Setting a value for commercial premises is a different proposition to a residential home – although there are some similarities as well. Here Maunder Taylor -property valuation surveyors covering Potters Bar, Cheshunt, other parts of Hertfordshire and North London – identify some of the key factors involved when dealing with businesses.
Location, Location, Location
As with domestic properties, where the business premises are located is probably the key factor in determining its value. And the term ‘location’ for businesses usually takes in a much wider area, such as the proximity of any airports if the company is interested in trading internationally. Home valuations also take account of local transport connections but also look at other facilities such as schools, healthcare provision and the neighbourhood’s shopping options. In addition, companies benefit from areas with high levels of footfall, which isn’t usually the case with houses and neighbourhoods.
Local Regulations and Policies
Businesses can benefit from being located in zones which permit a range of commercial activities. For instance, if the premises are in a town or city’s Central Business District, then they should enjoy the advantages of good transport connections and high levels of traffic – both human and vehicles – as well as the proximity of other (complementary) companies. Would-be homebuyers (and sellers) are more likely to be affected by any historical factors – namely, whether the property is in a Conservation Area, or it is Listed. Both of these can affect what modifications you are allowed to make to the property (and hence its value).
Tenant Quality and Lease Terms
The quality of tenants and the terms of their leases can substantially impact a commercial property’s value. Properties which are leased to reputable tenants (who don’t miss a payment) are often valued more highly, as they present lower risks to investors. Long-term leases with favourable terms also contribute to higher valuations, providing a steady and reliable income stream.
The Property’s Condition and Age
As with any residential property, how well any office, shop or factory has been looked after is another crucial factor in determining its value. Newer buildings with modern amenities and infrastructure typically attract higher values. However, the same applies to older properties which are in good condition. Regular maintenance and timely upgrades can significantly enhance its value.
Wider Economic Factors
Sales of comparable commercial properties in the same area can also help in determining a business premises’ value, just as it would if it were a residential property. However, there are other, wider considerations at play as well; if other infrastructure projects such as a new urban regeneration scheme are in the pipeline, then this has the potential to significantly boost the value. Also, the potential income a commercial property can generate is a key factor here – this includes future lease renewals, and opportunities for future rent increases, as well as the current income. None of this applies directly to a residential property – unless the plan is to let it out.
Market Trends
Just as lower interest rates encourage more first-time buyers onto the market, boosting house prices, so any decision by the Bank of England to lower leads to increased investment in commercial properties and higher valuations. Equally, higher interest rates can dampen investment enthusiasm and reduce property values. Other trends also come into play when determining valuations. The increasing popularity of remote working and the rising demand for sustainable and energy-efficient buildings can all influence the final figure.
Maunder Taylor – Property Valuation Surveyors in Potters Bar
Maunder Taylor are leading property valuation experts in London and regularly undertake valuations for sale and purchase, probate, taxation, litigation, and company audits. For more information about any of our services – which range from acting as property insurance agents in North London, to residential block management in Hertfordshire – follow this link and complete the online form. You can also contact us on 020 8446 0011, unless it’s a residential block management enquiry, in which case you should call 01707 665 666.