Steuer, J.
The appeal is from an order confirming the assessments for tax purposes for the tax years 1956-57 to 1961-62, inclusive, on the real estate located at 375 Park Avenue. At the outset it is well to bear in mind a fundamental distinction between a proceeding of this character and one to ascertain the value for the purposes of condemnation. In the latter proceeding the court is obligated to find the value of the property. In this proceeding the value need only be found if the petitioner shows that it is less than the value fixed by the appraisers.
Considering first the land values, these progress from $3,800,000 in the earliest year to $5,000,000 in the latest. The present owner acquired the greater part of the land in 1951 for $4,000,000. The balance, consisting of an adjacent plot on East 52nd Street, was acquired in 1955 for $900,000. It is not disputed that between the time of purchase and the years under review real estate values have been steadily rising. Under the circumstances, an attack on the assessments for the land could not succeed without a showing that the price paid was grossly excessive. The petitioner has sought to do this by two means: through the medium of comparative sales, and circumstances attending its own purchase of this land. As to the latter, it is not subject to dispute that petitioner is a large corporation with experienced executives and had occasion to supplement its own knowledge with capable real estate advice. It makes no claim that it was overreached by the sellers. What it does assert is that in 1950 its lease on the office space it occupied was about to expire and that necessity prevented it from making a bargain at realistic prices. The leisurely pace at which the acquisition proceeded was quite enough to allow Special Term to give little credence to this explanation. The testimony in regard to comparative sales was far from conclusive and, as against the sale of the property under review, carried practically no weight.
The building in question is an unusual one in its nature, though not unique. It has these distinctive features which are the hallmarks of its class: It is generally known by its name (having relationship to the owner) instead of a street address; it is constructed of unusual and striking materials; its architecture is noteworthy; and it is well set back from the streets on which it fronts, the space involved being employed in distinctive decorative effects. The net effect is that this building, and the limited number that resemble it, gives up a substantial fraction of the land that might be built upon, with a consequent [111]*111diminution of the rentable space, and its construction involves a cost materially in excess of utilitarian standards.
These buildings serve their owners in a fourfold way: 1. They house their activities. 2. They provide income from the rental of the space not used by the owner. 3. They advertise the owner’s business. 4. They contribute to the owner’s prestige.1
Just how a building whose construction is designed to serve these particular purposes is to be appraised, presents certain difficulties. The enhancement of the owner’s ego is not a factor that can have a market value. In this city at present buildings in this special category, though few, are not unique. The time may come when they are so numerous that they become subject to sale, rent and the other transactions of commerce, so that by trading a market price which reflects the extracommercial aspect can be ascertained. Meanwhile in this proceeding it must first be determined whether a valuation based on the special character is necessary. It would not be necessary if the building, as a conventional office building, is of a value at least equal to the assessments.
The assessments for the last three years are the only ones in question. There is little material difference in the relevant figures, so a calculation for a single year will suffice to make the determination based on capitalization of net income. For the year ending July 31, 1960, the actual income was $3,005,510. This does not include any income for the space occupied by the owner. Petitioner’s expert appraised this space as having a rental value of $927,850, giving a total income of $3,933,360. Petitioner further claims a vacancy allowance of 5%, which would not be unreasonable. The net estimated return would therefore be $3,735,692. Expenses would vary somewhat. Petitioner’s average for the three years is $1,401,000. This includes an item of $288,000 in each year for tenant changes. The city has taken the position that this item is not allowable because the improvements are personalty and not a part of the realty, relying on Matter of 666 Fifth Corp. v. Tax Comm. of City of N. Y. (11 N Y 2d 915). We find the argument inappropriate. The figure represents a maintenance charge. Whether it has [112]*112to do with realty or personalty is immaterial. We question the figure on a different ground. Petitioner, having the burden of proof, must justify its calculations. The record is not clear as to how the expert estimated this figure, nor what it includes. It may be gathered that the figure is the total expenditure on behalf of tenants amortized over a period of years — just what period is by no means certain. But the record does show that it includes expenditures of sums which might be considered so far beyond the range of ordinary tenant accommodation in a commercial venture as to be considered fantastic. Expenditures in excess of a million dollars went into the fitting of a restaurant. Some explanation would be required to show that these amounts were proper business charges and that there was a reasonable expectation that rents would be enhanced or made possible through them. In the absence of any attempt at justification, they must be rejected. This reduces the expenses to $1,113,000 annually, with a net- income of $2,623,000 (figure rounded out). Using petitioner’s capitalization figures for the land and the taxes thereon there is a residual income for the building of $2,186,000. Petitioner claims the proper capitalization rate is 8% (made up of 6% for income and 2% for depreciation) plus taxes. Aside from the claim, this rate is not supported, and the city offered no proof on the subject. These figures represent the conservative view of an investor’s expectations and, while they might be subject to revision in the special circumstances here presented, the record is barren of any proof upon which any lesser rate might be adopted. Using these figures, the value of the building would be $17,802,000. While this exceeds the petitioner’s estimate by almost $4,000,000, it is still $3,200,000 under the assessment, and only about half the actual cost of construction.
It would seem to follow beyond the hope of successful contradiction that the traditional method of ascertaining value by capitalization is not applicable in this situation. Nowhere in the record is it explained how just two years before the period under review an experienced owner employing a reliable contractor and having the services of outstanding architects put $36,000,000 into a structure that was only worth $17,800,000. Such a startling result requires more than speculation before it can be accepted as fact.
The conclusion, therefore, is that petitioner proceeded upon an untenable theory and failed to show error in the assessments which calls for affirmance of the confirmation by the Referee. It would, however, be unfair to leave the impression that a building of this sort presents an insoluble problem and that [113]
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Steuer, J.
The appeal is from an order confirming the assessments for tax purposes for the tax years 1956-57 to 1961-62, inclusive, on the real estate located at 375 Park Avenue. At the outset it is well to bear in mind a fundamental distinction between a proceeding of this character and one to ascertain the value for the purposes of condemnation. In the latter proceeding the court is obligated to find the value of the property. In this proceeding the value need only be found if the petitioner shows that it is less than the value fixed by the appraisers.
Considering first the land values, these progress from $3,800,000 in the earliest year to $5,000,000 in the latest. The present owner acquired the greater part of the land in 1951 for $4,000,000. The balance, consisting of an adjacent plot on East 52nd Street, was acquired in 1955 for $900,000. It is not disputed that between the time of purchase and the years under review real estate values have been steadily rising. Under the circumstances, an attack on the assessments for the land could not succeed without a showing that the price paid was grossly excessive. The petitioner has sought to do this by two means: through the medium of comparative sales, and circumstances attending its own purchase of this land. As to the latter, it is not subject to dispute that petitioner is a large corporation with experienced executives and had occasion to supplement its own knowledge with capable real estate advice. It makes no claim that it was overreached by the sellers. What it does assert is that in 1950 its lease on the office space it occupied was about to expire and that necessity prevented it from making a bargain at realistic prices. The leisurely pace at which the acquisition proceeded was quite enough to allow Special Term to give little credence to this explanation. The testimony in regard to comparative sales was far from conclusive and, as against the sale of the property under review, carried practically no weight.
The building in question is an unusual one in its nature, though not unique. It has these distinctive features which are the hallmarks of its class: It is generally known by its name (having relationship to the owner) instead of a street address; it is constructed of unusual and striking materials; its architecture is noteworthy; and it is well set back from the streets on which it fronts, the space involved being employed in distinctive decorative effects. The net effect is that this building, and the limited number that resemble it, gives up a substantial fraction of the land that might be built upon, with a consequent [111]*111diminution of the rentable space, and its construction involves a cost materially in excess of utilitarian standards.
These buildings serve their owners in a fourfold way: 1. They house their activities. 2. They provide income from the rental of the space not used by the owner. 3. They advertise the owner’s business. 4. They contribute to the owner’s prestige.1
Just how a building whose construction is designed to serve these particular purposes is to be appraised, presents certain difficulties. The enhancement of the owner’s ego is not a factor that can have a market value. In this city at present buildings in this special category, though few, are not unique. The time may come when they are so numerous that they become subject to sale, rent and the other transactions of commerce, so that by trading a market price which reflects the extracommercial aspect can be ascertained. Meanwhile in this proceeding it must first be determined whether a valuation based on the special character is necessary. It would not be necessary if the building, as a conventional office building, is of a value at least equal to the assessments.
The assessments for the last three years are the only ones in question. There is little material difference in the relevant figures, so a calculation for a single year will suffice to make the determination based on capitalization of net income. For the year ending July 31, 1960, the actual income was $3,005,510. This does not include any income for the space occupied by the owner. Petitioner’s expert appraised this space as having a rental value of $927,850, giving a total income of $3,933,360. Petitioner further claims a vacancy allowance of 5%, which would not be unreasonable. The net estimated return would therefore be $3,735,692. Expenses would vary somewhat. Petitioner’s average for the three years is $1,401,000. This includes an item of $288,000 in each year for tenant changes. The city has taken the position that this item is not allowable because the improvements are personalty and not a part of the realty, relying on Matter of 666 Fifth Corp. v. Tax Comm. of City of N. Y. (11 N Y 2d 915). We find the argument inappropriate. The figure represents a maintenance charge. Whether it has [112]*112to do with realty or personalty is immaterial. We question the figure on a different ground. Petitioner, having the burden of proof, must justify its calculations. The record is not clear as to how the expert estimated this figure, nor what it includes. It may be gathered that the figure is the total expenditure on behalf of tenants amortized over a period of years — just what period is by no means certain. But the record does show that it includes expenditures of sums which might be considered so far beyond the range of ordinary tenant accommodation in a commercial venture as to be considered fantastic. Expenditures in excess of a million dollars went into the fitting of a restaurant. Some explanation would be required to show that these amounts were proper business charges and that there was a reasonable expectation that rents would be enhanced or made possible through them. In the absence of any attempt at justification, they must be rejected. This reduces the expenses to $1,113,000 annually, with a net- income of $2,623,000 (figure rounded out). Using petitioner’s capitalization figures for the land and the taxes thereon there is a residual income for the building of $2,186,000. Petitioner claims the proper capitalization rate is 8% (made up of 6% for income and 2% for depreciation) plus taxes. Aside from the claim, this rate is not supported, and the city offered no proof on the subject. These figures represent the conservative view of an investor’s expectations and, while they might be subject to revision in the special circumstances here presented, the record is barren of any proof upon which any lesser rate might be adopted. Using these figures, the value of the building would be $17,802,000. While this exceeds the petitioner’s estimate by almost $4,000,000, it is still $3,200,000 under the assessment, and only about half the actual cost of construction.
It would seem to follow beyond the hope of successful contradiction that the traditional method of ascertaining value by capitalization is not applicable in this situation. Nowhere in the record is it explained how just two years before the period under review an experienced owner employing a reliable contractor and having the services of outstanding architects put $36,000,000 into a structure that was only worth $17,800,000. Such a startling result requires more than speculation before it can be accepted as fact.
The conclusion, therefore, is that petitioner proceeded upon an untenable theory and failed to show error in the assessments which calls for affirmance of the confirmation by the Referee. It would, however, be unfair to leave the impression that a building of this sort presents an insoluble problem and that [113]*113the owner is never in a position to contest the assessment of the city’s appraisers. Nor is it necessary to await the day when the number of buildings of this kind reaches a point where they can be determined to have a market or rental value in consonance with their special features. Naturally, determination will have to await a proper presentation of the issue, but it will not be idle to indicate the lines along which presentation might be made.
Two possible theories occur. The first, and perhaps more obvious, is that advanced by the city here, namely, replacement value — reasonable cost of construction less depreciation. To date this method of appraisal has been limited to two situations, in both of which the logic of its use is impregnable. The first is where the building is unique and would, if destroyed, have to be replaced (People ex rel. N. Y. Stock Exch. Bldg. Co. v. Cantor, 221 App. Div. 193, affd. 248 N. Y. 533). The second situation is where the owner claims it as the highest value which can be put on the building (Matter of 860 Fifth Ave. Corp. v. Tax Comm. of City of N. Y., 8 N Y 2d 29). Neither of these categories embraces the issue here. But an approach to that method of valuation may be found through them. Buildings that are unique through their design for a special purpose which not only serves that purpose but renders them unsuitable for any other use are unsalable if the owner is the only one engaged in that enterprise or the number of persons is so few that the practical effect is the same. Likewise, the owner cannot replace the building by purchase. Consequently its value to him is the cost of replacement. Buildings so specialized as to have a restricted use, that is, a use by a limited number of people, are appraised similarly where there is an absence of proof of what such buildings sell or rent for (Matter of City of N. Y. [Kramer Realty Corp.], 16 A D 2d 148). While here the special features do not restrict the use, they do affect the value and the absence of proof of that effect could well lead to a valuation on replacement value as a last resort.
Another approach would be through the rental value of the space occupied by the owner. We have seen that the peculiar feature of this building and the few that resemble it is the identification in the public mind of the magnificent structure, and the consequent effect it has on the aesthetic improvement of the neighborhood, with the owner. The public does not know or care about the actual ownership of the fee. The same effect could be produced if the building were identified in the public mind by the name of a tenant. In calculating the income of the building the additional increment that a tenant who could afford and would be willing to pay for such a privilege should be [114]*114included. This increment could be added to the estimated rental of the owner-occupied space. Having determined this figure, capitalization of the result should produce a scientific appraisal.
The order should be affirmed, with costs.