COMMERCIAL REAL ESTATE VALUATION SERVICES
Determining property value is an important piece of the puzzle when making commercial real estate decisions. In today’s market, you need comprehensive and accurate data in order to determine the true value of your property and make the most informed decision possible.
AEI’s Commercial Real Estate (CRE) Valuation team delivers property valuations across North America and is led by the industry’s most skilled professionals with deep experience in property technology.
As a standalone deliverable or bundled with our environmental and property condition reports, our commercial real estate valuation services provide the efficiency of a single outsourced third party with no conflict of interest.
Understanding Commercial Real Estate Valuation Services
A commercial real estate valuation is a third-party unbiased market value estimate on a property that is performed by a licensed appraiser. It may include the estimated market value of the land and improvements, the location of the property, future income potential, and how the asset fits into the overall market.
The practice includes most commercial real estate assets such as industrial complexes, office buildings, multifamily apartments, and retail and shopping centers. CRE valuation is typically required for the purchase or sale of a property, investor reporting or tax returns, commercial real estate disputes, and lending transactions. Whether it’s a brand-new purchase or a refinance, most lenders require an independent property valuation.
How long does a property valuation take?
It depends on the size and scope of the valuation. It typically takes two weeks for a simple scope and three to four weeks for more complex projects.
Whether a valuation is requested by a lender, investors, or the market at large, AEI’s Valuation offers a trusted and independent third party to equip you with an accurate appraisal to inform your decision-making process.
Three Common Approaches to Valuation
This approach analyzes sales data from recently sold comparable properties with similar locations to estimate market value for the property. It is used for most property types, especially vacant land and owner-user occupied properties.
This approach considers the cost to construct subject improvements adjusted by depreciation, taking into account land value. It is generally used when there are limited to no comparables, such as when the property contains relatively unique or specialized improvements.
This is a very common approach for income producing commercial real estate valuation. It projects income and expenses to estimate future cashflows, and a capitalization rate and/or discount rate are applied to determine the estimated market value via this approach.
AEI’s Valuation Process
Determining property value for commercial real estate is a complicated process that requires expert insight and detailed analysis by experienced professionals. Whether you need a report for financing, internal strategic decisions, investor reporting, tax support, transaction support, or many others, AEI’s experts will walk you through the timing and process step by step.
The general process includes:
Review of Subject Documents
These documents are used to analyze the history of the property, financial positioning, tenancy, position in the market, and the property’s highest and best use. Records may include:
- rent roll
- subject income and expense statements, and budget
- ownership history
- zoning history and regulations
- market and demographic information
This is a visual inspection of the property as well as the surrounding neighborhood and competing properties.
In an effort to gather additional information about the property, interviews are conducted with strategic players such as brokers and city or municipal planners.
A written report is delivered that outlines the findings, including any specific insights or conclusions that can be made.