Posted on Jun 02, 2021
The current prevailing methodology for valuing industrial buildings is to put a price on every square metre of office, and every square metre of warehouse/factory, with weightings of these prices determined by such factors as quality of the space, stud height, suburb etc. Then additional charges are added for car parks and yard space.
All very good and logical. Except that often it is not!
Because very often our industrial stock was built in a different era – an era when the ratios of office to warehouse were very different, when stud height was not as important, when there was hardly a canopy to be seen, and when yard and car parking space was not as utilized or valued. Whilst putting a value on what exists may seem logical, what would be more sensible is to put a value on what is valued and utilized for contemporary business.
It may cost more to outfit an office than a factory. But for many businesses, the money is made on the factory floor, so should not that space be allotted a greater value? Similarly where a building is over-burdened with excess office from a bygone era, it makes little sense to place a high value on that redundant space. There are far too many nicely carpeted storage rooms which command a greater valuation than productive six metre stud factory space.
Whilst ultimately a building or space is worth what someone will pay for it, the reality is that within the industry eco-sphere, there are many who rely on “valuations”, There is a case that such “valuations” should be more about real world values based on utility, rather than meekly following established precedent.
A good start to becoming more realistic in the way space is valued may be to assign an overall value to space – whether it is office or warehouse.