With the economy still recovering, and real estate markets still shaking themselves out, knowing the condition of your portfolio can be tricky. With corporate real estate, having a clear picture of your property’s worth can be critical to making sure that your business will turn a profit.
How much value you should expect from the market, and what price should you be paying for your properties, can be difficult questions to answer. Having the right benchmarking tools can help, and so can knowing the best factors to watch.
Modeling the behavior of actors in the market requires a clear picture of both corporate and consumer behavior. Since a property’s worth is often closely linked to the income it generates (especially in retail locations), your own cash flow forms the backbone of its valuation. Weighed against that is the cost of leasing the property, or the amount you give up in property taxes. In either case, your awareness of the local market’s strength and mood will help you evaluate both sides of the ledger.
Because both economic activity and real estate prices have declined sharply over the last few years, and may not yet have turned around in every market, historical valuations and lease agreements may have left you with costs that fall well above the current market’s price.
It can be easy to lose track of your portfolio’s strength. Every property’s value is a mix of building metrics and market behavior. That can be difficult to organize without a dedicated system to manage it, but having a clear picture of that value can make all the difference.
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