When 1 + 1 < 2

The term plottage refers to the incremental value above the sum of individual values of parcels brought about by their combination. Can combining parcels ever reduce value? As always, the answer is found in the principles of Highest and Best Use

The concept of Highest and Best Use requires testing for: 1) physical possibility, 2) legal permissibility, 3) financial feasibility, and 4) maximal productivity. The first three are readily determined; for #4 a proxy for highest value is often most accurately measured by the income approach.

As an example. let’s compare two commercial developments that are identical in terms of utility, appeal, and market value. Next imagine there is an empty tract adjacent to one of the developments. Would adding the site area from that vacant adjacent parcel to the development automatically increase the market value? Not necessarily. In fact, the value of that development might actually be reduced if the extra land increases ownership expenses, for example higher taxes & maintenance costs.

For the assessment professional, this means awareness of how additional land contributes to value… if it does.

Salable excess land would contribute, but surplus area not contributive to highest and best use can be a detriment. It is possible for 1 + 1 to equal less than 2.

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