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/
