Given a choice, most consumers would shy away from being near a high voltage power line. They are certainly ugly and there is a perception of potential negative health effects being in constant proximity to the lines. For appraisers, the issue isn’t whether or not they actually pose a health risk but what impact they have on property values.
A recent study in the Journal of Real Estate Research by Chris Mothorpe and David Wyman from the College of Charleston covered this issue. They found that vacant lots adjacent to high-voltage transmission lines sell for 45% less than equivalent lots not located near transmission lines. Non-adjacent lots located within 1,000 feet of transmission lines sell at an 18% discount.
Prior studies found that powers lines hurt values but these studies tend to focus on lots with houses instead of lots alone. Varying home characteristics can muddle the sales prices which may not reflect the impact of power lines. If a lot represents 20% of a home’s overall value then a 45% decrease in the lot value equates to a total property value reduction of 9%.
The study followed 5,455 vacant lot sales between 2000 and 2016 in Pickens County, South Carolina. The study was reported in an article in the August 17, 2018 Wall Street Journal. Health concerns (although not clearly proven), impacted views and the noise from the lines were the primary factors driving the negative effect. The authors indicated that they couldn’t really break out the negative correlation between the three but felt that the view was most likely the largest factor.
The study did not cover commercial valuation although it would be easy to argue, at least for retail or office space, that there would probably be some diminution in value. For warehouse space, a downward adjustment is possible but probably much less. This study also provides at least some basis for adjustments for other adverse neighbors such as cell towers.