When buying, selling, leasing, refinancing, or managing tax obligations for commercial real estate, obtaining a commercial property valuation is essential. These valuations offer an accurate and legally compliant assessment of a property’s market value—used by lenders, investors, accountants, and legal professionals alike.
This guide explores how commercial property valuations work in Australia, what influences their outcome, and when you should consider getting one.
What Is a Commercial Property Valuation?
A commercial property valuation is a formal, evidence-based assessment of the market value of non-residential property. This includes:
- Offices
- Warehouses
- Retail shops
- Industrial sites
- Development land
- Mixed-use commercial/residential buildings
Conducted by a certified property valuer, commercial valuations are typically more complex than residential assessments due to factors like rental income, lease terms, building use, and zoning.
When Do You Need a Commercial Valuation?
Buying or Selling a Commercial Property
- Determine a fair purchase or listing price
- Assist with negotiation and decision-making
Securing a Commercial Loan or Refinancing
Banks require certified valuations to assess loan-to-value ratio (LVR) and lending risk
Tax and Financial Reporting
Used for Capital Gains Tax (CGT), depreciation schedules, balance sheet reporting, and SMSF compliance.
Lease Reviews or Rent Disputes
Valuations may be required for market rent reviews, especially in long-term leases.
Legal Matters
Needed for divorce settlements, business dissolution, and dispute resolution.
How Is a Commercial Property Valuation Conducted?
A valuation typically involves a combination of site inspection, lease analysis, and market research.
Physical Inspection
The valuer will assess:
- Size and layout of the building
- Condition, construction type, and age
- Access for vehicles and customers
- Fit-outs, loading bays, lifts, HVAC systems
- Car parking, security, and compliance with building codes
- Environmental factors or contamination risks
Lease & Income Analysis
The valuer will examine:
- Lease agreements and terms (gross/net rent, incentives)
- Remaining lease period and renewal options
- Outgoings and responsibility for maintenance
- Vacancy rates and tenant history
Market Comparison
Valuers analyse:
- Comparable recent sales or lease transactions
- Zoning regulations and planning overlays
- Location and infrastructure access
- Broader economic conditions and sector performance
Valuation Methods for Commercial Property
Depending on the type of property and purpose of the report, valuers may use one or a combination of these methods:
Direct Comparison Method
Used for smaller or owner-occupied commercial properties. Compares with recent sales of similar properties.
Capitalisation of Income Approach
Used for investment-grade properties. Capitalises net rental income using a market yield to calculate value.
Discounted Cash Flow (DCF)
Used for complex assets with future income projections. Calculates the present value of expected cash flows over a defined holding period.
Summation (Cost) Method
Used for specialised or new-build properties. Adds land value to replacement cost of improvements, minus depreciation.
What Affects Commercial Property Value?
Location & Accessibility
- Proximity to transport, major roads, and business hubs
- Visibility, signage, and access for customers or freight
Building Condition & Use
- Quality of construction, compliance with building codes, and energy efficiency
- Fit-out and flexibility for alternative uses
Lease Structure
- Length of lease, tenant quality, and escalation clauses
- Gross vs. net leases and who pays outgoings
Market Conditions
- Vacancy rates in the area
- Interest rates and investment yield trends
- Demand within the sector (e.g. retail vs industrial)
How Much Does a Commercial Valuation Cost in Australia?
Fees vary depending on the complexity, location, and purpose:
- Standard commercial valuation: $1,000 – $3,000
- Large-scale or multi-tenant buildings: $3,000+
- Urgent reports: Additional charges may apply
Make sure your quote includes GST and clarifies the intended use of the report (e.g. for bank lending or court use).
How to Prepare for a Commercial Valuation
Here are a few tips to ensure a smooth process:
- Provide access to all areas of the property
- Prepare lease documentation, rent roll, and outgoings breakdown
- Share any recent improvements or capital works
- Disclose known issues (e.g. asbestos, defects, compliance notices)
- Have up-to-date council and strata plans available if applicable
Conclusion
A professional commercial property valuation provides transparency, confidence, and data-driven insights—essential whether you’re negotiating a deal, securing finance, or preparing financial statements.
Engage a certified, experienced commercial valuer who understands your asset type, your industry sector, and the local market. In doing so, you’ll ensure your property is assessed fairly, accurately, and with legal standing.