commercial Property Valuation Methods
Previously we have discussed how you can calculate your commercial property value using the three methods below:
- Comparable valuation
- Investment valuation
- Redevelopment valuation
To learn more about these three different commercial property valuation methods, read our article How to Calculate Commercial Property Value. Now, let’s look at a case study of how using all three methods can impact the marketing of a property and maximize the sale price.
The subject property of this case study is a 13,810 square foot, two-storey freestanding commercial building in Surrey City Centre. Situated on a small corner lot the subject property has excellent exposure to main roads and future development potential.
1. The owner of this commercial property was ready to sell but was unsure of their property value.
2. The owner contacted Frontline Real Estate Service Ltd. to value and achieve their goal of selling their property for the maximum sale price
3. By using the three different commercial property valuation methods, we assessed the highest value of the property.
As you can see, the redevelopment valuation determined the residual land value of the property was $3,500,000 and the value of the property as an investment property was $4,685,000. Comparable commercial building sales averaged $500/sf, which equates to the highest valuation of $6,905,000.
4. Since the comparable analysis provided the highest valuation, we determined the property was worth the most to a commercial business owner/operator who wanted to own their own premises.
5. On behalf of the owners, Frontline Real Estate Services listed the property for $7,250,000, which equates to $525 per square foot.
6. We marketed the property using our proactive and targeted marketing process to reach our target audience of owner-occupier commercial businesses. Through this marketing process, we procured multiple offers for the commercial property.
The property was sold for $7,000,000, or $507 per square foot, which exceeded all three of the initial valuations.
Note: The values included in this case study are point-in-time values. They are not necessarily representative of today’s market value for properties in Surrey City Centre.
If you have any questions about commercial property valuation or the current demand and pricing trends in the Fraser Valley commercial real estate market, please don’t hesitate to contact us.