It is not uncommon for clients, users and appraisers to use the term “right of way” and “corridor” interchangeably regardless of their correct legal application. For the purpose of this post, I will continue to use the terms interchangeably. The function of this post is not to correct the dictionary, but to help explain what many appraisers find in our day-to-day appraisal assignments.
Especially when it comes to figuring out the highest and best use of a railroad property. Are there are active tracks in the corridor? Then obviously the railroad is the primary user and any leftover land can be claimed by a secondary user.
Therefore having active railroad tracks within a transportation corridor is one of the highest and best use outcomes. So every valuation assignment of railroad corridors will require the appraiser to understand the present use of the land.
Railroad Right of Way Valuations
Some people will argue that railroad corridors have a value greater than the land across the fence or ATF. The corridor helps create a value because it assembles land pieces into a continuous usable corridor piece.
The idea is that once assembled, the corridor has a value of at least equal to the land across the fence. Note: small, slender slivers of land seldom have the same functional use and as a result will offer a lower market price. But when combined to create a corridor, they may possess a greater functional use, depending on market conditions.
Obviously, all railroad right of way valuations pose their own inherent challenges.