What is my commercial property worth?

General information, not tax or legal advice. The numbers here are illustrative. Talk to your lawyer and accountant before you act on them.

The income approach

Take the net operating income (rents less operating costs, before the mortgage) and divide by a cap rate drawn from similar sales. A property with $150,000 of NOI at a 5% cap rate points to about $3,000,000.

The numbers are illustrative only. The cap rate guide explains more.

Comparable sales

Recent sales of similar properties nearby, per square foot or per unit, adjusted for size, condition, leases and location.

For owner-users

Buildings that a business would buy to use are often valued more on comparable sales, because the buyer cares most about the space.

Two prices

The same property can be worth different amounts to different buyers. One has cheaper financing, another wants the building for their own business, another sees a renovation nobody else has priced. Every buyer has two numbers in mind: the price they’d like to pay and the price they’ll pay to win it.

When several qualified buyers are looking at once, offers tend to move toward the second number.

What changes value

• Lease length and rent compared with the market.
• Vacancy and the cost to fill it.
• The building’s condition and big repairs coming.
• Zoning and what the site could become.
• Interest rates and how easy financing is.

Questions people ask

Is BC Assessment value the same as market value?

No. Assessments are set for property tax, as of a date before the tax year. Market value can be quite different.

Can you value my property without listing it?

Yes. I can give you an opinion of value. A lender or the tax authorities may need a formal appraisal.