Whether it’s for a new headquarters address or a larger workshop for business expansion, the professional real estate market follows its own rules. This is why a thorough valuation can only be entrusted to a specialized real estate advisor.
Estimating the Value of a Commercial Property: What Criteria Are Considered?
Regardless of the type of property being evaluated (office, commercial space, workshop, warehouse, factory…), several criteria are systematically involved in the valuation process:
- Location is obviously a major factor, as it is with any real estate project. However, the environmental factors considered favorable or unfavorable differ significantly compared to residential real estate. For commercial properties, proximity to major roads, highways, transport hubs, or a potential customer base is particularly important.
- Property size is also crucial. Note that the price per square meter for office or retail space is often unrelated to that of a house in the same neighborhood, as the two serve different purposes.
- Specific features of the property may include special equipment (such as a cold room, storage room...), a ground-floor location, a reception area, or large parking facilities.
- Ease of use is another important factor, especially for offices. Well-soundproofed premises or those located in quiet areas are typically more valuable than those surrounded by constant noise.
Key Figures for Commercial Real Estate in 2018
- In 2018, the demand for office space in the Ile-de-France region reached 2,504,400 m².
- The average face rent (based on transactions made in the last quarter) is:
- €380 excl. VAT/sq.m/year for second-hand properties (+7% over one year)
- €386 excl. VAT/sq.m/year for new or renovated properties (+3% over one year)
What Are the Methods for Estimating a Commercial Property?
Several methods can be used to accurately estimate a property intended for professional use.
- Comparison-based valuation is a common technique. As the name suggests, it involves searching for similar properties that have recently been sold, then studying the sale price to determine a value per square meter that can be applied to the property in question. In some cases, the building and the land it occupies can be valued separately, or a global evaluation can be performed.
- Income capitalization valuation applies when selling a commercial property that is currently leased. It involves determining the property’s value based on the annual rental income it generates. For example, an office leased for €5,000 per year could be offered for sale at €100,000, implying a 5% rental yield for the future buyer.
- In the case of a commercial space, the property’s value is proportional to the previous occupant's turnover, and the property’s valuation can be reasonably based on this criterion to arrive at a realistic range.
Capifrance and Commercial Real Estate
- The Capifrance network includes 120 advisors specialized in commercial and professional real estate across France.
- More than 700 brands and companies have already placed their trust in us.
- On average, there are 5,000 available listings at any given time.
The Importance of a Specialized Advisor in Commercial Property Valuation
Hiring a specialist in commercial and office real estate is the best way for a business owner to avoid facing a crucial project for their company’s future alone. The agent will visit the site, conduct a thorough inspection of the premises, and follow up with a comparative market analysis and a report that includes an estimated sale price.
It is often recommended not to rely on a standard real estate agency that mainly handles residential transactions but to seek out true specialists in the field. The Capifrance network has over a hundred commercial real estate advisors across France. Many choose to specialize in a specific sector to provide excellent service, supporting clients from diverse industries such as hospitality, local businesses, agriculture, and shopping centers.
To ensure a fair and accurate estimate, evaluating an office or business space must consider multiple criteria and always requires a tailored approach. The Capifrance network supports business owners in realizing all their real estate projects.
The Three Key Points to Remember:
- The value of a commercial property is determined by its location, amenities, and many other factors.
- Different estimation methods can be used depending on the circumstances.
- A specialized advisor is often sought for the success of any sale or purchase.
