Case Study 4
We recently appraised a cold storage industrial building in the Produce District of Downtown Los Angeles. Cold storage industrial buildings are rather unique and it is imperative that an experienced appraiser value such properties. Another commercial appraisal firm appraised the same building several weeks prior. The owner was trying to get the property refinanced with the bank. The appraisal from the other commercial appraisal firm came in much lower than he thought and the owner was not able to refinance. So the owner tried with another bank and thus we were contracted to do the appraisal. The owner told us of the comparables that were utilized in the prior report and even provided the prior appraisal. Upon further review, the appraiser did not use any cold storage comparables and essentially said that the cold storage component did not add any value.
As we do many cold storage facilities, we are fully aware that cold storage properties rent and sale for a premium in the Los Angeles Market. We appraised the subject at market value. We used cold storage rent and sale comparables. The premium for cold storage was clear. In this case, the premium amounted to 35% to 45% over a typical industrial building. The owner was able to refinance his property.