By Marc Kushner, The Informed Appraiser

“Letters are like wine; if they are sound they ripen with keeping. A man should lay down letters as he does a cellar of wine.” – Samuel Butler (1835–1902), British author

This being my first blog post here on Commercial Grade, I think it is appropriate to start at the bottom. Hence, this entry will touch on some issues regarding basements and cellars. I know, I know – you can hardly contain your excitement at this point. So please go ahead and read on.

(A brief comment regarding my chosen moniker, “The Informed Appraiser”: While this title might appear to be nothing more than a cheesy and conceited attempt at self-promotion, it’s actually also a shameless plug for my own website of the same name. But I’ll leave that topic for another blog post.)

In common use, the terms “basement” and “cellar” are usually bandied about interchangeably with fairly reckless abandon. To be fair, most any thesaurus will show the two terms to be synonymous. Here are their definitions, per the Random House Dictionary:

base·ment

/ˈbeɪsmənt/ –noun

1. a story of a building, partly or wholly underground.

2. (in classical and renaissance architecture) the portion of a building beneath the principal story, treated as a single compositional unit.

3. the lowermost portion of a structure.

4. the substructure of a columnar or arched construction.

cel·lar

–noun

1. a room, or set of rooms, for the storage of food, fuel, etc., wholly or partly underground and usually beneath a building.

2. an underground room or story.

3. wine cellar.

Close enough, right? For most people, perhaps. (All things being equal, “basement” has the advantage of avoiding the potential for confusing “cellar” with “seller”.) However, as appraisers we must hold ourselves to a higher standard. For those of us lucky enough to be working in NYC, the Department of City Planning’s Zoning Resolution could be taken as that standard. Weighing in at 3,349 pages, this voluminous tome sets the tone for the development and use of real estate in NYC. Take a moment to peruse it and you will see that “basement” and “cellar” have very specific definitions.

In short, the Z.R. defines a basement as “a story partly below curb level, with at least one-half of its height (measured from floor to ceiling) above curb level.” A cellar, on the other hand, is defined as “a space wholly or partly below curb level, with more than one-half its height (measured from floor to ceiling) below curb level.”

This is not merely a matter of semantics. The above distinction carries with it legal and practical implications in terms of permissible uses, construction requirements, and the like. Perhaps the point most significant for appraisers is that Zoning Resolution’s definition of Floor Area specifically includes basements, but excludes cellars (with the noteworthy exception of cellars that are used for “dwelling purposes”). Because floor area is typically the most fundamental building metric used by appraisers, it is vitally important to know precisely what any particular building’s floor area includes – or should include.

To further complicate matters, the NYC Department of Buildings as well as the Department of Finance – whose building records are often referenced as the source for building floor area measurements – do not always follow this rule consistently. (This is apart from the general observation that published floor areas can be inaccurate in virtually any case due to a variety of reasons, even where there are no basement/cellar issues at play.) In my experience, basements are sometimes excluded from recorded floor areas, while in other cases cellars may be included. Consequently, two buildings with identical published floor areas may in fact not be the same size at all. Conversely, two buildings with appreciably different recorded floor areas may actually be the same size.

In light of the above, I tend to proceed with caution when utilizing published building floor areas, particularly where basements and/or cellars are involved. To ensure consistency, care should be taken to consider exactly what is being included in the floor area measurements for both the subject and any comparables being analyzed. Otherwise, flawed comparisons and conclusions may result.