7 Factors Influencing Commercial Property Values

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7 Factors Influencing Commercial Property Values

How to determine the value of commercial property 


When it comes to determining the value of commercial property, there are many different factors influencing the price businesses are willing to pay and the fees people are willing to receive. There are so many different factors involved, it is important to evaluate each property on its own merits. However, there are some common factors that influence the general market value, and here are 7 factors influencing commercial property values.

These factors influence commercial property values

1 Location of the premises

This is a fairly obvious factor that influences the value of the property. The location of the land or the property is going to have an impact on what businesses are willing to pay. Some locations are more desirable than others, and this means that certain locations will carry a higher lease fee or purchase price. There are benefits from being located in a particular area or being close to certain firms but it is likely that there will be a higher price to pay for these properties.

2 Taxation and incentives

If there are tax-breaks or incentives to be located in a certain area, it is likely that the property value will be higher. This is all comes down to the increased level of demand from firms looking to be located in these areas. Tax-breaks and incentives are a huge motivation in deciding where to be located in many industries and it is only natural that these incentives will impact on the value of properties.

3 Demographics of local community and workforce

Another issue which makes some areas more desirable than others is what is on offer in the local community. A huge factor in the demand for business property is having access to a skilled or qualified workforce. Areas which have higher education bodies or an existing reputation for providing good quality workers for a certain industry or sector have a reliable workforce in the area, and this may make some properties more appealing than other locations.

4 The economy and cyclical demand

While many of the factors that impact on property value relate to the location or industry, some factors relate to external factors such as the economy and the cyclical nature of demand. These factors are outside of the control of people within the industry, but it is worth following these trends, because there will be times when it is more advantageous to buy or lease than at other times.

5 Quality of the site and any improvements carried out

It stands to reason that the quality of the site, the amenities on offer and any improvement work carried out on the site will impact on the value of the property. Different sites may cover the same size or area but if there are more facilities on offer in one site, this will have a higher value.

6 Access, parking and storage for vehicles

One issue that many firms need to consider is how suitable the site is for vehicles. If you are in the distribution sector or there is a lot of traffic coming in and out of your business premises, there is a need to ensure that there is suitable access for vehicles, there is sufficient parking and that vehicles can be stored overnight or for longer periods of time if required. The availability of major roads close to the site will also impact on the value of property.

7 Need to sell and marketing

If the seller is in a hurry to sell or lease, it is only natural that the value will be lower. If the seller is in no rush, they may decide to hold out for a higher price. This means it can be helpful to determine the nature of the business and how keen they are to sell the property. You’ll also find that the marketing of property can have an impact on the value of property.

A well-marketed property will grab attention and there will be a higher level of demand, which means that the value will rise.

At Virtual Commercial, we understand many factors impact on the value of property. If you are looking for guidance in this area, get in touch and we will be more than happy to help.  


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