This section is from the book "Practical Real Estate Methods For Broker, Operator & Owner", by Thirty Experts. Also available from Amazon: Practical Real Estate Methods for Broker, Operator, Owner.
Whenever land increases rapidly in value, although it may seem somewhat anomalous, the rental value of the buildings several years old decreases materially, on account of the necessary demolition of older buildings and the construction of adequate improvements with which the first mentioned cannot successfully compete.
It is generally recognized in real estate circles, and could not well be otherwise, that when land and buildings are purchased and the latter torn down in order to make way for a more adequate improvement, the value, if any, of the structure so demolished is merged in the cost of the land.
Plottage is an added percentage to the aggregate value of two or more contiguous lots held in one ownership and attaches when vacant or covered by a single structure. Where there are separate buildings on the lots and plottage is claimed, full value cannot be allowed for the buildings. (73 App. Div., 152.)
Davies and Hoffman Rules