Determining an accurate valuation for commercial real estate requires consideration of several unique factors not present in residential assessments. Working with experienced commercial property valuers provides the expertise needed to establish a defensible market value this year.
Understanding the Commercial Appraisal Process
Commercial appraisals analyse three valuation approaches:
- Cost Approach – Estimates the current cost to rebuild the property.
- Sales Comparison Approach – Compares recent sales of similar properties.
- Income Capitalization Approach – Considers the property’s income producing potential.
The appraiser will reconcile these methods to reach a final opinion of value. The intended use of the appraisal, as well as current economic conditions, can impact the relative weighting placed on each approach.
Key Factors in Commercial Valuations
Some of the most important elements assessed during a commercial valuation include:
- Location – High traffic and accessibility are ideal. Proximity to complementary businesses boosts desirability.
- Size – Total square footage, floor plate layouts, and options to expand should accommodate business needs.
- Condition – Functionality, upgrades, deferred maintenance and overall curb appeal matter.
- Zoning – Confirming the property is approved for its intended commercial use is critical.
- Tenancy – Strong, long-term tenants on triple net leases are ideal for investment properties. High vacancies negatively impact valuations.
Working with Experienced Commercial Valuers
Seeking input from commercial property valuation professionals provides key insights during the appraisal process. They will analyse factors like:
- Local market sales data on comparable properties.
- Commercial lease terms and conditions.
- Costs for renovations or deferred maintenance.
- Limitations related to zoning or easements.
- Market demand from investors and owner-occupants.
Their experience valuing all types of commercial real estate results in an accurate opinion of value.
Relying on commercial property valuers helps owners, buyers, tax assessors and investors make decisions regarding purchase offers, financing, taxes and investment strategy. Their valuation reports withstand scrutiny and foster informed, data-driven decisions.