Short answer
A commercial property valuation is an assessment of market value, market rent or another agreed valuation question for a commercial property interest.
It may involve offices, shops, industrial units, warehouses, mixed-use property, leased premises, vacant premises or other income-producing property.
The valuation should be prepared for the stated purpose, valuation date, property interest, inspection basis and intended users.
Why this matters
Commercial property valuation can be more complex than standard residential valuation because lease terms, income, market rent, outgoings, incentives, tenant occupation and yield evidence may all affect value.
The same property may produce different valuation conclusions depending on whether it is assessed with vacant possession, subject to lease, or on another basis stated in the instructions.
The report should explain the property, income position, evidence, assumptions, limitations and valuation method used.
What the valuer considers
Depending on the property and instruction, the valuer may consider:
- Property type and location
- Land and building areas
- Zoning and permitted use
- Building condition and functional utility
- Car parking, access and loading
- Lease terms and tenant occupation
- Market rent and rental evidence
- Outgoings and recoverability
- Comparable sales evidence
- Capitalisation rates, yields and investment risk
- Vacant possession or subject-to-lease basis
- Tenant fitout, incentives and related-party occupation
The relevance of each item depends on the property and the valuation purpose.
Common valuation approaches
Commercial valuation may involve one or more approaches.
The direct comparison approach may be used where there is sufficient comparable sales evidence.
The income approach may be relevant for leased or income-producing property, where rent, lease terms and market yields are material.
A cost or summation approach may sometimes be used as a cross-check, depending on the property and available evidence.
What the valuation does not do
A commercial property valuation does not provide legal advice about leases, taxation advice, financial advice, building compliance advice or town planning advice.
The valuer may consider lease and property information for valuation purposes, but legal interpretation should be confirmed by the appropriate adviser.
Where specialist issues are material, the report may need to identify assumptions or limitations.
Common misunderstandings
Commercial value is not just rent multiplied by a number.
The valuer must consider lease quality, market rent, evidence, risk, property type and buyer profile.
A lease can affect value.
The terms of occupation may be important, especially for income-producing property.
Vacant possession and subject to lease are different bases.
The report should state the basis adopted.
Commercial fitout is not always part of the property value.
Tenant-owned fitout or business-specific fitout may need separate consideration.
The valuer does not provide lease advice.
Lease interpretation should be confirmed by a solicitor or other appropriate adviser.
Related glossary
- Commercial Property
- Market Value
- Market Rent
- Lease
- Vacant Possession
- Subject to Lease
- Capitalisation Rate
- Yield
- Outgoings
- Tenant Fitout
Related articles
- Commercial Property Valuations
- What is market rent?
- Vacant possession vs subject to lease value
- What documents are needed for a commercial valuation?
- How are yields used in commercial valuation?
- How is tenant fitout considered?
- What is Market Value?
- What is Vacant Possession?
Related services
Prepared by:
Tigran Amiyants, Certified Practising Valuer (CPV), Managing Director, Northbourne Valuers.
Last reviewed:
July 2026.
General information note:
This page provides general information only and does not constitute valuation, legal, taxation, leasing or financial advice. Commercial property matters should be considered with the appropriate qualified adviser. Every valuation depends on the specific property, purpose, valuation date, evidence, assumptions and instructions.