Industrial property assessments
What is an industrial property?
An industrial property is predominantly designed for warehousing and distribution of product, or processing and manufacturing of product. These properties generally have limited interior finishes, though they do commonly include a small amount of office or retail space. Industrial properties are typically valued using the Sales comparison or Cost approach.
Types of industrial properties
Businesses and other organizations use industrial properties for:
- Manufacturing
- Warehousing
- Distribution
- Storage
- Contractor workshops, and more.
How are industrial properties assessed?
- Sales comparison approach to value: Industrial properties are usually assessed using the sales comparison approach to value (also known as the direct comparison approach to value). This approach compares the characteristics of each property to similar industrial properties that have sold.
- Cost approach to value: In some cases, industrial properties will be valued using the cost approach to value. This approach adds the cost of land to the cost of construction and subtracts the depreciated value to equal the final assessed value. It is used for industrial properties that are unique, purpose-built, or have limited market data to lend comparability (e.g., a greenhouse).
- Land value: Industrial properties may be assessed based on the underlying land value if the value of the vacant land exceeds the value of the improved property. As a result, the land value more accurately represents market value. Land values are derived using the sales comparison approach to value described above.
Some market factors that may influence the value of an industrial property are:
- Assessable area
- Finished area
- Land use designation
- Location
- Outbuilding
- Site coverage
- Tenancy
- Year of construction
To learn more about real estate market trends, our valuation methodology, and industrial sales transactions please download the Industrial Market Trend Report.