What are the best property valuation services for commercial real estate?

The NAV model is a widely used method for real estate valuation. It involves determining the assets that generate net operating income and dividing it by a cap rate assumption. The NAV should be adjusted by the present value of expected future capital expenditures and corporate overhead. Non-operating REIT assets should be added, and debt and other debt-like claims should be subtracted. The NAV-derived equity value can be compared against the REIT's market cap or share price.

In all my 28 years of real estate experience which includes title insurance, I have found public records such as deeds records and tax assessors along with other platforms to be helpful. However, it is important to know how up-to-date those records are. RPR has been another great resource to capture property valuation in any market nationally as well. The more I poke around the more confident I feel my valuations true and solidly priced.

This article effectively underscores the pivotal role of professional appraisal firms in commercial real estate valuation. Certified appraisers, employing rigorous methodologies such as the Cost, Sales Comparison, and Income Capitalization Approaches, conduct thorough assessments, ensuring accuracy. The detailed appraisal reports, including insights on highest and best use, are indispensable for informed strategic decision-making.

It is important to ensure that when making a decision to sell or purchase a property that you have detailed understanding of the market and factors affecting valuations. The benefit in utilising professional appraisal firms is their market knowledge and in depth understanding of the impact on variables affecting valuations, which provide a more bespoke option to online valuations.

Appraisals are one of the best valuation tools for commercial property because they provide an unbiased, professional assessment of the property's market value based on comprehensive analysis and current market data. They consider various factors such as location, condition, and income potential, ensuring an accurate and thorough valuation. Additionally, appraisals are conducted by certified appraisers, lending credibility and reliability to the valuation process.

The biggest difference I see with a broker opinion of and an appraisal firm is BOVs are based on real time. Brokers know what buyers or tenants are looking for, and what they are willing to pay. I feel this is more accurate, especially in a rapidly changing market.

A great experienced Broker has the ability to drill down on the all the nuances of a particular area, building type and unique market conditions creating a properties value. Algorithms can't see what makes a place special.

We tend not to have this option widely available or at least adopted in our region in the moment. Maybe if you just need some sort of a range, advice or consideration maybe it should be a viable option.

Broker Price Opinions are a good, quick method for qualifying a prospective loan and may be used by lenders in the underwriting process to obtain credit approval subject to receipt of a certified appraisal.

This article highlights the value of Broker Price Opinions (BPOs) as a cost-effective alternative to traditional appraisals in real estate. Leveraging local market insights, knowledgeable real estate brokers deliver estimates based on comparable sales data, offering a quick assessment of a property's potential value. While BPOs may lack the depth of a full appraisal, they serve as a valuable tool for gauging property value efficiently.

Online valuation tools offer another valuable tool in qualifying a prospect for a loan. Generally, these services provide sales data on similar properties but may not have enough representative data examples to provide a "solid" estimated value. Lender expertise will typically be required to determine if the available data is sufficient to rely on the examples.

This article sheds light on the rising popularity of online valuation tools for commercial property assessment. Utilizing algorithms and diverse data sources, these platforms offer swift estimates. However, they may overlook property-specific nuances, necessitating caution in interpreting their estimates alongside other valuation methods.

Online valuation tools can be a useful tool when wanting to get a quick idea of what the property is worth. It struggles however to take in account property specifics which may impact (in some cases significantly) on value and therefore whilst useful as a guide, a professional opinion is likely to more accurate. That said with breakthroughs in AI, in time online valuation tools are likely to become more advanced and capable of taking into account more variables.

For commercial real estate, some of the best property value platforms include: LoopNet: One of the largest commercial real estate listing platforms, providing property value estimates and market insights. CoStar: Offers comprehensive data and analytics for commercial real estate properties, including property values, market trends, and comparable sales. CREXi: A marketplace for buying, selling, and leasing commercial real estate properties, with tools for valuing properties and analyzing market trends. Reonomy: Offers property intelligence and data analytics for commercial real estate, including property values, ownership information, and market trends.

Looking at it from a potential lender's perspective I typically start by calculating NOI using the net economic occupancy number.

A good commercial Broker will have this as part of a complete report for a property. Choose your broker wisely, and you will have all the information you need. Nate Grill and Kevin Rocio in the @properties Commercial division will have all the answers.

Financial modeling is a great way to value commercial property because it allows for detailed projections of future cash flows, expenses, and potential returns, providing a dynamic and forward-looking valuation. This method enables investors to test various scenarios and assumptions, offering insights into the property's performance under different market conditions. Additionally, financial modeling incorporates a range of financial metrics and ratios, giving a comprehensive picture of the property's financial health and investment potential.

Financial Modeling would typically be applied when evaluating new construction or repurposing of CRE. This gives the Lender an idea of prospective value based on expected rents, vacancies and lease-up scenarios. This approach heavily relies on Lender and Credit Approver expertise and market knowledge. It would be used in the underwriting and approval process and the assumptions would be compared to a certified appraisal to ensure it accurate and complete.

It underscores the hands-on nature of financial modeling in property valuation, emphasizing its detailed approach in projecting cash flows and ROI. It demands a robust grasp of financial concepts and market intricacies to accurately simulate diverse scenarios. Financial modeling offers a dynamic tool to evaluate commercial real estate investments, aiding in informed decision-making.

Financial modelling is a good choice when wanting to model various scenarios to test viability and assess risk. Whilst more costly, getting a greater understanding of an investment and risk vs reward before committing is likely to save you money in the long run.

Government Assessment are typically used for baseline but not typically relied upon by lenders for determining the "true" market value of a property since tax assessment values are typically lower than the current market value of a property and lagging due to the frequency upon which property is reassessed.

This article highlights the significance of local government assessments as a foundational reference for property valuation. While primarily intended for taxation, they offer valuable insights into a property's worth within its jurisdiction. However, their reliance solely on periodic evaluations may limit accuracy regarding current market dynamics and income potential.

Consultants will offer an outside perspective and respectfully challenge SOP to unlock value you might’ve overlooked. Financial models are a great starting point. But are often static and lack market insights, and operational recommendations. By having a knowledgeable advisor whos in tune with the market, emerging trends as well as how technology can actually fit in your existing stack are worth every penny.

The combination of financial modeling and consulting services is a very good starting point to evaluate properties. Financial modeling will be able to give you a forecast for your future income and expense. The beauty of the models is that you can change the variables to see best and worst case scenarios. For example, a vacancy factor of 3% vs 5%, rent increases yearly vs every 5 years, labor inflation of 3% vs 5% vs 7%. Consultants have a lot of experience in the field. Experience is one thing that can not be taught. If you can create your own financial models, that will be beneficial for you to learn and gain experience. At one point, you will be your own consultant and will not have to pay for those services.

There is no better alternativ at the moment no consulting regional specialist and professionals in the field. Maybe in the future we would see an better and improved way of conducting valuation work, but at the current moment the data simply isn't there to work with large models.

Hire an experienced commercial Broker to do a Property Valuation (Appraisal by Broker); have them conduct a DCF Analysis of property. Then make a decision...

The best property valuation services for commercial real estate typically include those offered by, well-known, well-established firms with a solid market reputation and a wide range of expertise. Such firms are recognized for their robust methodologies, experienced professionals, and the ability to provide accurate and reliable valuations across different types of properties.