This article describes how to assess and appraise corporate headquarter facilities.

1. Presented by: Tim Wilmath, MAI
Palm Beach County
Property Appraiser’s Office
Supersize Me!
The Valuation of Corporate Headquarters

2. Best Buy
Headquarters
Minneapolis,
Minnesota
1.5 million
square feet

3. Insert:
#1 Best Buy Video

4. Corporate Campus Questions:
1. Who is the market for these properties?
2. Which of the three approaches to value is
best for these unique properties?
3. Do these large buildings automatically
have obsolescence due to their size and
features?

5. Facebook Headquarters
Menlo Park, California
430,000 square feet
22 acres

6. Insert:
#2 Facebook Video

7. Google Headquarters
Mountain View, California
2,000,000 square feet

8. Insert:
#3 Google Video

9. Samsung U.S.
Headquarters
San Jose, CA
1,100,000 square feet

10. **Audience Participation Question**
Who is the market for this property?
Local?
National ?
No market ?

11. Insert:
#4 Samsung Video

12. Nike Headquarters
Beaverton, Oregon
2,000,000 square feet

13. Insert:
#5 Nike Video

14. Pentagon
Washington DC
6.6 million square feet
**Trivia Question**
What is the largest single-occupant office building
in the world?

15. Steve Jobs had a vision to build the greatest office
building in the world.

17. Insert:
#6 Steve Jobs Video

18. Insert:
#7 Apple Video

20. **Audience Participation Question**
Given it’s $5 billion cost, how much did
Santa Clara County assess the Apple HQ?
a. $5 billion – same as cost
b. Less than $5 billion, because cost ≠ value?
c. $3 billion – because the assessor cannot
justify (or even find) some of the cost
d. Zero – Apple should be exempt since
they make such great products

22. Harris Corporation
Melbourne, Florida
Brevard County
464,000 square feet

23. Publix Headquarters
Lakeland, Florida
Polk County
320,000 square feet

24. Office Depot Headquarters
Boca Raton, Florida
Palm Beach County
624,000 square feet

25. Citi Campus
Tampa, Florida
Hillsborough County
675,000 square feet

26. Question 1: Who is the
market for these properties?

27. Insert:
#8 Timelapse Video

28. Corporate Campus Life-Cycle
1st
Generation
2nd
Generation
Multitenant

29. Cargill Headquarters
Minneapolis,
Minnesota
520,203 Square Feet
Sold for $244/PSF

30. AT&T Campus
Oakton, Virginia
410,230 Square Feet
Sold for $226/PSF

31. Social Security Campus
Birmingham, Alabama
597,680 Square Feet
Sold for $250/PSF

32. All three of these buildings
were built to the 1st
generation occupant’s
specs, then sold to a
national investor in a
sale-leaseback
$244/psf $226/psf
$250/psf

33. Intermedia Campus
Tampa, Florida
818,091 Square Feet
Intermedia went bankrupt
and the individual buildings
were sold vacant for $115/sf

34. Former JC Penny Headquarters
Dallas, Texas
2,300,000 Square Feet.
Sold partially vacant for $153/psf

35. Former Merrill Lynch Campus
Middlesex, New Jersey
770,000 Square Feet
Sold vacant for $140/psf

36. All three of these
properties sold after
the first generation
occupant vacated.
$116/psf $153/psf
$140/psf

37. Former FPL Headquarters
Miami, Florida
635,000 Square Feet
Sold for $50/psf
Built in 1974
Converted to Multitenant

38. Former American Express
Operations Center
Plantation, Florida
650,000 Square Feet
Sold for $45/psf
Built in 1976
Converted to Multitenant

39. Former Fortune Federal Campus
Largo, Florida
197,000 Square Feet
Sold for $44/psf
Built in 1985
Converted to multitenant

40. All three of these older
properties sold after being
vacant for many years
and were converted to
multitenant occupancy
$50/psf $45/psf
$44/psf

41. Older/Class C & D - $40-$50/psf
2nd Generation - $115-153/psf
1st generation - $226-250/psf

42. Answer to Question 1: Who is
the market for these properties?
1st generation buildings: Predominantly owner-
occupants but also national investors - usually
REITS.
2nd generation and older: Mostly local investors
who often convert the buildings to multitenant
occupancy.

43. Question 2: Which of the three
approaches to value is best for
these unique properties??

48. The best approach for 1st
generation space is the
COST APPROACH.
Because that’s how the
market prices these
property types.

49. Former Beneficial Corporation Headquarters

50. I find that the most reliable indicator of
the value of this unique property is the
cost approach. The property cannot be
valued by the sales comparison approach
because it is quite different from other
office buildings. The income approach
cannot be used because rent for owner-
occupied buildings is purely speculative.
The subject’s sale-leaseback is not reliable
because it is a financing transaction.
Beneficial Facilities Corp. v. Peapack and Galdstone Borough – NJ 1990
1908)

51. Former IBM Headquarters Boca Raton

52. Insert:
#9 IBM Video

53. Former IBM Headquarters Boca Raton

54. Toys R Us is closing all it’s stores and it’s
Corporate Headquarters

55. Insert:
#10 Toys R Us Video

56. Former Toys R Us
Headquarters
Wayne, New Jersey
585,000 square feet
192 acres

57. Answer to Question 2: Which
Approach is best for these
properties?
1st Generation Properties:
Cost Approach
2nd Generation and older:
Sales Comparison and Income Approach.

58. Facebook Headquarters Apple Headquarters
Question 3: Do these super-large
buildings suffer from Obsolescence due
to their large size or unique features?

59. Functional Utility: 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.

61. We are not disposed to give much force to
the argument that because there are very few
buyers for so costly a residence the valuation
should be depreciated. The criterion
established by the statute is a hypothetical
sale, hence the buyers are hypothetical buyers,
not actual and existing purchasers. If this be
not so, a citizen, by the construction of a
residence so costly that no one could buy it,
would escape all taxation.”
Turnley v. Elizabeth, 76 N.J.L. 42, 68 A. 1094 (Sup. Ct. 1908)

62. Answer to Question 3: Do these
super-large buildings suffer from
Obsolescence due to their large
size or unique features?
1st Generation: No automatic obsolescence since
improvements serve the purpose for which they
were intended.
2nd Generation and older: Possible obsolescence if
the improvements cannot be utilized or maximized.

64. Fee Simple vs. Leased Fee
Market Value vs. Value in Use
Vacant vs. Occupied

65. Areas where both sides agree
Value based on hypothetical sale on lien date
Value based on highest and best use
Value typically should be based on fee simple
market value (subject to state/local laws)

66. Fee Simple: Absolute ownership
unencumbered by any other interest or
estate, subject only to the limitations
imposed by the governmental powers of
taxation, eminent domain, police power,
and escheat.
Leased Fee Interest: The ownership
interest held by the lessor, which
includes the right to the contract rent
specified in the lease plus reversionary
right when the lease expires.

67. Does “available to be
leased at market rates”
mean vacant?
Appraisal of Real Estate 14th Edition – Page 441

71. Older/Class C & D - $40-$50/psf
2nd Generation - $115-153/psf
1st generation - $226-250/psf

72. JP Morgan Chase
Tampa Regional HQ
468,000 square feet
Built in 2000

73. Former FPL Headquarters
Miami, Florida
635,000 Square Feet
Sold for $50/psf
Built in 1974
Converted to Multitenant

74. Vacant
corporate
Headquarters
are vacant
for a reason

75. Pixar Campus – San Francisco

77. Fee Simple
Market Value –
The value of a
property is based
on its highest and
best use.
For AG property, it
might be
development of
single family
homes resulting in
a fee-simple
market value of
$5,000,000.
Value in Use
Ignores highest and
best use and only
focuses on the value to
a specific person or
firm.
For AG property, value
in use might be the
value to a farmer
where only cattle
grazing was allowed.
That might generate a
“value in use” of
$300,000

81. “The performance of
the subject property is
likely to be the most
reliable indicator of
current demand for
existing properties on
the market.”
The Appraisal of Real
Estate, 14th Edition,
page 310.

83. “There is no suggestion of
inadequacy of the
structure or mislocation.
On the contrary, it is
peculiarly adapted to the
purposes of its use and in
the best possible situation
in the financial district.”
People ex rei. N. Y. Stock Exch. Bldg. Co. v. Cantor, 223
N.Y.S. 64, 68-69 (App. Div. 1927), aff'd mem., 162 N.E.
514 (N.Y. 1928).
)

84. Former CPC Headquarters – Englewood Cliffs, NJ

85. Though many features of these structures greatly
exceed the bare necessities of a general office
building they clearly serve the plaintiff’s purpose of
visibly enhancing its prestige in the business
community by an artful blend of function and
aesthetics. Such benefits have been held to
constitute a value intrinsic to the building itself.”

86. “A wealthy financier is reputed to
have remarked that if you must be
concerned about the cost of
upkeep, you should not buy a
yacht. Similarly, corporate officials
who worry about a large tax
assessment should not construct a
place of splendour and
magnificence.
Having decided that opulent
campus-type headquarters would
enhance the prestige of its
corporate image, the corporation
here should pay taxes on that basis
as long as it occupies the campus.”
CPC Int’l Inc. v. Englewood Cliffs, 193 N.J. Super 261, 265, 473, A. 2d
548

87. Notwithstanding its age, the property remains a
corporate headquarters facility, uniquely
designed for the special purposes of the owner.
As such, it is most appropriately valued under
the cost approach. Best Foods v. Englewood Cliffs Borough, 19 N.J. Tax 266 (2001)

88. “It is true, of course, that the market for the Wellmark
property for use as a single-tenant office building may be
limited. But we think the fact that the property is currently
being successfully used as a single-tenant corporate
headquarters cannot go unnoticed. Current use is an
indicator that there is demand for such a structure.”
Wellmark, Inc. v. Polk County Bd. of Review, 875 N.W.2d 667 (Ia. 2016)

89. “Although both parties
presented evidence under the
sales comparison approach, the
court found that evidence to be
largely unreliable and
inconclusive. The court is left
only with value indications
under the cost approach”
Symantec Corporation v. Lane County Assessor, Oregon
Tax Court TC-MD 140286N (2014)

90. “This Court understands that it may be
proper appraisal practice to include a
lease-up discount in addition to a
stabilized vacancy allowance in cases
where the property is experiencing a
below stabilized vacancy position. This is
not such a case, however, as the evidence
here indicates the subject property's
highest and best use is its actual use as a
fully owner-occupied facility. Applying a
lease-up discount in this tax appeal would
require a suspension of reality and an
acceptance of conditions not borne out
by the evidence”
Yellow Equipment & Terminals, Inc., No. 107,653, 2012
WL 6634418 (Kan. App. 2012)

91. “While his qualifications are
impressive to say the least,
his actions herein together with
his extensive criticisms
of the respondent's experts
subjected his opinion to
substantial criticism. This, together
with his aversion to splitting
infinitives and his propensity to
split hairs, diminishes and
negatively impacts his credibility
as an expert and value as a
witness.”
Union Carbide Corp. v. City of Danbury, 1999
WL 956659, sustained 257 Conn. 865 (Conn.
2001).

92. “The trial court valued the property by determining its
reproduction cost, an accepted method of estimating market
value. To state it differently, the trial court determined the value
of the property according to its highest and best use as an
airport facility without regard to who might own it. The fact that
its intrinsic value to Northwest Airlines might be equal to a
hypothetical buyer as an airport facility does not render the trial
court’s method of valuation invalid.”
McCannel v. County of Hennepin, 301 N.W.2d 910 (Minn. 1980)).

93. “The problem with valuing large
industrial plants is a problem with
the statutory standard itself. The
reality is that these types of
industrial plants are rarely bought
and sold, so that a determination
of ‘usual selling price’ constitutes
a metaphysical exercise which
puts the Tax Tribunal in the
position of having to resolve a
question somewhat akin to how
many angels can dance on the
head of a pin.”
Clark Equipment Co. v. Township of Leoni
Cnty. Of Jackson, 318 N.W.2d 586 (Mich. App.
1981).

94. “Petitioner may well be correct in its
assertion that there is no market for
its industrial plant at its current use.
However, to the extent that an
industrial plant is not so obsolete
that, if a potential buyer did exist
who was searching for an industrial
property to perform the functions
currently performed in the subject
plant, said buyer would consider
purchasing the subject property, the
usual selling price can be based upon
value in use”
Clark Equipment Co. v. Township of Leoni Cnty. Of
Jackson, 318 N.W.2d 586 (Mich. App. 1981).

95. “When a large corporate entity such as Ford or General
Motors builds a factory, it is probable that absolutely no
market exists for the resale of that factory consistent with
its current use. It is ludicrous to conclude, however, that
such a brand new, modern, industrial facility is worth
significantly less than represented by its replacement cost
premised on value in use because, in actuality, such
industrial facilities are rarely bought and sold.”
Clark Equipment Co. v. Township of Leoni Cnty. Of Jackson, 318 N.W.2d 586 (Mich. App.
1981).

96. Other Corporate Headquarter Court Cases of interest
Aetna Life Insurance Co. v. City of Middletown, No. CV960078839S, 2002 WL 377147,
(Conn. Super. Ct. Feb. 14, 2002).
Gen. Elec. Co. v. Fairfield, No. CV020392891S, 2005 WL 2081269 (Conn. Super. Ct. July 22,
2005)
Beneficial Facilities Corp. v. Peapack & Gladstone Borough, 11 N.J. Tax
359, 363, 376 (1990), aff'd per curium, 13 N.J. Tax 112 (N.J. Super. Ct. App. Div. 1992).
Freedom Federal Savings & Loan Association v. Department of Revenue, 801 P.2d 809 (Or.
1990) (en banc)
Supervisor of Assessments v. U.S. Fidelity & Guaranty Co., No. 1263, 1978 WL 1493
21 (Md. Tax Feb. 1, 1978).
Equitable Life Insurance Co. v. Board of Review, 281 N.W.2d 821 (Iowa 1979).
Federal Reserve Bank of MPLS v. State, 313 N.W.2d 619 (Minn.Sup.Ct. 1981)
Joseph E. Seagram & Sons, Inc. v. Tax Com'n, supra.
First
Fed. Sav. & Loan Assn. v. City of Flint, 415 Mich. 702, 329 N.W.2d 755 (Sup.Ct. 1983).

97. Office Trends

98. Office Trends
Open floor plan
instead of cubicles
• Collaboration
• Relieves isolation
• Team building
• Cuts Costs

99. Office Trends
**Audience Participation Question **
How many people would prefer to work in
an open environment instead of a cubicle?

104. Green Buildings

105. Green Buildings

106. Green Buildings
Studies have shown 3-8% increase in
rent due to green building construction
and 10%-16% increase in sale prices for
green buildings

107. Green Buildings

108. Insert:
#11 Compilation
Video

109. Tim Wilmath, MAI – Chief Appraiser
Palm Beach County Property Appraisers Office
Phone: (561) 355-2862
Email: twilmath@pbcgov.org