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19 Factors Affecting Value In Commercial Real Estate:Guest Post From Jim Baker CCIM

19 Factors Affecting Value In Commercial Real Estate:

1. Location: Location most always is one of, if not the main, factor to value.

2. Highest and best use: The current use is not always the best use.

3. Cyclical demand: Retail, office, industrial, residential; depends on the economy.

4. Marketing time: How motivated are you to quickly sell or lease?

5. Market driven value: Buyer/Tenant’s best offer vs. Seller/Landlord’s bottom-line.

6. Site vs. Improvements: Improvements: add to or subtract from the market value?

7. Lease value: What is the property’s net lease value?

8. Financing: Affects value; cash, bank, or owner; down payment; interest rate.

9. Vehicle impact: driving times; ingress/egress; traffic counts; traffic lights.

10. Demographics: Population; income, age, educational levels; family stats, etc.

11. Competition: From other properties or from other name brands in the market.

12. Taxation issues: Effect taxes for the seller/landlord and/or buyer/tenant.

13. Zoning: What is the current permissible use or what can it be changed to?

14. Creative sales/leasing methods: Auctions; trades/exchanges; sale/leaseback; etc.

15. Multipliers and “rules of thumb”: What do you use to judge value?

16. Income (appraisal) approach to value: Net income divided by return desired.

17. Market (appraisal) approach to value: Comparison to similar sold properties.

18. Cost (appraisal) approach to value: Cost of site + cost to build – depreciation.

19. Net lease value: Determined by competition in the market and demand factors.

Written by: Jim Baker, CCIM    jim@bakercre.com

 

Photo Credit:http://www.flickr.com/photos/maistora/with/944142183/

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  • Good post, the one thing I really want to highlight is number 8, financing. What drives real estate is truly supply and demand (of capital).

  • Erin Lounsbury

    I know this is an old post, but be aware that you should Never underline anything on the Net if there isn’t a hyperlink associated with it. That’s just basic proper site form.

    • Duke Long

      Really? There are no rules ……just guidelines!

  • wei

    can i know where can i get more detail information about this 19 factors?