A typical industrial building appraisal appointment will take anywhere from 20 minutes to several hours, depending on the complexity of the property. The appraiser will inspect both the interior and exterior of the subject property, as well as the surrounding neighborhood. Interior and exterior photographs will be taken, and in most cases the property will be measured. The appraisal report will contain as much information on the building and the surrounding area as possible. Included will be a description of the exterior and interior and any additional features. There is a section of the report which describes the economic factors that could impact the property, as well as the neighboring area, the lot size, shape, gross building area and any significant features of the property.
Then the process of valuation begins. When applicable, a Cost Approach is provided. The appraiser uses various methods of estimating a cost to reconstruct the building, estimate the depreciation and then add the estimated market value of the site to arrive at an indication of value. This approach is not always applicable, based on the age of the building. In the Income Approach, an analysis of the market rent is conducted, from which is deducted the operating expenses of the facilty to arrive at the net operating income. This is then capitalized into an indication of value.
The Sales Comparison Approach is the one approach that is almost always used. In this approach, properties that have sold are reviewed. The four or more properties that are most similar are compared to the subject on a feature by feature basis. The appraiser will make adjustments to the comparables where the properties differ and a value indication via this approach will be reached based on an analysis of the adjusted sales prices.
Finally, the appraiser will consider the most applicable approach(s) and reconcile the information into the final value estimate.