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The City of Westminster is home to over 18 million square feet of commercial space across 30 business parks and 68 retail centers.
There's no shortage of commercial space in our city and, fortunately for investors, some of it is for sale. You'll have a great opportunity to make serious money buying a commercial property in Westminster, but it's still crucial to do your due diligence before putting in an offer.
That's where a commercial property valuation comes in. When it comes to commercial property, there's a lot to think about. Keep reading, however, and we'll explain some of the best property valuation techniques that can give you a strong indication of whether a property is worth your investment or not.
Assess the Property
For every commercial property you view, you'll need to assess it in various ways. Pay attention to the state of the property, as commercial real estate can go through a lot of wear and tear, depending on the types of businesses that have occupied it in the past.
Look for structural problems, cracks in the foundation, or leaks. Look for anything that makes the property stand out, such as brand-new windows or a nice industrial HVAC system. These major features can be reflected in your rental price.
Look at Income and Expenses
Ask to view the property's previous financial performance. This can tell you more about what type of return you'll be getting when you purchase it.
At the same time, you'll need to look at the operating expenses. Things like insurance, property tax, utilities, and maintenance costs tell you how costly running the building will be. Understanding these things ahead of time can also tell you how to manage the asset once it's yours.
Compare It to Other Commercial Spaces
Always include a market comparison in your property value assessment. By looking at what other similar properties are both selling for and renting for, you can determine whether the property you're looking at is a good deal or not.
No two commercial properties are exactly alike. Consider the size and versatility of the space to accommodate different businesses. Also, consider the neighborhood and the space's proximity to amenities, as properties in thriving locations command more on the commercial rental market.
Use an In-Depth Investment Worth Method
There are more mathematical valuation methods as well. The Net Income Capitalization method divides the net operating income by the asset's current market value to determine the property's value as an income-producing entity.
The discounted cash flow method looks at the future viability of an investment. It looks at potential income/expenses over a long period to give you a long-term view of the property.
Get Help with Your Commercial Property Valuation
This valuation methods guide should give you plenty of ways to determine the worth of commercial space in Westminster. It can be confusing at times, however, so if you need help with your commercial property valuation, Team PMI Mile High can help.
We're the top commercial property manager in greater Denver. With our expertise, you can find the perfect commercial investment to diversify your portfolio or secure your future. We can also help you run it once it's yours, so contact us today to learn more.
