I concur in affirmance of the order. I also agree with the views expressed by Mr. Justice Steuer concerning the land value assessment and the so-called tenant-changes. It is with respect to the building value assessment that I find it necessary to express my own views.
Taxpayer has argued cogently that the value of the building should be determined in the usual way by capitalization of the net income, using 6% as the rate of capitalization and 2% as the rate of depreciation. The 6% rate of income capitalization, the only rate proven in the case, is a modest, presumptively proper, return in the absence of any proof that financial and real estate market conditions justify a lower rate. A commercial building is an investment that is being amortized and it is unlikely that a prudent investor would regard anything more than 50 years as a conservative basis on which to gamble physical depreciation, technological obsolescence, area deterioration, or other physical devaluation (American Inst. of Real Estate Appraisers, The Appraisal of Real Estate [3d ed.], ch. 14, especially pp. 204-205; 1 Bonbright, Valuation of Property, ch. X). Hence, the 2% rate, in the absence of proof to the contrary, would seem reasonable. Because of the leverage in rates of capitalization and amortization one must be especially cautious before adjusting them, and, in no event, should it be done without objective basis in the record (cf. Matter of City of New York [A, & W. Realty Corp.], 1 N Y 2d 428, 433).
The recent cost of construction of this building stands out, however, as a seeming contradiction of the result derived by capitalization of net income. It is because of this that the city has attempted to resolve the problem by the concept of a limited specialty—and to base value on replacement cost less depreciation. At this point it is not necessary to reach that hurdle.
It has been held with respect to new buildings that the cost of construction is a highly significant indicator of value (Matter of 860 Fifth Ave. Corp. v. Tax Comm. of City of N. Y., 8 N Y 2d 29, 32; Matter of 5 East 71st St. v. Boyland, 7 N Y 2d 859; but, cf., Matter of City of New York [Maxwell], 15 A D 2d 153, 171; see Bonbright, op. cit. ch. VIII, especially pp. 144-145). Thus, in Matter of 860 Fifth Ave., it was said by Judge Van Voorhis, on behalf of the court (p. 32): “Cost of new *115buildings or reproduction cost less depreciation establish maximum building value in assessment cases [citing cases]. It can have no other relevance unless the building would normally be reproduced at the time in question. One may regard that formula as supplying some evidence of value, however, where, as here, the building is well suited to the site. The actual construction cost in 1949-1950 was properly considered as a factor. The tax years now in litigation followed soon after the construction of this building, and both the assessors and Special Term found the same building value as well as the same land value during each of the tax years in suit.”
The present case provides a stronger one for application of this rule, for here the court is concerned with the year of completion and the immediately following years. In Matter of 860 Fifth Ave., the court was concerned with four tax years (1954-1958) separated by five years from the time of completion (1949-1950).
Given a profit-minded owner with available experience and resources, and a competent builder, the cost of construction is likely to represent the value of the newly-finished product. Consequently, in the absence of credible qualifying explanation, for a new building the cost of construction is, prima facie, the true value. Indeed, because it would escape this fact, the taxpayer is in the anomalous position of urging that vast corporate funds were used to construct a building of much less value. This, if so, is never satisfactorily explained and does not do much credit to the sagacity of the corporate managers.
The maximum assessment for the building for the years in question was $21 million. The building, according to the city’s examination of the taxpayer’s books, cost $36 million to complete. Even if one were to eliminate the cost of all tenant improvements at taxpayer’s figure of $9.5 million, contrary to what has already been concluded with respect to tenant-changes, there would be a residue of $26.5 million. Taxpayer’s expert, without knowledge of the actual costs, gave $19 million as the reproduction cost of the building before depreciation, excluding all tenant installations. Adding only a part of the cost of the tenant installations it would match the assessment; adding all the tenant installations the cost would exceed the building assessment generously. Interestingly enough, the taxpayer’s expert, despite his lower cost figure, had only praise for the competence of the architect, engineers, and builders of this building. Consequently, in the absence of any satisfactory explanation to show excessive costs, the construction cost estab*116lishes value, prima facie — a value substantially in excess of the building assessment.
But the discrepancy hero between capitalized rental income and cost of construction merits further analysis. The capitalized rental income as computed by taxpayer, using 6% as the rate of capitalization and 2% as the rate of depreciation, but including as an amortized expense the rejected tenant-changes, is $14.5 million. Excluding adjustments for tenant-changes the result would be $17 million —$4 million short of the building assessment, and up to $19 million short of the construction cost. Given a new building, prudently constructed for commercial purposes, the answer must be that the rental value assigned to the owner-tenant is too low, and, perhaps too, that the building as a whole bearing the name of its owner includes a real property value not reflected in commercial rental income. Of course, this would mean that, to begin with, the owner did not build for commercial rental-income purposes alone, and, as a consequence, capitalization of such income without adjustments produces a false result. Of course, the formula for capitalization of commercial rental income is relevant when commercial property is held only for such income, or when its market value is determinable solely by its potential for such income. This is merely a corollary of the principle that income capitalization is valid only for property held for or measurable only by its income (Matter of City of New York [James Madison Houses], 17 A D 2d 317, 319-320, 323; People ex rel. Gale v. Tax Comm. of City of N. Y., 17 A D 2d 225, 230). In short, when dealing with commercial property one must not confuse investment for commercial rental income with investment for some other form of rental value unrelated to the receipt of commercial rental income.
It is self-evident that an owner who builds, as did this taxpayer, a prestige (monumental) building for itself, requires the leasing to other commercial tenants simply as an important way of bearing the heavy costs involved. The prestige building has a rental value not based alone on commercially rented space, but on the building’s value in promoting the economic interests of an owner. Thus, such an owner is not wasting assets. Bather, it is investing in a real estate project that will contribute to the production of income in its principal enterprise. Since this practice is becoming a common feature of urban areas, such investment has ceased to be idiosyncratic and is undoubtedly translatable into market value terms. Typically, such value would be related to owner-occupancy of principal or prestige offices with choice space, the continued power *117to control its choice of space, and most often, identification by name of the building with that of the owner.2
On this view the rental value assigned to the taxpayer’s space is understated, if there is merely charged to that space the prorated value assigned to other tenants. And, undoubtedly too, there is value to be assigned to the building as a whole, independent of commercial rental income, since the building, qua building, is also held for business purposes, unrelated to the receipt of commercial rental income.
At this time, it is not necessary to work out the values last discussed, so long as, the building being new, the cost of construction, otherwise unexplained, suffices to justify the building assessment. With the passage of time both the taxpayer and the city will have, with respect to future assessments, the burden of providing proof and testimony bearing on such values. If there is sufficient evidence of market values, that may do. If not, reproduction cost less appropriate adjustments may have to be utilized to find the value of so much of the property as definably is not held for commercial rental income purposes — perhaps with the present ratio between adjusted original cost and capitalized commercial rental income as a starting point. In this connection it would be likely, although not necessarily so, that the prestige or monumental value of the building would depreciate economically at a much greater rate than the value attributed to the rental income potential.
It is unlikely, however, that a formulation based upon the physical ratio of owner-occupied space to commercially rented space would be valid. The reason is simply that an owner’s quantitative need for space may be wholly unrelated to the economic value to it of the building as a whole, either as a prestige monument or as the seat of power to control the choice and use of space.
Worth discarding, although urged, is the argument that because a building does not occupy all of the assembled land, there is an inadequate improvement. This does not follow. The improvement is inadequate to the land only if that is not a sound economic way to construct a building. Indeed, a discernible trend in modern prestige building, for at least a quarter of a century, may make construction to the building line an inade*118(píate improvement — economically. Exclusively utilitarian construction may produce more “ rentable ” space, but not more valuable space.
Bbeitel, J. P., Valente, Stevens and Eager, JJ., concur in result and concur with Steubr, J., with respect to land value assessments and treatment of tenant-changes; Breitel, J. P., concurs in opinion, in which Valente and Eager, JJ., concur.
Order, entered on May 8, 1962, unanimously affirmed, with $20 costs and disbursements to the respondent.
. Where, as sometimes happens, a major tenant’s name is borne by the building, presumably, the rental paid reflects the name-bearing value. Or, in another situation, it may be that the tenant’s name is used to enhance the prestige of the building; but in that case the rental income of the other tenants will reflect that value. The permutations are many, and whether the increased value attaches to the real estate or to business good will may well, in some cases, present problems difficult of solution.