What is the value-added benefit of plottage in real estate?

Plottage refers to the increase in value that is realized when two or more adjacent parcels of land are combined into a single larger parcel. This concept is based on the principle that the whole is worth more than the sum of its parts. When properties are combined, they can be utilized more effectively, allowing for more significant development opportunities, better land use, or enhanced appeal to buyers.

The value-added benefit of plottage contributes to a higher valuation of combined parcels because it often allows for more extensive development possibilities or a more desirable property configuration, which can lead to increased demand. For instance, a larger parcel may accommodate a larger commercial building or provide better access and visibility to potential customers, which would not have been possible if the properties remained separate.

In contrast, while increasing marketability can be an outcome of enhanced properties, it is not the primary focus of plottage. Similarly, while there could be some reduction in property taxes depending on the situation, that is not a consistent benefit of plottage. Lastly, a faster sale is not guaranteed simply by virtue of combining parcels, as market conditions and demand still play significant roles. Therefore, the primary benefit of plottage lies in its potential to elevate the overall valuation of combined properties.