A special-use property is defined as a building with special construction materials, unique physical design or arrangement that limits its utility to the use for which it was built. They are typically single-purpose buildings which are adaptable to only one particular process, use or even one particular company.
Examples of special-use properties include: theatres, sports arenas, religious facilities, schools, hospitals, medical and dental offices, nursing homes, assisted living facilities, processing plants, refineries, mills, railway stations and fire houses.
The functional utility of a special use building is dependent on whether the demand for its designed use and capacity remains similar to conditions at the time it was built. The suitability of use and capacity of the asset can also be affected by advances in technology, resulting in some older special use facilities becoming obsolete well before their physical life expectancy is reached. Special use properties often cannot be easily adaptable between tenants because they are designed for a specific and often exclusive type of use. Special use properties are just that… special. They simply do not fit into a typical classification.
When evaluating the functional utility and value of building components designed specifically to serve the use of special-purpose property, the appraiser or consultant can employ several strategies:
- Review appraisal literature pertaining to the properties in a comparable product classification
- Search for market data on similar property in related areas of service ie: when data is not available on directly comparable property – or associated services
- Consult with the current or recent resident/tenant and other business owners in that particular industry
- Consult with project managers, architects, and engineers
- Review taxation case studies for relevant decisions
As special use properties are truly unique, they require detailed knowledge of their exclusive characteristics and the additional skill required in their valuation process become a specialty service area.