Thinking about selling a warehouse, an industrial outdoor storage (IOS) yard, or a light-industrial building? The first question is usually simple: how much is my commercial property worth? There is no single price tag, but buyers and appraisers figure value in the same few ways. This guide explains them in plain words, along with the features that move the price of a building or a yard.
The 3 Ways Commercial Property Value Is Figured
Appraisers and tax assessors use three standard approaches: sales comparison, income, and cost.
- Sales comparison. Look at what similar properties near you sold for, then adjust for differences in size, age, condition, and location.
- Income. Look at the rent the property brings in after expenses. More steady rent usually means a higher price.
- Cost. Figure what it would cost to build the building today, take off some value for age and wear, and add the value of the land.
Commercial and industrial property is usually bought and sold based on the income it can produce. If you use the building for your own business and no one pays rent, sales of similar buildings count for more.
What Affects the Value of a Warehouse or Light-Industrial Building
- Location. How close the building is to major highways, rail, and the people and businesses it serves.
- Clear height. The open height inside, from the floor to the lowest beam, duct, or sprinkler. More height means more room to stack goods on racks.
- Loading. How many dock-high doors it has, which sit at trailer height, and how many drive-in doors it has at ground level.
- Truck room. Enough space outside for big trucks to turn and for trailers to park.
- Power. How much electricity the building can get.
- Condition. The roof, the floors, the paving, and the building systems, and what it would cost to fix them.
- Leases. Who the tenants are, what they pay, and how long their leases run.
What Affects the Value of an IOS Yard
An IOS yard is industrial land used to store trucks, trailers, containers, equipment, and materials. Most of its value comes from the open land, not from the buildings on it.
- Usable land. How much flat, open ground trucks and equipment can actually use.
- Improvements. Paving, fencing, and lighting make a yard more useful and more secure.
- Access. Room for trucks to get in and out, and a short drive to highways, ports, or rail.
- Zoning. The zoning has to allow the way the yard is used.
In Philadelphia, for example, the City’s zoning guide allows equipment and materials storage yards in five of its six industrial districts without Zoning Board approval. In the sixth, the Zoning Board of Adjustment has to approve it. Ask your attorney before counting on a use.
Other Things That Change the Price
- Environmental history. Buyers often order an environmental report called a Phase I to check for contamination risk.
- Repairs. Buyers take the cost of needed repairs, like a new roof or new paving, off the price.
- Vacancy. An empty building earns no rent today, so buyers look at what it could rent for and what it costs to find a tenant.
- Your tax bill. The assessed value on your property tax bill can be different from what a buyer will pay.
How to Get a Number for Your Property
For a formal value, hire a licensed commercial appraiser. For a quick check, look up recent sales of similar buildings near you. You can also ask a direct buyer for an offer. Planning to sell it yourself? Read our guide to selling commercial property without a broker.
Didenko Capital is a direct buyer of industrial real estate. We buy warehouses, IOS yards, and light-industrial and flex buildings from owners in all states. We look at what similar industrial properties sell for, the rent the property earns or could earn, its condition, and the cost of any repairs it needs. Condition does not rule a property out. Environmental history is part of how we price a property, not an automatic no. Asking for an offer is free, and you are not committed to anything unless you sign a purchase agreement.
Want to know what your warehouse, IOS yard, or industrial building could sell for? Tell us about your property and we’ll get back to you.