Real estate appraisal is the process of assessing a property to establish its actual market value. Before a client purchases a commercial property, they are most likely to ask for an appraisal. After all, no one wants to pay more for a property than it is worth, and neither would anyone want to sell a property for less than its current market value.
When conducting an appraisal for a commercial property, several factors come to play. These include the location, upgrades, and renovations, among others. Upon the appraisal of a property, a report is made, which establishes the correct sale price for a commercial property.
Below are nine types of appraisal for commercial property:
Type #1: Industrial Appraisals
Industrial appraisals include the valuation of manufacturing buildings, truck terminals, distribution buildings, and storage yards. These types of appraisal also include warehouses, flex buildings, showroom buildings, business parks, cold storage buildings, and R&D buildings, among others.
Conducting an appraisal on an industrial property is a complicated affair. Among factors to consider are the best and highest use of the industrial property, it’s location in comparison with other similar properties, access, linkage, truck manoeuvrability, and clear heights exposure. Other factors to consider are the type and quality of office finish, floor area ratio, dock and grade-level loading doors, and the parking ratio. It is also essential to establish whether the property is a multi- or single-tenant.
The building’s condition is another critical consideration. These are just a few of the numerous factors you need to look into when conducting an appraisal on commercial property. To establish the real value of industrial property, hiring a competent property appraiser with experience working on industrial property appraisals is critical.
Type #2: Mixed-Use Industrial Properties Appraisals
A building that accommodates multiple uses within it is called a mixed-use property. One building may host residential and recreational/cultural, retail, office, industrial, and hotel businesses.
To get the right appraisal of such property, hire a commercial appraisal company with experience not only on commercial property appraisals but specifically on industrial property appraisals such as mixed-use properties.
Type #3: Public-Storage, Mini-Storage, Self-Storage Appraisals
In a self-storage property, also referred to as public or mini-storage, the building is another type of industrial property. Appraisal of such a property will factor, among other things, whether it has an onsite office and an apartment unit for the manager. Some self-storage facilities have open areas for parking RVs, boats, and vehicles. Appraisal for such properties must factor in these realities.
Type #4: Data Hosting Centre
A data hosting centre is another type of commercial property appraisal. It is also variously referred to as a webhosting facility, a switching centre, a cyber centre, or a telecom hotel. It is a centralized repository for storing, managing and disseminating information and data.
These types of facilities rarely have offices since their work is mainly to store electronic equipment. Appraisals for such facilities require qualified professionals with requisite experience.
Type #5: Industrial Condominium Appraisals
This subtype of industrial properties involves appraising single or multiple units in a multi-structure. The appraisal must include shared facilities such as land areas, sidewalks, lobbies, parking areas, recreational facilities, garages, stairs, and hallways, among others.
Usually, individual owners of a unit in such a multi-structure are members of the condominium association, the collective owners of all the shared facilities within the multi-structure. An appraisal must factor all these facilities to reflect the current market value of a unit in a condominium.
Type #6: Storage Yard Appraisals
This industrial property, also referred to as a contractor storage yard, is a piece of land with few or without buildings. You can use it to store equipment. Some storage yards feature paved roads; others do not. A valuation of such a commercial property must factor in these dynamics to reflect its current real value.
Type #7: Showroom Appraisals
A showroom is an industrial building for displaying samples or exhibiting merchandise for sale. Measuring between 25,000 and 150,000 sq. ft., offices in these buildings occupy about 30% of the space while the exhibition area takes up 50% of the site. Businesses in such facilities include those dealing with apparel, clothing, and furniture, among others.
Type #8: Food Processing Building Appraisals
This is another type of industrial property appraised under commercial properties. It is essential for the packaging and processing of food items. Usually, the buildings feature freezer and cold storage space.
Some buildings, such as those dealing with dry foods, canneries, bakeries, and frozen foods, may not require cold storage. An appraisal of such facilities must factor in the extra facilities a food processing building has.
Type #9: Distribution Building Appraisals
This appraisal deals with large industrial buildings that feature single- and multi-tenant units. It’s mainly ideal for distribution and warehousing. The facilities usually measure upwards of 200,000 sq ft. The heights are clear at 28+ feet and contain a maximum of 5% office space; the rest is exclusively warehousing or storage space.
Distribution buildings usually have a single loading door after every 10,000 square feet and up to 40% site coverage. Some feature cross-docked trailer parking, an essential factor when appraising such buildings.
Appraising commercial properties is a complicated task that must be done by qualified appraisers specializing in this niche. This exercise is critical since there’s more to valuing commercial properties than meets the eye. Luckily, a qualified and specialized property appraiser knows what they are doing, and their valuations reflect the actual realities in the marketplace.