A real estate expert witness advises on a case involving a property owner and the US government in dispute over the highest and best use of condemned land. The United States initiated this condemnation proceeding to acquire 0.335 acres of downtown vacant land for renovation and expansion of a federal courthouse. The defendants — the property owner and its lender — had purchased the property five years earlier and entered into agreement with a hotel chain to develop a 15-story hotel.
The parties dispute the highest and best use for the property.
Question(s) For Expert Witness
Is an apartment complex a viable use for this property?
Expert Witness Response
Such a project is not feasible. The site is simply not large enough to warrant an apartment development and generate acceptable financial returns. The subject site does have the market depth and rent levels to warrant proceeding with analysis of the site. The parking ratio (spaces per unit) in the city’s multi-family zoning categories ranges from 1.5 in downtown to around 1.9 outside of downtown. In our experience, providing less than 2 spaces per unit can lead to problems as visitors and second cars are prevalent in luxury apartments. However, in this case we used a minimum ratio of 1.27, which is aggressive.
The maximum construction type or building code for apartments in the downtown four stories of wood frame. Five stories or higher with structural steel is too expensive currently given the highest apartment rents in the city. Given market and financing conditions at the time of the taking, steel construction was not feasible. Therefore, the massing study for the subject site indicates support for a maximum of 36 apartments in a four-story structure over 46 surface level parking spaces. The projected return on equity would be very low at around 4%. The economies of construction and operations suffer significantly for a development of this size. We have never developed an apartment community of less than 100 units, and I am not aware of an apartment project of less than 75 units which has been built in this area in the last 10 years.
In my opinion, the site is not suitable for apartment development because not enough units can be feasibly developed to make the site viable.
The expert is a senior vice president of a real estate development company that has developed more than 20 apartment communities.
About the author
Kristin Casler
Kristin Casler is a seasoned legal writer and journalist with an extensive background in litigation news coverage. For 17 years, she served as the editor for LexisNexis Mealey’s litigation news monitor, a role that positioned her at the forefront of reporting on pivotal legal developments. Her expertise includes covering cases related to the Supreme Court's expert admissibility ruling in Daubert v. Merrell Dow Pharmaceuticals Inc., a critical area in both civil and criminal litigation concerning the challenges of 'junk science' testimony.
Kristin's work primarily involves reporting on a diverse range of legal subjects, with particular emphasis on cases in asbestos litigation, insurance, personal injury, antitrust, mortgage lending, and testimony issues in conviction cases. Her contributions as a journalist have been instrumental in providing in-depth, informed analysis on the evolving landscape of these complex legal areas. Her ability to dissect and communicate intricate legal proceedings and rulings makes her a valuable resource in the legal journalism field.
