For commercial property, the process is significantly different from a residential CMA. In many cases, you are performing a simplified appraisal-style analysis rather than a traditional residential CMA.

Step 1: Identify the Property Type

The valuation method depends on what type of commercial property you have:

• Office

• Retail

• Industrial

• Multifamily (5+ units)

• Mixed-use

• Self-storage

• Hospitality

• Vacant commercial land

• Medical office

• Mobile home park

Different property types use different metrics.

Step 2: Gather Property Data

Collect:

Physical Characteristics

• Building size (square feet)

• Lot size

• Year built

• Renovations

• Parking ratio

• Zoning

• Flood zone

• Occupancy status

Income Information

If income-producing:

• Current rent roll

• Lease expiration dates

• Triple Net (NNN), Modified Gross, or Gross leases

• Operating expenses

• Property taxes

• Insurance

• CAM charges

• Maintenance costs

Financial Documents

Request:

• Trailing 12-month operating statement (T12)

• Last 2–3 years of P&Ls

• Rent roll

• Tax bills

• Survey

• Environmental reports (if available)

Step 3: Choose the Correct Valuation Method

Commercial brokers typically use all three approaches.

1. Sales Comparison Approach

This is the closest thing to a residential CMA.

Find:

• Similar properties

• Similar use

• Similar size

• Similar age

• Similar location

Look at:

Price Per Square Foot

Formula:

Price ÷ Building SF

Example:

Sale Price = $2,000,000

Building = 10,000 SF

$2,000,000 ÷ 10,000 = $200/SF

Compare multiple sales and determine a reasonable range.

2. Income Capitalization Approach

This is often the most important method for investment properties.

Calculate NOI

NOI = Gross Income – Operating Expenses

Example:

Gross Income = $250,000

Expenses = $70,000

NOI = $180,000

Determine Market Cap Rate

Find recent comparable sales.

Formula:

Cap Rate = NOI ÷ Sale Price

Example:

NOI = $180,000

Sold for $3,000,000

Cap Rate = 6%

Value Subject Property

Value = NOI ÷ Market Cap Rate

Example:

$180,000 NOI ÷ .06

= $3,000,000

This is often the number investors care about most.

3. Cost Approach

Useful for:

• New construction

• Specialty properties

• Churches

• Schools

• Medical facilities

Formula:

Land Value

Replacement Cost

Depreciation

=

Property Value

Step 4: Pull Commercial Comparables

Sources include:

MLS Commercial Systems

• Stellar MLS Commercial

• Florida Commercial Exchange (FCX)

• Commercial Exchange

• Catylist

Public Records

• County Property Appraiser

• County Clerk records

Commercial Databases

• CoStar

• LoopNet

• Crexi

• Reonomy

Broker Network

Many commercial deals never hit MLS.

Call:

• Commercial brokers

• Property managers

• Investors

This often uncovers off-market sale information.

Step 5: Analyze Market Metrics

Look at:

Cap Rates

Typical ranges:

• Class A retail: 5%-7%

• Office: 6%-9%

• Industrial: 5%-8%

• Multifamily: 4%-7%

Varies greatly by market and asset class.

Occupancy

• Vacancy rates

• Absorption rates

• Rental growth

Market Trends

• New construction

• Redevelopment projects

• Population growth

• Traffic counts

Step 6: Reconcile the Value

After completing all approaches:

You might conclude:

Recommended List Price: $3.05M–$3.15M

Then discuss marketing strategy with the seller.

What I Recommend as a Florida Commercial Agent

For most Florida commercial properties:

1. Pull 5–10 recent sales.

2. Calculate price per SF.

3. Obtain a rent roll and T12.

4. Calculate NOI.

5. Determine market cap rates from comparable sales.

6. Use the income approach as the primary valuation method.

7. Use the sales comparison approach as a reasonableness check.

For investment properties, buyers will usually scrutinize NOI and cap rate far more than your sales-comparison figures.