AND ECONOMIC OBSOLESCENCE
specialised buildings are often built and designed for a single
purpose. For example, a fire station. This means that if that use
becomes obsolete it is difficult to use the building for an
alternative use. Such loss in value is functional obsolescence
and is shown by difficulty in conversion to a higher and better use.
companies sometimes build a highly specialised building designed to
make one particular drug or chemical. A particular layout,
specialised sterile rooms and quality control systems make it almost
impossible to use the building for any other purpose.
the making of that drug is economical to the company, the building
has value particularly to the company. However, if a rival company
produces a cheaper or better alternative drug it may no longer be
viable to keep the factory running. In this case there is massive
economic and functional obsolescence.
an extreme example puts the valuer in the awkward position of trying
to ascertain the viability of the existing specialised use. Unless
there is clear evidence to the contrary it is better to value the
building as a viable use but with qualifications in the valuation
that the market for the building is limited and dependent upon the
viability of the product being produced in the building.
are other examples of specialised buildings in the electronics
industry. For example, in “Silicon Valley” in Los Angeles
buildings are purpose built to make integrated circuits, CPUs and
other computer parts. The value of such specialised buildings is
largely dependent on the viability of the computer components being
some specialised uses may appear not to be suitable another use there
are exceptions. For example, old mainstream religious churches in the
inner suburbs of Sydney have been sold to newer religious groups and
sects as a place of worship. In this situation there is little loss
through functional obsolescence. Some old churches have also been
successfully converted to restaurants and even as residential
dwellings. However, there will still be significant loss in value
because the costs of conversion are high.