Lucent Tract at Holmdel: Projected Valuation

In an effort to avoid starting a flame war or becoming the target of blog trolls, please let me state: I am pro-development.  I am a real estate and infrastructure development consultant.  I build and help others build.

I attended the Monday evening presentation by Somerset et al at the Senior Center.  Mr. Zucker stated that has planner has calculated a value of approximately $399,000,000 for the Lucent property when it is built out and will produce $5MM in tax revenue to Holmdel on an annual basis.  Build out will take 7-10 years.
Back of the envelope calculations:
40 Toll Bros Single Family homes at $1.25MM/unit = $50MM
185 Toll Bros Luxury Age Limited Housing Units at $700k/unit = $129.5MM
1.8MMsf value calculated various ways:

• replacement cost: $250/sf x 1.8MM= $450,000,000 (replacement cost has limited value as a calculation)
• Income approach with Cap Rate of 6%: Let's say the building is considered fully leased at 95% and that 30% of the building is circulation.  1.8MM -30% common area= 1.26MM sf to lease.  95% occupied in year 10 is 1.197MM sf (1.2MM sf) of leases space.  rents in Monmouth county are about $20/sf.  1.2MM SF x $20/sf= $24MM/yr in rent.  If the cap rate in Monmouth county for office/medical (primary uses) is 6, then the value of an asset with $24MM/yr leases on triple net leases is $400,000,000.  Value=NOI/Cap Rate.  If for some reason cap rates moved to 10, then the building itself is worth $24MM/.10 or $240,000,000.