As a place of business and an investment vehicle, an office building requires special attention with respect to managing its operations and renting its spaces.
The office rental market is the real estate sector that is most affected by external factors (economic context, money market, competition). Therefore, a comprehensive analysis is generally required to understand the market (rental rate, vacancy rate, absorption rate).
At HPDG, our appraisers’ approach and the innovative analytical tools developed by our experts are based on a systematic market review to obtain objective findings.
The value of an office building not only depends on its physical characteristics, but also on its rental situation (lease conditions) and occupancy rate. Most importantly, the value is determined by the property’s real and existing condition. Potential considerations tend to be speculative and less relevant to valuation. As such, HPDG appraisers focus particularly on lease analysis.
The financial analysis of an office building is thus an essential prerequisite for its valuation.
- Identification of the property’s strengths and weaknesses
- Comprehensive financial analysis of the property
- Thorough lease review
- Rent comparison based on rental market trends
- Analysis and standardization of property operating expenses
- Identification of steps to reduce certain expense items
- Calculation of financial ratios and performance ratios for the building
- Anticipated income and expense projections
- Investment risk assessment
- Survey and analysis of comparable real estate transactions
- Comparison and positioning of the property on the market
- Assessment of the property’s effective potential with respect to its market and sector outlook
- Proof of estimated value based on facts and market indicators