Unlike residential property, which is more valuable with vacant possession, commercial property is often more valuable if it is tenanted. This is reflected by using Investment Method Valuation, where we assess the rental value and apply an investment yield to the income (rent).
We will need to analyse the terms of the existing lease, assess the impact of any unusual or onerous covenants, and assess the covenant strength of the tenant to allow us to determine the appropriate yield to use. Sometimes property can be under rented, in which case we will reflect the likely increase in income at the next rent review. Other times the property might be over rented in which case we would value the “hardcore” and “top slice” of income separately.
A comprehensive understanding of the relevant property sector is also a requirement. For instance the RICS issued a Valuation Notification to its VRS registered valuers in December 2018 expressing concern about the structural change occurring in the UK retail property market.
Our commercial surveyors have considerable understanding of existing market trends in a wide range of commercial property and are happy to talk about their perceptions of your property if you need an appraisal of your investment. Call Kate or David now for a chat now 08081698881.