildings and other improvements, and is published by Marshall & Swift,
LP.
For building structure and components, the calculator method is utilized. The improvements
most closely resemble an average quality Class D distribution warehouse, as described in the
Marshall Valuation Service Handbook, Section 14, Page 23. To the base cost, various multipliers
are applied to reflect local market conditions and changes in construction costs.
24-0032
COST APPROACH
55
DIRECT COSTS
Base Building Costs
Component Area Base Cost
311,680 SF 58.50$ 18,233,000$
Improvements cost before adjustments for time, location, and perimeter 18,233,000$
Current Local Perimeter
x 1.06 x 0.93 x 1.00 17,974,000$
Site Improvements
1,200,000$
250,000$
1,450,000$
19,424,000$
INDIRECT COSTS
@ 8%1,554,000$
1,554,000$
ENTREPRENEURIAL INCENTIVE @ 15%3,147,000$
24,125,000$
Replacement Cost New (RCN)24,125,000$
Industrial warehouse
Multipliers
Total Base Costs
$18,233,000
Parking, Drives & Sidewalks
Landscaping, Signage & Lighting
Total Site Improvements
Total Direct Costs
Architectural, Legal, Engineering Fees,
Permits, etc.
Total Indirect Costs
Total Direct and Indirect Costs
or Total Construction Costs
exclude land cost, and amount to $24,125,000 or $77.40 per square foot. This cost is within the
range for average quality construction costs for distribution warehouses, as estimated by the
Marshall and Swift Cost Valuation Service Cost Manual (after adjustment for time and location).
24-0032
COST APPROACH
56
DEPRECIATION
Appropriate items of depreciation must be deducted from the cost to replace the subject
improvements as estimated above. Depreciation in this case is defined as "a loss in value from
any cause". The accrued depreciation applicable is typically broken down as follows:
a. Physical Depreciation
Curable - refers to items of deferred maintenance.
Incurable - deterioration that is not practical or economically feasible to
correct.
b. Functional Obsolescence - adverse effect on value resulting from defects in
design, can also be caused by changes that, over time, have made some aspects of
a structure, material, or design obsolete by current standards.
Curable - to be curable the cost must be at least offset by the anticipated
increase in value.
Incurable - deficiencies or superadequacies not economically feasible to
correct.
c. External (Economic) Obsolescence - result of diminished utility of a structure due
to negative influences from outside the site and is always incurable. The total loss
in value due to such influences is allocated between the land and the
improvements with only that portion attributable to the improvements deducted
from the current replacement cost.
Curable Physical
No items of deferred maintenance were noted at the inspection.
Incurable Physical
A property suffers from deterioration as a result of the aging process. The method of estimating
accrued depreciation utilized here is the modified economic age-life method. Briefly, this
method consists of first estimating the cost to cure all curable items, deducting that figure from
the replacement cost, and then applying to the remainder the deduction based on the ratio of
effective age to total economic life.
24-0032
COST APPROACH
57
DEPRECIATION
Replacement Costs - Industrial warehouse 24,125,000$
Less: Curable Items -$
Value of Improvements 24,125,000$
Total Economic Life 45 years
Remaining Economic Life 40 years
Effective Age 5 years
Depreciation Percentage
Applied Percentage - M&S, Sec. 97, Pg. 9 ≈ 4%
Less: Incurable Items
$24,125,000 x 4.0%965,000$
Depreciated Value 23,160,000$
COST APPROACH SUMMARY
Estimated Total Construction Costs 24,125,000$
Less: Curable Items -$
Less: Depreciation 965,000$
Total Depreciated Value of Improvements 23,160,000$
Plus: Indicated Value of Land 7,447,424$
Final Opinion of Value via the Cost Approach 30,607,424$
Rounded 30,607,000$
COST SUMMARY
As the subject consists of a distribution warehouse (totaling 311,680 square feet), the costs are
applied to this property. The estimated costs of the entire property, including land, and
improvements are $30,607,000.
24-0032
SALES COMPARISON APPROACH
58
The sales comparison approach is a method of estimating market value whereby a property is
compared with similar properties that have sold recently. One premise of the sales comparison
approach is that the market will determine a price for the property being appraised in the same
manner that it determines the price of comparable, competitive properties. The principle of
substitution is basic in this approach as it implies that a prudent person will not pay more for a
property than an acceptable alternative available in the market.
SALES COMPARISON APPROACH
The steps of the sales comparison approach are outlined as follows:
(a) Research the market to obtain information about sales, listings, and offerings of
properties similar to the subject property.
(b) Ascertain the nature of the conditions of sale, including the price, terms, motivating
forces, and its bona fide nature.
(c) Determine relevant units of comparison, price per unit or sales price per square foot and
develop a comparative analysis for each unit.
(d) Compare each of the comparable properties' important attributes to the corresponding
ones of the property being appraised, under the general categories of time, location,
physical characteristics, and conditions of sale.
Consider all dissimilarities and their probable effect on the price of each sale property to
derive individual market indications for the property being appraised.
(e) Formulate, in light of the comparison thus made, an opinion of the relative value of the
subject property as a whole, or where appropriate, by applicable units, compared with
each of the similar properties.
In the sales comparison approach, the property appraised is compared with known prices paid for
similar properties in the open market. Typically, for most properties, the most common units of
comparison used are the overall price paid per unit, and sales price per square foot.
The following summary information on improved sales judged to be comparable to the property
appraised is included herein, establishing the probable value of the subject property by the sales
comparison approach.
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SALES COMPARISON APPROACH
59
IMPROVED SALES MAP
24-0032
SALES COMPARISON APPROACH
60
Improved Sale No. 1
Location 421 and 451 South Western Boulevard
Denton, Denton County, Texas
Grantor Fund XII Western Boulevard, LLC
Grantee Westcore CG II Denton, LLC
Record Data
Date February 9, 2023
Document No.2023-11946
Consideration $32,000,000
Sale Price/SF $132.06
Conditions of Sale Cash (or cash equivalent) to the seller
Physical Description
Land Area
14.72 AC
641,029 SF
Building Coverage 37.80%
Gross Building Area 242,320 SF
Year Built 2021
Occupancy @ Sale 100%
Description Distribution Warehouse
Condition Average
Comments
Acres
Square Feet
The property is located along the eastern line of South
Western Boulevard north of Airport Road.The property
consist of two adjoining distribution warehouse buildings.
The property located at 421 South Western Boulevard is a
multi-tenant building with 32 exterior docks.The property
located at 451 South Western Boulevard is a single tenant
building with 28 exterior docks.Both properties have clear
ceiling height of 32 feet.
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SALES COMPARISON APPROACH
61
Improved Sale No. 1 (Continued)
Total $/SF
Gross Rental Income 1,696,240$ 7.00$
Add:Expense Reimbursement 302,900$ 1.25$
Less:Vacancy @ 5%99,957$ 0.41$
Effective Gross Income 1,899,183$ 7.84$
Total Expenses 545,220$ 2.25$
Net Operating Income 1,353,963$ 5.59$
Source: Appraiser's estimate & broker's data
4.23%
$132.06
71.29%
Pro-Forma Operating Statement - Sale No. 1
Income Data
Units of Comparison
Overall Rate (Ro)
Sales Price/SF
NOI/EGI Ratio
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SALES COMPARISON APPROACH
62
Improved Sale No. 2
Location 5601 Alliance Gateway Freeway-
Fort Worth, Tarrant County, Texas
Grantor Industrial Propco, LP
Grantee USCIF Alliance Gateway 27, LLC
Record Data
Date October 25, 2022
Document No.D222257027
Consideration $9,397,681
Sale Price/SF $79.79
Conditions of Sale Cash (or cash equivalent) to the seller
Physical Description
Land Area
5.68 AC
247,334 SF
Building Coverage 47.62%
Gross Building Area 117,785 SF
Year Built 1998
Occupancy @ Sale 100%
Description Distribution Warehouse
Condition Average
Comments
Acres
Square Feet
The property is located along the northern line of Alliance
Gateway Freeway,west of Highway 377.The property is a
single tenant,distribution warehouse with 10 exterior docks,
2 drive in doors,and clear ceiling height of 30 feet.A
separate deed was recorded earlier on the same date which
appears to be a transfer between related entities and not an
arms-length transaction.
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SALES COMPARISON APPROACH
63
Improved Sale No. 2 (Continued)
Total $/SF
Gross Rental Income 588,925$ 5.00$
Add:Expense Reimbursement 147,231$ 1.25$
Less:Vacancy @ 5%36,808$ 0.31$
Effective Gross Income 699,348$ 5.94$
Total Expenses 265,016$ 2.25$
Net Operating Income 434,332$ 3.69$
Source: Appraiser's estimate & broker's data
4.62%
$79.79
62.11%
Pro-Forma Operating Statement - Sale No. 2
Income Data
Units of Comparison
Overall Rate (Ro)
Sales Price/SF
NOI/EGI Ratio
24-0032
SALES COMPARISON APPROACH
64
Improved Sale No. 3
Location 899 Henrietta Creek Road
Roanoke, Denton County, Texas
Grantor Industrial Propco, LP
Grantee USCIF Alliance Henrietta Creek, LLC
Record Data
Date October 25, 2022
Document No.2022-150708
Consideration $30,934,050
Sale Price/SF $93.74
Conditions of Sale Cash (or cash equivalent) to the seller
Physical Description
Land Area
19.56 AC
852,208 SF
Building Coverage 38.72%
Gross Building Area 330,000 SF
Year Built 2005
Occupancy @ Sale 100%
Description Distribution Warehouse
Condition Average
Comments
Acres
Square Feet
The property is located at the southeast corner of Henrietta
Creek Road and Independence Parkway.The property is a
single tenant,distribution warehouse with 28 exterior docks,
2 drive in doors, and clear ceiling height of 30 feet.
24-0032
SALES COMPARISON APPROACH
65
Improved Sale No. 3 (Continued)
Total $/SF
Gross Rental Income 1,980,000$ 6.00$
Add:Expense Reimbursement 412,500$ 1.25$
Less:Vacancy @ 5%119,625$ 0.36$
Effective Gross Income 2,272,875$ 6.89$
Total Expenses 742,500$ 2.25$
Net Operating Income 1,530,375$ 4.64$
Source: Appraiser's estimate & broker's data
4.95%
$93.74
67.33%
Pro-Forma Operating Statement - Sale No. 3
Income Data
Units of Comparison
Overall Rate (Ro)
Sales Price/SF
NOI/EGI Ratio
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SALES COMPARISON APPROACH
66
Improved Sale No. 4
Location 16600 East Victory Circle
Northlake, Denton County, Texas
Grantor Scannell Properties #444, LLC
Grantee BCI JV Northlake Logistics Crossings, LP
Record Data
Date February 17, 2022
Document No.2022-26468
Consideration $38,670,461
Sale Price/SF $95.25
Conditions of Sale Cash (or cash equivalent) to the seller
Physical Description
Land Area
43.98 AC
1,915,769 SF
Building Coverage 21.19%
Gross Building Area 406,000 SF
Year Built 2022
Occupancy @ Sale 100%
Description Distribution Warehouse
Condition Average
Comments
Acres
Square Feet
The property is located at the northwest corner of East
Victory Circle and Harmonson Road.The property is a multi-
tenant,distribution warehouse with 80 exterior docks,2
drive in doors, and 36 foot clear ceiling height.
24-0032
SALES COMPARISON APPROACH
67
Improved Sale No. 4 (Continued)
Total $/SF
Gross Rental Income 2,436,000$ 6.00$
Add:Expense Reimbursement 507,500$ 1.25$
Less:Vacancy @ 5%147,175$ 0.36$
Effective Gross Income 2,796,325$ 6.89$
Total Expenses 913,500$ 2.25$
Net Operating Income 1,882,825$ 4.64$
Source: Appraiser's estimate & broker's data
4.87%
$95.25
67.33%NOI/EGI Ratio
Pro-Forma Operating Statement - Sale No. 4
Income Data
Units of Comparison
Overall Rate (Ro)
Sales Price/SF
24-0032
SALES COMPARISON APPROACH
68
Sale No.Address YOC Size SF Price/SF Date
1 421 and 451 South Western Boulevard 242,320 $132.06 Feb-23
Denton, Denton County, Texas
2 5601 Alliance Gateway Freeway 117,785 $79.79 Oct-22
Fort Worth, Tarrant County, Texas
3 899 Henrietta Creek Road 330,000 $93.74 Oct-22
Roanoke, Denton County, Texas
4 16600 East Victory Circle 406,000 $95.25 Feb-22
Northlake, Denton County, Texas
Summary of Improved Sales
2021
1998
2005
2022
The sales in the sample were selected from a larger group as being most similar in overall
physical characteristics as compared to the subject. The sale sample ranges in price from $79.79
to $132.06 per square foot, range in size from 117,785 square feet to 406,000 square feet, and
were constructed between 1998 and 2022.
Comparable Adjustments
Adjustments to the comparable sales are considered in the categories of financing terms,
conditions of sale, market conditions/time, location, size, zoning, and availability of utilities and
other factors. Adjustments for each factor are typically made after a comparison indicates the
appropriate direction and size of each adjustment. Adjustments are based on experience and
extrapolations of market indicators.
EXPLANATION OF ADJUSTMENTS
Rights Conveyed
The rights conveyed of the sales represent fee simple ownership for each of the comparable
sales, resulting in no required adjustment.
Financing
The sales were purchased with cash, or third-party financing which do not require adjustments.
Sale Conditions
Sale condition adjustments account for factors such as buyer or seller motivation, which affect
the purchase price. The sales were evaluated and no adjustments for sale conditions are
considered necessary.
24-0032
SALES COMPARISON APPROACH
69
Market Conditions
The sales were transacted from February 2022 to February 2023. Adjustments for market
conditions are applied if property values have increased or decreased since the transaction
dates. Based on our observations and analysis, real estate has appreciated approximately 4%
annually. The sales are adjusted accordingly for time.
Location
The subject is located at the southwest corner of Airport Road and Corbin Road, in the city of
Denton, Denton County. The sales are similar in location or market areas to the subject and do
not require adjustments for location.
Physical Characteristics
Physical aspects are considered for each sale, and include size, age, condition, and quality.
Access
Access is defined as the points, or number of points available for ingress/egress to the subject
site or ease of access to the site from abutting roadways. Sale properties are adjusted based on
their inferiority/superiority as compared with the subject. The sales are similar in access as
compared to the subject, with no adjustment.
Size
The subject comprises 311,680 square feet of total building area. The sales range in size from
117,785 square feet to 406,000 square feet. The size adjustment is based on the premise that, in
general, the larger the building, the less its selling price on a per unit basis. Typically, a 5%-
15% adjustment for size compared to the subject is appropriate. The sales are adjusted -10%,
-15%, 0%, and +10%, respectively for size.
Age
The subject was built in 2007/2022. Sale No. 1 was built in 2021, Sale No. 2 in 1998, Sale No. 3
in 2005, and Sale No. 4 in 2022. The subject’s effective age is estimated at 5 years, with
significant remaining economic life. Inadequate market data are available for an analysis to
isolate precise factors for perceived differences in effective age. However, effective age, in
addition to the actual age of structures, is considered an important consideration from a buyer
standpoint. The adjustment is calculated at 1% for every 5 years difference of effective age. The
sales are adjusted -1%, +1%, 0%, and -1%, respectively.
Condition
The improvements are in average condition. All four sales are similar to the subject in condition
and receive no adjustment.
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SALES COMPARISON APPROACH
70
Quality
Due to the varying construction designs and quality of the comparable sales, a degree of
subjectivity is likewise required in comparing the construction quality of the sale properties to
the subject. Inherent in this adjustment is recognition of the aesthetic appeal and finish of each
property. The subject is of average quality construction. The sales are similar in quality as
compared to the subject and are not adjusted.
The following grid summarizes the adjustment process.
Sale No.1 2 3 4
Year Built
Size SF 242,320 117,785 330,000 406,000
Sale Date Feb-23 Oct-22 Oct-22 Feb-22
Sale Price $32,000,000 $9,397,681 $30,934,050 $38,670,461
Sale Price Per SF $132.06 $79.79 $93.74 $95.25
Rights Conveyed -0--0--0--0-
Financing -0--0--0--0-
Sale Conditions -0--0--0--0-
Immediate Expenditures -0--0--0--0-
Market Conditions 4%6%6%8%
Adjusted Price/SF $137.34 $84.57 $99.36 $102.87
Location -0--0--0--0-
Access -0--0--0--0-
Size -10%-15%-0-10%
Age -1%1%-0--1%
Condition -0--0--0--0-
Quality -0--0--0--0-
Net Adjustment -11%-14%-0-14%
Adjusted Price/SF $122.23 $72.73 $99.36 $117.27
IMPROVED SALES ADJUSTMENTS
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SALES COMPARISON APPROACH
71
CONCLUSIONS
In the square foot analysis, the adjusted sales range from $72.73 to $122.23 per square foot. Sale
3 is the closest in location to the subject and required the least amount of net adjustments and is
given greater emphasis in the final value estimate. Given the size, quality, condition, and location
of the subject, a unit value of $100.00 per square foot is supported by the sale data. This
equates to an indicated value of $31,168,000.
Size SF $/SF Indicated Value
311,680 x $100.00 =$31,168,000
$31,168,000
VALUE INDICATED BY THE SALES PRICE PER
SQUARE FOOT - WHOLE
Value by Sales Comparison
24-0032
INCOME CAPITALIZATION APPROACH
72
The premise of the income capitalization approach is that an indication of value can be derived
by capitalizing the net income a property will produce - under prudent management - at an
appropriate rate which reflects the current market conditions, trends, and investor requirements.
The approach is based on the principle of anticipation of future benefits, foremost of which is the
stream of annual net income for a holding period plus a capital sum at the end of that period. The
mechanism by which these benefits are translated to value i.e., present worth, is the capitalization
process.
INCOME CAPITALIZATION APPROACH
The income capitalization approach consists of the following steps:
Market Analysis: Research the market to determine relevant income parameters i.e.,
rental rate, vacancy rates, absorption trends, escalations,
allowances, and other factors.
Estimate of Operations: Estimate potential gross income. Then, deduct a vacancy and
collection loss allowance to derive effective gross income. Finally,
estimate and deduct expenses of operation to derive net operating
income.
Capitalization: Select an applicable capitalization method and technique. Develop
the appropriate rate or rates and capitalize the net operating income
or income stream to derive an indication of value.
As described above, the analysis of the market includes thorough research of the market to
determine relevant income parameters i.e., rental rate, vacancy rates, absorption trends, escalations,
allowances, and other factors. A summary of competing properties in the subject area is also
included the following pages.
24-0032
INCOME CAPITALIZATION APPROACH
73
RENTALS MAP
24-0032
INCOME CAPITALIZATION APPROACH
74
RENTAL NO. 1
Address 950 North Masch Branch Road
Denton, Denton County, Texas
Year of Construction 2014
Rentable Building Area 99,000 SF
Occupancy 100%
Rental Rate Per SF $4.70
Lease Terms Triple net; 10-year term
Comments The property is a distribution warehouse located along the eastern
line of North Masch Branch Road,north of Jim Christal Road.
The rental rate for the single-tenant property is $4.70 per square
foot,on a triple-net basis,with a 10 year term beginning in July
2022.
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INCOME CAPITALIZATION APPROACH
75
RENTAL NO. 2
Address 920 South Western Boulevard
Denton, Denton County, Texas
Year of Construction 2020
Rentable Building Area 126,890 SF
Occupancy 100%
Rental Rate Per SF $5.65
Lease Terms Triple net 10-yea, 4-month term
Comments The distribution warehouse property has an access drive from the
western line of South Western Boulevard,north of Airport Road.
The rental rate for the single-tenant property is $5.65 per square
foot,on a triple-net basis,with 10-year,4-month term beginning in
July 2022.
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INCOME CAPITALIZATION APPROACH
76
RENTAL NO. 3
Address 2800 Airport Road
Denton, Denton County, Texas
Year of Construction 2016
Rentable Building Area 422,819 SF
Occupancy 100%
Rental Rate Per SF $5.99
Lease Terms Triple net; 15-year-term
Comments The distribution warehouse property is located at the southwest
corner of Airport Drive and Interstate HIghway 35 southbound
frontage road.The rental rate for the single-tenant property is
$5.99 per square foot,on triple net basis,with a 15-year term
beginning in September 2018.
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INCOME CAPITALIZATION APPROACH
77
RENTAL NO. 4
Address 2401 Worthington Drive
Denton, Denton County, Texas
Year of Construction 2008
Rentable Building Area 63,150 SF
Occupancy 100%
Rental Rate Per SF $9.06 to $11.38
Lease Terms Modified gross; Negotiable
Comments The distribution warehouse property is located along the western
line of Worthington Drive,north of US Highway 380.The multi-
tenant property offers rental rates from $9.06 to $11.38 per square
foot,on a modified gross basis,with available spaces from 3,375
square feet to 4,500 square feet.
24-0032
INCOME CAPITALIZATION APPROACH
78
Rental No. Name/Location Rent/SF Lease Basis YOC Rentable Area
1 950 North Masch Branch Road
Denton, Denton County, Texas
2 920 South Western Boulevard
Denton, Denton County, Texas
3 2800 Airport Road
Denton, Denton County, Texas
4 2401 Worthington Drive
Denton, Denton County, Texas
$9.06 to
$11.38
Modified gross 2008 63,150 SF
$5.99 Triple net 2016 422,819 SF
$5.65 Triple net 2020 126,890 SF
RENTAL SURVEY
$4.70 Triple net 2014 99,000 SF
The properties in the survey are similar to the subject and are comparable in design, construction,
and use. The facilities range in size from 63,150 square feet to 422,819 square feet. The lease
rates of the survey range from $4.70 to $11.38 per square foot on a triple net or modified gross
basis, and are representative of market.
For the purpose for this analysis, we conclude the subject leases on a triple net lease basis. That
is, the operator/tenant is responsible for operating expenses, including pro rata shares of taxes,
insurance, and maintenance. Based on this lease arrangement, the only expense to an owner
would be a management fee and any structural maintenance charges. Each of the comparable
rents varies in location and quality and differs in size as compared with the subject.
Market Rent and Gross Rental Income Analysis
In estimating the appropriate market rental rate for the subject, all the comparables were
considered. Rental 1 is metal construction, considered inferior in comparison to the subject.
Rental 2 has access from a long drive from the western line of South Western Boulevard with no
frontage, considered inferior in comparison to the subject, and Rental 4 represents asking rates in
the market area. Rental 3 is considered the most similar to the subject. Therefore, considering the
location of the subject, the quality of finish, careful consideration of data and inspecting each
comparable property, with greatest consideration toward Rental 3, the data support a market
rental rate of $6.00 per square foot, on a triple net lease basis. This estimate recognizes the
location, construction, size, quality, and condition of the subject as compared with competing
properties in the local market.
Potential Gross Income
Based on the estimated market rate, the potential gross income of the subject property is
$1,870,080 per year, or $6.00 per square foot, with the consideration of the subject use.
Reimbursements
Under a triple net lease arrangement, the tenant is responsible for operating expenses.
Reimbursements for taxes, insurance, and maintenance are estimated at $392,311 for the
distribution warehouse.
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INCOME CAPITALIZATION APPROACH
79
Vacancy & Collection Loss
According to the Dictionary of Real Estate Appraisal, vacancy and collection (credit) loss is
defined as an allowance for reductions in potential income attributable to vacancies, tenant
turnover, and non-payment of rent. The portion referring to vacancy is typically derived from
market sources such as the market conditions of competing properties and the competitive
market. The collection loss is a reflection of the type of tenants within the market or subject.
In order to estimate anticipated vacancy and credit loss for the subject, relevant market data
sources have been researched, and the operating expenses and comparable properties have been
analyzed.
A survey of local management companies and rental properties show that there is a wide range of
vacancy rates in the area, which vary from 0% to 50%, with an average of approximately 5%.
The subject is currently 100% occupied. Given the subject’s size, current/potential tenancy,
market occupancy rates, and location, a reasonable market vacancy and credit loss rate for the
subject is estimated at 5%, which equates to $113,120, or $0.36 per square foot.
OPERATING EXPENSES
The following annual expense summary is estimated based on operations of similar properties in
the subject market. Expenses include both fixed and variable expenses. Fixed expenses include
ad valorem property taxes and property insurance. Variable expenses include
management/administrative and maintenance/repair costs. Typical leases on properties of this
type are structured on a triple net lease basis. That is, the operator/tenant is responsible for
operating expenses, including pro rata shares of taxes, insurance, and maintenance. Based on
this lease arrangement, the only expense to an owner would be a management fee and any
structural maintenance charges.
Where actual operating statements were not available for analysis, estimates are applied in the
expense estimates for the subject property.
EXPENSES
Real Estate Taxes
Real estate taxes (as detailed previously in the tax analysis portion of the subject property
section) are estimated at $267,311, or $0.86 per square foot. This expense is reimbursed. The
basis of this expense is the county appraisal district.
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INCOME CAPITALIZATION APPROACH
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Fire & Extended Coverage Insurance
Based on information from third party reports, the estimated typical fire, extended coverage, and
liability policy is $85,000, or $0.27 per square foot. This expense is reimbursed. The basis of
this expense is market estimates and data.
Management Fees
Includes general management, supervision, professional fees, legal fees, printing, keys and locks,
sign expenses, and purchasing, etc. Management fees in this market range between 3% and 8%
of effective gross income. Based on the market estimates and data, we utilize a 5% management
fee based on market estimates, which equates to $107,464 ($0.34 per square foot).
Maintenance/Repairs
This category covers all normal annual maintenance and repair costs to the structure. This
expense includes such items as exterior repairs and roof repairs, as well as maintenance of the
interior and its equipment, including HVAC units, elevators, plumbing and electrical. Based on
information from third party reports, repairs and maintenance are estimated at $40,000, or $0.13
per square foot. This expense is reimbursed. The basis of this expense is market estimates and
data.
Reserves
Reserves are an appropriation from the income of the real estate that is allocated to deferred or
anticipated contingencies, such as maintenance. The basis of this expense is market estimates
and data. This expense is estimated at $20,000, or $0.06 per square foot.
Utilities
The utilities are paid directly to the service provider by the tenant and not included in this pro
forma analysis.
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INCOME CAPITALIZATION APPROACH
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Expense Summary
Based on the foregoing, the expenses are estimated at $1.67 per square foot, or $519,775 per
year.
The following table represents the stabilized pro forma operating statement for the subject
property.
Rentable Building Area: 311,680 SF
Total $/SF
Gross Rental Income 1,870,080$ 6.00$
Expense Reimbursements 392,311$ 1.26$
Total Potential Income 2,262,391$ 7.26$
Less: Vacancy @ 5%113,120$ 0.36$
Effective Gross Income 2,149,271$ 6.90$
Less: Expenses Reimbursed
Real Estate Taxes X 267,311$ 0.86$
Insurance X 85,000$ 0.27$
Management Fees (5% of EGI)107,464$ 0.34$
Structural Maintenance/Repairs X 40,000$ 0.13$
Reserves 20,000$ 0.06$
Total Expenses 519,775$ 1.67$
Net Operating Income 1,629,496$ 5.23$
Net Income/Effective Gross Income Ratio 75.82%
INCOME AND EXPENSE SUMMARY
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INCOME CAPITALIZATION APPROACH
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CAPITALIZATION
Two methods of developing rates for direct capitalization are illustrated below. First is the
market capitalization rate. This is an overall rate exhibited in the market and is the ratio between
the total net operating income (NOI) produced by the property and the sales price from the
property. Generally, the overall rate is extracted from the transactions of similar type properties.
Second is the band of investment method. This method considers the financial components, or
bands, of debt and equity capital required to support the investment.
Market Extracted - Capitalization Rate
In the sales comparison approach, the sales of similar properties are detailed. These sales
included actual or estimated pro forma income and expense information that allowed us to
extract capitalization rates from cash equivalent figures. In the sales comparison approach, the
pro-forma data indicate overall capitalization rates ranging from 4.2% to 4.9%.
Sale No.Name/Location OAR
1 421 and 451 South Western Boulevard 4.2%
2 5601 Alliance Gateway Freeway-4.6%
3 899 Henrietta Creek Road 4.9%
4 16600 East Victory Circle 4.9%
Summary of Improved Sales
The overall rate developed by the band of investment method is based on (1) the capitalization
rate for debt, called the mortgage constant, and (2) the rate of return required on equity, called
the equity capitalization rate. For the subject, a 25-year amortization period is used covering
70% of the value at 7.25% interest, and considering the characteristics of the subject, an equity
return of 9.00%. Using the band of investment method, the overall rate is developed as follows:
Amortization Period 25 years Mortgage Constant (Rm)
Loan-to-Value Ratio 70%
Equity Component 30%
Interest Rate (i)7.25%
Equity Dividend Rate (Re)9.00%
% Total Value Return Required
Loan 0.700 x 0.08674 (mortgage constant)=0.06072
Equity 0.300 x 0.09000 (equity dividend rate)=0.02700
Overall Rate 0.08772
Rounded 8.77%
-0.086737
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INCOME CAPITALIZATION APPROACH
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Secondary data sources are noted regarding overall rates. Real Estate Research Corporation
(RERC) conducts a quarterly survey of major knowledgeable real estate participants. This
survey tracks target rates of return (discount rates) and capitalization rates for predominately
investment-grade properties. The specific criteria for industrial warehouse properties are most
applicable to the subject. The RERC survey indicates a going-in capitalization rate of 6.9%, for
investment grade warehouse industrial properties.
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INCOME CAPITALIZATION APPROACH
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In addition to the RERC survey, the Realtyrates.com Market Survey shows average operating
data and investment data. The Realtyrates.com survey indicates target rates in the range of
5.75% to 13.15%, with an average of 9.42%.
An overall capitalization rate of 5.50% is judged to be appropriate for the subject. The net
operating income is capitalized using an overall rate of 5.50%, and results in a value indication
of $29,627,000 ($1,629,496 ÷ 0.0550). Based on the foregoing, the income capitalization
approach supports a market value of $29,627,000.
$1,629,496
=0.0550
Value Indicated By Direct Capitalization $29,627,200
Final Value by Direct Capitalization $29,627,000
Net Operating Income
Capitalization Rate
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RECONCILIATION – WHOLE PROPERTY VALUE
85
In the preceding sections of this report, the area data and trends, location amenities, highest and
best use, and other elements of value are discussed. The market was researched for comparable
data and market trends.
In the final analysis, considering the approaches to value, each approach is analyzed in terms of
the quantity and quality of the data used in each approach and applicability to estimate a reliable
value.
Summary of Approaches
Cost Approach $30,607,000
Sales Comparison Approach $31,168,000
Income Capitalization Approach $29,627,000
RECONCILIATION – WHOLE PROPERTY VALUE
Sufficient sales of tracts of land with similar utility are available to arrive at an opinion of value
of the land by market comparison. The sales used are adjusted to reflect current market
conditions and differences in physical characteristics.
Land Value estimate at $4.00 per square foot $7,447,424
Cost Approach
The estimated costs are compared with the Marshall Valuation Service Cost Manual. Additionally,
a review of cost manuals, conversations with local building contractors and developers, and the
appraiser’s experience in valuing similar properties readily support these costs.
The cost approach is most applicable when a property is new or proposed and when the
development represents the highest and best use of the site. The effective age of the improvements
is estimated at 5 years. Overall, the cost approach is a reliable valuation method for this analysis.
Sales Comparison Approach
The price per square foot is used in the sales comparison approach to provide an indication of
value for the subject. These transactions are considered to reflect the behavior of typical market
participants. Although the sales were somewhat different in age, size, and use, they provide
reasonable value indications of the subject, after adjustment for these various differences. The
value range produced by this approach is a reasonable indicator based on the best available
market data.
Income Capitalization Approach
The direct capitalization method is used in the income capitalization approach to develop an
indication of market value. Operating expenses are estimated based primarily on actual data
from other projects, subject historical records (if available), and data extracted from the tax rolls.
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The income capitalization approach is the best approach to determine market value when the real
estate market recognizes the value of a property based on the income it produces. The
comparables used are representative of market and provided a good indicator of the potential of
the subject property.
CONCLUSION
In conclusion, the sales comparison and income capitalization approaches are the most reliable
indicators due to both the quality and quantity of the available sale data and current rental market
data and provide a good basis for valuation. Based on the above considerations for the subject
property, our final opinion of the market value of the subject in the whole property condition is
as follows:
Whole Property (Market Value) $30,000,000
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PART TO BE ACQUIRED
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Part To Be Acquired
Part to be acquired
The proposed part to be acquired is in permanent utility easement estate. Per the enclosed parcel
survey and field notes, the part to be acquired in permanent easement totals 17,787 square feet or
0.408 acres. The easement will be used for the relocation of an existing overhead electric
transmission line.
The permanent utility easement is 400.38 feet in length along northern boundary, 386.94 feet along
the southern boundary, with depths of 248.83 feet on the eastern boundary, and 258.14 feet on the
western boundary.
Also situated in and/or proximate to the acquisition area are utility lines and appurtenances, such as
utility equipment, signs, and markers. These items are assumed the property of other-unrelated
entities of subject ownership. It is assumed that the City of Denton will negotiate the successful
movement of these items where necessary, and without burden to the subject owner.
Landowner improvements situated in the proposed easement area include concrete paving and
drives, concrete curbing, and landscaping. Items that appear to be the property of others (other than
the subject owner) are not considered in the valuation of the subject. The city of Denton or its
contractors will restore any site improvements in the permanent easement to as good or better
condition upon completion of construction. Therefore, the site improvements are excluded.
Highest and Best Use
The part to be acquired is a small parcel and would not be developed as a separate property. Its
highest and best use is as part of the whole property.
Since the area to be acquired is not an economic unit, a value estimate cannot be supported by a
direct comparison with comparable data in the market. As a result, the proposed acquisition is
valued as a part of the whole property.
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PART TO BE ACQUIRED
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PART TO BE ACQUIRED
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The proposed acquisition extends through land that includes site improvements. The city of Denton
or its contractors will restore any site improvements in the permanent easement to as good or better
condition upon completion of construction. The compensation due the property owner for the part
acquired is comprised of land value and an estimated cost to cure for irrigation system.
Valuation of the Permanent Easement Acquisition
The part to be acquired in easement estate is a permanent utility easement. The permanent utility
easement taking will result in an encumbrance of 1.0% of the subject (17,787 square feet ÷
1,861,856 square feet = 0.010).
The proposed easement is not considered to be an economic unit within itself, due to the small
size and shape, and the highest and best use of the parcel is considered as a part of the whole
property. The whole property land value is previously established at $4.00 per square foot. The
value of the easement land immediately before the imposition of the permanent utility easement
equates to $71,148 for a total of 17,787 square feet.
Fee Simple Value Permanent Utility Easement 17,787 SF x $4.00 x 100%=71,148$
After the imposition of the easement, the land in the easement areas is restricted. The property
owner can continue to use the land but cannot use the easement land in any manner that will
prevent or interfere with the grantee’s uses or rights and cannot construct any building or other
structure within the easement area, and cannot change the grade, remove dirt from the surface of
the easement or impound water over the easement without the prior approval of the grantee. The
easement holder may cut all trees from the easement area. The property owner is relinquishing
certain rights in perpetuity to the easement holder. The property owner still incurs certain
obligations within the area of the easement including the cost to maintain the surface and
payment of ad valorem taxes.
Limited market data are available that demonstrate the value of these rights. For the land
encumbered by the permanent utility easement, it is our opinion that the property owner is giving
rights to the easement holder that equate to 90% of the fee simple value of the land.
Immediately after the imposition of the easement, the value of the land within the existing utility
easement is considered to be no more than 10% of the fee simple value of the land. The resulting
value of the permanent utility easement is calculated as follows:
Fee Simple Value Permanent Utility Easement 17,787 SF x $4.00 x 100%=71,148$
Less:
Value after imposition of Permanent Easement 17,787 SF x $4.00 x 10%=7,115$
Easement Value 64,033$
In our opinion, the total value of the part to be acquired in easement estate is $64,033.
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REMAINDER BEFORE THE ACQUISITION
90
Remainder Before the Acquisition
The indicated value of the remainder before the taking is derived by deducting the projected
value of the take from the value of the whole property. The calculation is as follows:
REMAINDER BEFORE THE ACQUISITION
Opinion of value - whole property 30,000,000$
Opinion of value - taking 64,033$
Opinion of value - remainder after the taking 29,935,967$
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REMAINDER AFTER THE ACQUISITION
91
Remainder After the Acquisition
The remainder after the acquisition is valued by a separate analysis of the property addressing
physical characteristics, highest and best use, utility, and marketability.
After the acquisition, no building improvements are affected. In the remainder after, the subject
retains the same number of parking spaces as before. The distance from the building to the
permanent easement is 40 feet on the northern side of the tract.
The remainder after the taking is the same as the whole property, but with a small area
encumbered by the easement. The remainder land area is 1,861,856 square feet, or 42.742 acres,
including the part acquired in the permanent utility easement (17,787 square feet). The easement is
situated in an area that includes some parking spaces, setbacks, or landscaping areas. The
highest and best use of the remainder is continued use as a distribution warehouse. While the
acquisition does not diminish the remainder’s potential, it will result in an encumbrance of
approximately 1.0% of the whole property land area (17,787 square feet ÷ 1,861,856 square feet =
0.010).
As if complete and in place, the project improvements are a general enhancement in the
neighborhood and are not judged to enhance a specific property.
Highest & Best Use – As if Vacant
In the remainder condition, the subject property is encumbered by a permanent utility easement
along the northern and eastern property lines. The subject fronts approximately 1,400 feet along
the southern line of Airport Road and approximately 1,320 feet along the western line of Corbin
Road. The subject is approximately 1,450 feet deep, along the southern property line.
According to the enclosed flood map No. 48121C0360G, approximately 15% of the subject has
base flood elevations within the 100-year floodplain, being within Zone 'AE'. The site is of
sufficient size, shape, and frontage to be economically adaptable to numerous uses.
Permissible Use: The site is zoned HI, Heavy Industrial by the City of Denton. The HI, Heavy
Industrial district is intended to provide locations suitable for development and operation of
indoor and outdoor industrial, distribution, and manufacturing uses. The HI district applies to
areas primarily west of Highway I-35 W near the Denton Enterprise Airport that supports the
most intense industrial uses and may require access to major rail, truck or aircraft, shipping
facilities. The HI district applies to areas that can accommodate the intensity of uses while also
being sensitive to the adjacent built and natural context.
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REMAINDER AFTER THE ACQUISITION
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Feasible Use: The surrounding properties and land uses are considered for compatibility in
determination of feasible use. The subject abuts industrial development across Airport Road,
along the north side, industrial development across Corbin Road along the east side, and vacant
industrial land to the south and west sides. Based on the land usage pattern of the surrounding
area, the layout, location and frontage/visibility of the site, the most feasible use is considered to
be for industrial development.
Maximally Productive Highest & Best Use: For industrial development, the location is
considered good for appeal within the submarket. Access is rated as average and exposure of the
subject is rated as average. Electricity, water, sewer, gas, and telecommunication services are
available to the subject. Based on the foregoing and land use patterns, the highest and best use of
the subject tract is for industrial development.
HIGHEST & BEST USE AS IMPROVED
Possible Use: The improvements were built in 2007/2022 according to the Denton County
Appraisal District. The improvements are of average quality and in average condition. Overall,
the improvements are adequately maintained and have no deferred maintenance. The intended
use of the improvements is for distribution warehouse use. The physical characteristics and
accompanying amenities support the continued use as such.
Permissible Use: The site is zoned HI, Heavy Industrial by the City of Denton. The HI, Heavy
Industrial district is intended to provide locations suitable for development and operation of
indoor and outdoor industrial, distribution, and manufacturing uses. The HI district applies to
areas primarily west of Highway I-35 W near the Denton Enterprise Airport that supports the
most intense industrial uses and may require access to major rail, truck or aircraft, shipping
facilities. The HI district applies to areas that can accommodate the intensity of uses while also
being sensitive to the adjacent built and natural context. Distribution warehouses are allowed in
this zoning district.
Feasible Use: The existing improvements have an effective age of approximately 5 years, based
on the modified economic life concept. With proper maintenance, a property of this type
typically has a useful life of 45 years. Remaining economic life of the improvements is
estimated at 40 years, based on a useful life of 45 years and an effective age of 5 years, and no
other use of the improvements could provide a greater return in the current market.
Maximally Productive Highest & Best Use: As improved, the property is improved with a
distribution warehouse and is suitable for distribution warehouse use. Therefore, the continued
use as a distribution warehouse represents the highest and best use of the land and improvements.
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RECONCILIATION - REMAINDER AFTER
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In the preceding sections of this report, the area data and trends, location amenities, highest and
best use, and other elements of value are discussed. The market was researched for comparable
data and market trends. The same sales and rentals are utilized in the remainder after analysis.
All data is contained in the appraiser’s work file.
Remainder After the Acquisition
The indicated value of the remainder after the taking is derived by deducting the projected value
of the take from the value of the whole property. The calculation is as follows:
Opinion of value - whole property 30,000,000$
Opinion of value - taking 64,033$
Opinion of value - remainder after the taking 29,935,967$
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SUMMARY OF COMPENSATION
94
SUMMARY OF COMPENSATION
The total compensation consists of the value of the part acquired in permanent easement estate
and cost to cure. There are no damages to the remainder.
Cost To Cure
Within the acquisition area, the property is improved with concrete paving and drives, concrete
curbing, and landscaping. A portion of the irrigation system will require reconfiguration due to
the relocation of the base of the electric utility poles. The estimated cost to cure is $1,000.
Item (Replacement Costs)Quantity Cost Cost New
Less Value of
Items Acquired Cost-To-Cure
Irrigation Unit 1,000.00$ =1,000$ -$ 1,000$
Total Cost-To-Cure 1,000$
Fee Simple Acquisition Items - Costs to Replace
The city of Denton or its contractors will restore any additional site improvements in the permanent
easement to as good or better condition upon completion of construction.
TOTAL COMPENSATION
The total compensation due to the landowner for the part acquired is $65,033.
Whole Property 30,000,000$
Part To Be Acquired in Easement 64,033$
Remainder - Before the Acquisition 29,935,967$
Remainder - After the Acquisition 29,935,967$
Damages 0$
Costs-to-Cure 1,000$
Total Compensation 65,033$
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APPRAISER’S CERTIFICATE
95
The undersigned do hereby certify that, except as otherwise noted in this appraisal report:
APPRAISER’S CERTIFICATE
We have no present or contemplated future interest in the real estate that is the subject of this
appraisal report. We have no personal interest or bias with respect to the subject matter of this
appraisal report or the parties involved. Our engagement in this assignment was not contingent
upon developing or reporting predetermined results. Our compensation for completing this
assignment is not contingent upon the development or reporting of a predetermined value or
direction in value that favors the cause of the client, the amount of the value opinion, the
attainment of a stipulated result, or the occurrence of a subsequent event directly related to the
intended use of this appraisal.
To the best of our knowledge and belief, the statements of fact contained in this appraisal report,
upon which analyses, opinions and conclusions expressed herein are based, are true and correct.
This appraisal report sets forth all of the assumptions and limiting conditions (imposed by the
terms of our assignment or by the undersigned) affecting the analyses, opinions, and conclusions
contained in this report. These are our personal, impartial, unbiased professional analyses,
opinions, and conclusions.
This appraisal report has been made in conformity with the Uniform Standards of Professional
Appraisal Practice. We certify that, to the best of our knowledge and belief, the reported
analyses, opinions, and conclusions were developed, and this report has been prepared, in
conformity with the requirements of the Code of Professional Ethics and the Standards of
Professional Practice of the Appraisal Institute and in conformity with the rules of the Texas
Real Estate Commission. The use of this report is subject to the requirements of the Appraisal
Institute relating to review by its duly authorized representatives.
The Appraisal Institute conducts a program of continuing education for its members. As of the
date of this report, Richard McBride has completed the Standards and Ethics Education
Requirements for Practicing Affiliates of the Appraisal Institute..
The Appraisal Institute conducts a program of continuing education for its members. As of the
date of this report, Kathleen Foley has completed the Standards and Ethics Education
Requirements for Practicing Affiliates of the Appraisal Institute.
We have performed no services as an appraiser, or in any other capacity, regarding the property
that is the subject of this report within the three-year period immediately preceding acceptance of
this assignment. No one provided real property appraisal assistance to the person signing this
certification. We certify that Richard McBride and Kathleen Foley personally inspected the
property appraised.
PYLES WHATLEY CORPORATION
Richard McBride Kathleen Foley
State of Texas Certification #TX-1380335-G State of Texas Certification #TX-1380509-G
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APPRAISER QUALIFICATIONS
96
APPRAISER QUALIFICATIONS
RICHARD C. MCBRIDE
Appraisal assignments include retail centers, existing and proposed office buildings, commercial
and industrial properties, and multi-family residential. Additional consulting assignments include
condemnation and right-of-way work, and other various consulting assignments.
Experience
Appraiser with Pyles Whatley Corporation since 2007; Partner in the company
since 2018
Over fifteen years’ experience in appraising various real property interests in Texas and Oklahoma
Education
Numerous Appraisal Courses offered by the Appraisal Institute Right-of-way courses offered by the International Right of Way Association
Richland College
o Engineering
o General studies
Professional
Texas Appraiser Licensing and Certification Board
o Certified General Real Estate Appraiser #TX-1380335-G
Appraisal Institute
o Practicing Affiliate
International Right of Way Association, Chapter 36, Member
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APPRAISER QUALIFICATIONS
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KATHLEEN A. FOLEY
Appraisal assignments include retail centers, office buildings, commercial and industrial properties, land
development, multi-family residential, right-of-way, and easements.
Experience
Independent appraiser 1996-present
Las Vegas Appraisal, Inc, 1993-1996
Education
Numerous Appraisal Courses offered by the Appraisal Institute Right-of-way courses offered by the International Right of Way Association
University of Nevada, Las Vegas
Bachelor of Science-Finance
Professional
Texas Appraiser Licensing and Certification Board
Certified General Real Estate Appraiser #TX 1380509-G
Nevada Real Estate Division
Certified General Real Estate Appraiser NV# A.0002152-CG
Appraisal Institute
Practicing Affiliate
International Right of Way Association
Chapter 36 - Member
Texas Real Estate Commission
Real Estate Broker #TX 696961
Nevada Real Estate Division
Broker Salesperson NV# BS.0034463
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ADDENDA
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PARCEL SURVEY/FIELD NOTES
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TAX INFORMATION
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TAX INFORMATION – Continued
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ZONING INFORMATION
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ZONING INFORMATION – Continued
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LETTER OF NOTICE
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USPS CERTIFIED/RETURN RECEIPTS
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