We formed the Terrace Experts because we realized that there wasn’t authoritative, empirical data on terraces in New York, and one of the areas that’s still hotly debated is terrace valuation (and all of its variables). We invited friend of TTE Andrew Goodman of Gotham Valuation to provide a peek behind the appraiser’s curtain when it comes to professional terrace appraisal.
All outdoor spaces are not created equal, and as such, not all are valued equally. There are various factors to take into account when accurately valuing terraces and other outdoor spaces. Key factors that should to be considered include total terrace area, terrace shape, terrace utility, terrace accessibility, terrace improvements, and (of course) views.
Terraces can be valued on a per sq. ft basis as a percentage of the value of the apartment’s interior gross living area. Typically terraces become more valuable as their total size increases; however, the usability of additional terrace area declines after a certain point. There is typically nominal (if any) additional value for terrace area that exceeds the size of the apartment itself. Utility and accessibility are key factors to keep in mind, as well as these rules:
The range of value for terraces can be significant based on consideration of these factors. Terraces with limited accessibility, limited finish, limited view and limited utility could be worth as little as 5-10% of the value of the apartment’s living area on a per sq. ft. basis. Terraces with custom improvements, open views, multiple-access points and large functional areas can be worth as much as 50% of the value of the apartments living area on a per sq. ft. basis.
Commentary by Andrew Goodman, Principal and Founder, Gotham Valuation
To get in touch with Andrew, click here.