“The floorplate is the set of measurements and parameters that you have to design the floor plan within. If its too large or too small, too narrow or too wide, or if the elevators and stairs are awkwardly situated, it will make the floor plan inefficient in terms of squeezing the most net rentable area from the gross floor area. In addition, what often happens is that there are awkward rooms within apartment units that have little functional utility, which then affects the rent per square foot that can be achieved from those units.
To compensate, the developer must purchase the property for a lower price than if the building were ideally configured. But if these adjustments to the financial model drive the value of the property below the value of the land (which is determined by the model for new construction) net of the cost of demolition, then the old building is not the highest and best use. It is doomed.
Problems such as these are common in situations where a building gets re-purposed for a completely different use.” [TheNiche, commenting on Finger Going After Finger’s Ben Milam Hotel Downtown]