Over the past 16 years, Norris Realty Advisors has had many opportunities to value a number of unique and unusual properties.  Earlier this quarter we were presented with one of the most challenging tasks we have undertaken - the valuation of perhaps the nation's only privately held low-speed (non-supersonic) wind tunnel test facility. 

According to NASA, wind tunnels are elaborate structures for "flying" aircraft on the ground; tube-like structures in which wind is produced, usually by a large electric-powered propellers, to flow wind over objects such as aircraft, engines, wings, rockets or models of these objects. 

The subject aerodynamic testing facility was built in the 1950s.  How does one value a wind tunnel with improvements dating back this far?  With the goal of answering this question, we contacted a number of major aerospace defense firms we have worked with in the past who have highly specialized expertise in this area.  

The Cost Approach could not be utilized, as only a handful of similar wind tunnels have been constructed in the US in the past 25 years.  The Sales Comparison Approach was also not useful in valuation of the property as an operating wind tunnel testing facility, due to its unique nature.  Our research of wind tunnel facilities across the nation (and around the world) reveals there is no identifiable market for this type of improvement.  Confirming this, the subject is among only a handful of private defense contractor-operated facilities in the world.

Unlike other almost all wind tunnels worldwide, this specialized improvement was operated under a long-term lease.  The overwhelming majority of wind tunnels are operated by their owner/users.  Given this, contract rent for this property was significantly higher (>400%) than the industrial leases in the surrounding region. 

The majority of the value of the property was contained within the recently renegotiated lease.  The defense contractor tenant has occupied the facility since its opening, and has extensive data on the calibration of the facility for their specific testing processes.  Therefore, the factorial differential between local rents for warehouse space and the subject wind tunnel is entirely a function of the very specialized testing equipment inherent in the wind tunnel design.  For more on the history of and "fun with wind tunnels", see the NASA-created video below.