Legal Definitions - plottage

Plottage refers to the additional increase in value that occurs when two or more smaller, often adjacent, parcels of land are combined to form a single, larger property. This combined, larger parcel is typically more valuable than the sum of its individual parts because it offers greater development potential, better utility, or more desirable features that were not possible with the smaller, separate lots.

Here are some examples to illustrate this concept:

• Imagine a city block where three small, vacant lots, each owned by a different person, sit side-by-side. Individually, each lot is too small to build a modern, multi-story apartment complex or a large retail store. A developer, however, purchases all three lots. By combining them into one larger parcel, the developer can now construct a much larger building with more units or commercial space, along with adequate parking. The value of this single, larger development site is significantly higher than the combined value of the three small, separate lots, because it unlocks a greater potential for profitable development. This increased value due to the merger is the plottage.

• Consider a rural area where a large agricultural company wants to expand its operations. They identify two small, undeveloped plots of land situated between their existing fields and a main road. Individually, these two plots might be difficult to farm efficiently or might only be suitable for very small-scale use. However, when the agricultural company purchases and merges these two plots with their existing land, the combined property becomes a much larger, contiguous farm. This allows for more efficient use of machinery, better access to the road, and the ability to plant larger, more profitable crops. The overall value of the expanded farm, including the newly acquired land, will be greater than the sum of the original farm's value and the individual values of the two small plots, demonstrating plottage.

• Picture a busy commercial street where a national restaurant chain is looking to build a new drive-thru location. They find two small, outdated commercial properties next to each other, each with an old, small building that doesn't meet their needs. Neither property alone is large enough to accommodate their standard restaurant layout, drive-thru lane, and sufficient parking. The restaurant chain buys both properties, demolishes the old buildings, and combines the land into one larger parcel. This newly created, larger lot now has the necessary space for their modern restaurant design, a long drive-thru, and ample parking, making it a highly desirable location. The value of this combined property for the restaurant chain is considerably more than what the two small, separate properties were worth individually, illustrating the concept of plottage.