Established in 1974
At D.R. Coell our reputation for excellence is based on decades of collective experience and strong industry connections. We offer timely, accurate commercial appraisals of all types of commercial property, including but not limited to office, industrial, retail, multi-family, institutional and vacant land. By extracting market knowledge from several comprehensive resources we provide our clients with a strong understanding of their assets, and a fair equitable value on which to base their decisions.
Vancouver Islands Leading Commercial Real Estate Appraisals Company
Commercial Appraisals may be required for a variety of reasons. Our knowledge spans the entire life cycle of your commercial assets, and we are able to offer invaluable advice pertaining to acquisition, development, operation, and disposition of your property. When it comes to value, timing is everything, and obtaining regular appraisals is a critical step in managing e your commercial investments. By working with our team, you will have access to update appraisals at a discounted rate, from experts who understand your property and vision. Whether you own a single commercial property or a portfolio of properties, obtaining commercial appraisals from D.R. Coell will provide you with sound advice on which to base your next move.
In some cases, Commercial Property Appraisals may be required for litigation purposes. D.R. Coell’s Accredited Appraisers are highly experienced and skilled at providing an expert opinion of value for litigation along with expert witness testimony. Our Appraisers are committed to confidentiality and protecting the privacy of all of our clients and professional industry members. We work in conjunction with legal teams to facilitate a desired outcome for our clients.
As one of Victoria’s longest-standing Appraisal Firms, with decades of collective experience and historical data banks, we are able to provide an accurate estimate of value, whether a current, retrospective, or prospective opinion is required. Our qualified appraisers provide invaluable insights backed by experience, into construction costs, development costs, market impacts, revenue expectations and more. We have built a reputation of accuracy and reliability, which lenders and developers have come to rely on and trust.
A hypothetical “As If” valuation will provide you and your lender with an expert opinion of the likely value of your next project upon completion. The Highest and Best Use analysis is a key component of each appraisal report and provides the reader with a detailed analysis of the “as vacant” vs “as improved” highest and best use of their property. This evidence is used to steer informed decisions regarding the development of your property, as well as obtain construction financing.
Commercial Building & Property Appraisal Costs
Appraisals have value! Obtaining an appraisal of your commercial property provides valuable insight into opportunities to maximize your investment. We are familiar with the requirements of most banks, credit unions, and private lenders. By providing accurate, bank-recognized appraisals, we can assist with accessing funds to assist with mortgage, construction, or take-out financing in a timely manner.
Our fees conform to the needs of each individual client, and the scope of each assignment. We are committed to earning your future business through results that have an identifiable net benefit to your bottom line.
Serving Victoria, Gulf Islands, Vancouver and Surrounding Area
D.R. Coell’s main office is located in beautiful Victoria BC, but thanks to incredible investments in technology, our Appraisers are able to provide commercial appraisals, anytime, requiring only an internet connection to access our entire virtual office and all databases. These investments in technology permit our Appraisers to offer the same, valuable service across all of Vancouver Island, the Gulf Islands, Mainland, and more! Our team even includes Appraisers accredited in Alberta, where a special license is required. No matter where your property is, we’ll come to you.
Proudly Offering Commercial Appraisals in:
- Capital Regional District: Victoria, Saanich, Oak Bay, Esquimalt, View Royal, Langford, Colwood, Central Saanich, Highlands, North Saanich, Sidney, Metchosin, Sooke, Salt Spring Island, Juan de Fuca, Southern Gulf Islands, Port Renfrew, Jordan River
- Cowichan Valley Regional District: Duncan, Ladysmith, Lake Cowichan, North Cowichan
- Nanaimo Regional District: Nanaimo, Parksville, Qualicum Beach, Lantzville
- Comox Valley Regional District: Comox, Courtenay, Cumberland
- Mount Waddington Regional District: Alert Bay, Port Alice, Port Hardy, Port McNeil
- Strathcona Regional District: Campbell River, Gold River, Sayward, Tahis, Zeballos
- Alberni-Clayoquot Regional District: Port Alberni, Bamfield, Sproat Lake, Great Central Lake, Tofino, Ucluelet
- Greater Vancouver
- Prince Rupert
- Prince George
Frequently asked questions
- What is an Appraisal?
As defined by the Appraisal Institute of Canada:
An appraisal is an estimate of value. It can be provided orally but it is usually a written statement of market value, or value for loan purposes, or value as described by the appraiser of an adequately described property on a specific date and supported by the presentation and analysis of relevant data.
- How is Commercial Property Appraised?
The three approaches recognized in the current Canadian Standards of Professional Appraisal Practice are Cost, Income and Direct Comparison.
The Principle of Substitution is the basis for this method of valuation. Use of the Cost Approach is typically confined to proposed improvements as a test of feasibility, or for special purpose properties.
Value is determined in the Cost Approach using the following steps:
- Estimate the value of the land as if vacant.
- Estimate the Reproduction Cost New (RCN) of the structure(s) and the ancillary improvements.
- Estimate the depreciation affecting the structure(s) and other improvements.
- Deduct this total depreciation from the RCN.
- Add the land value obtained in step “1” to the depreciated value of all improvements obtained in step “4”.
“Cost” and “Value”, although related, are not synonymous: “Cost” is the amount of money necessary to erect the structure. “Value” is the market worth of the building once erected. In a situation where labour and material become scarce for a period of time, the cost of the building may be higher than its value a year later when labour and materials are more plentiful.
A cost approach requires the estimation of accrued depreciation from all sources which is critical in the analysis. With existing improvements determining what the accrued depreciation is can be subjective and difficult to accurately measure and as a result, the cost approach does not tend to produce a reliable market value indicator.
This approach involves analysing the income produced by a property to determine its relative worth in a given market. It is typically utilized when valuing an improved income producing property or the underlying land value of a proposed development.
For an improved, income-producing property, value is determined in the Income Capitalization Approach using the following steps:
- Estimate the annual potential gross income (PGI), which represents the maximum revenue that the property can generate in one year given 100% occupancy and any other ancillary income from other sources such as; coin-operated machines, parking, etc.
- Determine a vacancy and collection loss and deduct that amount from the PGI to arrive at the effective gross income (EGI).
- Estimate and deduct the annual operating and maintenance expenses from the EGI to determine the net operating income (NOI).
- The NOI is converted to value through either the Income Rate method or the Discount Rate method. The methodology applied is dependent upon existing or anticipated earnings. Choosing the appropriate rate or rates will convert the income into a capital value of the property.
There are three (3) income-based methods when valuing land, as detailed below:
In the Ground Rent Capitalization Method, ground rent is the amount paid for the right to use and occupy the land according to the terms of the ground lease. Ground rents can be capitalized at an appropriate rate to form an indicator of value. An alternative method involves discounting the anticipated rental income received over the holding period and the reversion (lump sum benefit) received on the termination of the investment.
The Land Residual Method is based on the concept that the value of a property with development potential is derived from the value of the property after development minus the cost of undertaking that development, including a profit for the developer. The Land Residual Method is complicated by the fact that development takes time, while the valuation is at a single time point. Because of this, the remaining cash flows after the deduction for development costs and profit must be discounted for time.
The Subdivision Development Method allows the appraiser to take into account the costs and revenues associated with undertaking a complex subdivision. Furthermore, this analysis takes into account the time period over which development will take place, as well as how long it will take for the marketplace to absorb the finished product. Finally, factors such as construction financing and developer’s profit are also taken into account.
Direct Comparison Approach
This approach involves the comparison of properties similar to the subject to arrive at a value. The process requires a study of like properties that have recently been sold or offered for sale, analysing the differences and making quantitative or qualitative adjustments to the comparable properties for differences found to exist in each in order to provide a correlation of values between the comparable properties and the subject.
This approach is appropriate when a number of similar properties have sold or are currently offered for sale. However, when applying this approach knowing the nuances within each comparable relative to those within the subject is critical to the adjustment process. If they are not known, then this approach is deemed simplistic in the valuation of complex investment-grade real estate. The Direct Comparison Approach requires a significant amount of subjectivity by the appraiser, so accurate information is important.
Value is determined in the Direct Comparison Approach using the following steps:
- Locate comparable properties that have sold, or are currently being marketed.
- Compile all relevant data about each comparable and check for accuracy.
- Analyse and verify all differences regarding the property and conditions of sale as compared to the subject.
- Make direct comparisons between the subject and the comparable and adjust for differences affecting the value.
- Reconcile all of the data to arrive at a value for the subject property.
The Direct Comparison Approach is most appropriate when valuing improved, owner-occupied properties and vacant land.
- What is Market Value and how is it determined?
As defined by the Canadian Uniform Standard of Professional Appraisal Practice (CUSPAP):
The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in Canadian dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Appraisers estimate market value by measuring the impact of market forces. Appraisers do not determine value in a commercial appraisal; the market determines the value. In estimating market value the appraiser must consider many principles including supply and demand forces, competition, law of substitution, opportunity cost, conformity, highest and best use and marginal productivity among others. The appraiser will use the Direct Comparison Approach to value which looks at the differences in the legal, physical, locational and economic characteristics of comparable sales and listings, and more closely on differences in the property rights, the sale dates, the motivation of the parties and the financing involved.
- Why would I require an Appraisal?
Buying or selling real property can be one of the largest financial decisions you will make in your life. Commercial appraisals offer an unbiased, informed opinion of the market value of the property you are interested in purchasing or selling. Appraisal services may be needed:
- To ensure that the purchaser does not pay more for a property than it is worth.
- To obtain a qualified opinion of value for mortgage or lending purposes.
- To provide investors with adequate information upon which to base investment decisions.
- To determine the correct selling price when selling a home.
- How long is a commercial real estate appraisal good for?
Commercial property appraisals may not have expiration dates, however, lenders tend to reject appraisals that are more than 120 to 365 days old. For residential properties, the expiration date may be within 60 to 90 days. It’s also possible to extend an appraisal with the proper documents. Lenders call the time in which they accept appraisals the “term of validity.”
- How long do commercial appraisals take?
Timelines for commercial appraisals depend on the physical characteristics of the subject property as well as the current market for appraisals within your community. Some properties are complex with multiple components or unique physical characteristics which sometimes requires extended timelines to collect the appropriate data needed to estimate market value. These more complex appraisals can sometime take 3 to 4 weeks to complete and sometimes even longer. On the other hand, some properties are more simplistic, requiring only a short turnaround time of 1 to 2 weeks. Depending on how active the market for appraisals is at the time of a commercial appraisal request, these estimated timeframes can be even longer due to high volume of work within each office.
- How accurate are commercial real estate appraisals?
In a recent study, the accuracy of commercial real estate appraisals was analysed using data from commercial properties sold out of the NCREIF National Property Index during the last 25 years in the USA. On average, appraisals are more than 10% above, or below, subsequent sales prices, and this result holds true for both external and internal appraisals. It was also found that appraisals appear to lag the true sales prices, falling below in hot markets and remaining above in cold markets. The largest deviations were observed during the two peaks and two valleys of the past two cycles in the commercial real estate market. Not surprisingly, the worst performance occurred during the recent financial crisis.
- What is the BC Assessment appeal process?
Property assessments in British Columbia are the basis for property taxation. Ensuring your commercial property is accurately and fairly assessed is a professional service we offer. Our staff have the expertise and relationships with BC Assessment staff to review and negotiate changes to assessments, where over-assessment is indicated, in a cost effective and timely fashion.
Contact our office before the January 31st appeal deadline to preserve your right of appeal.
We take a multi-stage approach for property assessment consulting to limit costs to property owners, as follows:
Step 1 – Initial review of the assessment to determine if the property inventory, Actual value, and Classification are correct, and the property is assessed fairly (equitably) with similar properties in the neighbourhood. This usually involves 1 to 3 hours consulting time and a modest fee. If the assessment appears reasonable or the degree of over assessment is minor we will likely recommend no further action. Keep in mind that the property’s Actual value may be over stated if the inventory is inaccurate – e.g., BCA is using a higher than actual building rentable area. If the property Actual value is improperly allocated among the Property Classes for a mixed-use property you may have an excessive property tax burden.
Step 2 – Assuming your property is significantly over-assessed or improperly classified we will recommend a best approach to achieving a positive outcome, including potential costs versus tax savings and our forecast of the probability of success. If you agree with our approach will begin negotiations with the local Assessor (as your agent) and file an appeal, if necessary. Some assessment issues can be resolved quickly during the initial review period, which is January 1 to January 31st of each year.
Step 3 – If we unable to resolve the assessment issues with the Assessor during the review period we will provide you with the option to continue the appeal to the Property Assessment Appeal Board or PAAB. Appeals to PAAB for more complex commercial properties are common since the initial level of appeal, the Property Assessment Review Panel, typically has insufficient time and expertise to deal with commercial property valuation and classification issues. The PAAB is a judicial tribunal with broad powers, somewhat similar to the Courts. The PAAB hears appeals based on rules of evidence and strongly encourages the parties to resolve the issues through informal mediation processes to avoid the costs of in-person hearings. During this stage the property owner may be subject to orders for financial and other property information. Our goal is to manage these requests on your behalf and minimize the disclosure of confidential business information.
During each stage in the process our goal is to keep you informed and manage the risk of achieving a successful outcome. In our experience the best approach is to maintain a respectful relationship with BC Assessment staff but ensure the Assessor continues to give your file the highest priority for issue resolution in the shortest time frame possible.
Should you wish to engage us in the initial Step 1, please call our office at (250) 388-6242 we will put you in contact with an expert in your specific property type.
- Why do BC Assessment values differ so much from the actual Appraised Values?
Assessed Value refers to the value for tax roll purposes. Both the Assessed Value and the Appraised Value are based on Market Value in B.C. The BCA value is the market value estimated as of July 1st of the previous year and a current market appraisal is based on the current date. An Assessment is often appraised on a bulk basis, lumping many similar homes in the same neighbourhood together. The Assessor may also not be aware of any updates or renovations that a home may have, whereas an appraisal would take both those into account.
- Who owns the Appraisal? Who is the appraisal client?
The appraiser performs a commercial appraisal for his/her Client and the Client is any party for whom the appraiser performs a service. This is usually the person who engages the appraiser to complete the assignment and this may or may not be the person who actually pays for the appraisal. Often the Lender /Broker will order the appraisal from the appraiser but the fee is paid by the homeowner and in this case the Lender/Broker is the Client. Appraisers work on a confidential basis with their clients (known as client-appraiser relationship), in the same fashion as other professionals such as lawyers and accountants.
- What is Economic Life and how is Remaining Economic Life calculated?
Economic Life is the total period of time, which the improvements (house/buildings) contribute to the overall property value. The total Economic Life of a typical BC home is generally 65 years. Economic life and physical life can differ widely and physical life usually exceeds Economic Life. Renovations and updates can increase a property’s physical and Economic Life and poor maintenance can shorten it. Increases in land value can also have a negative impact on remaining economic life as older homes are torn down to make way for new ones, it makes less “economic” sense to keep the older one standing.
Remaining Economic Life (REL) is the estimated time period, which the improvements continue to contribute to property value. An appraiser estimates REL in part by interpreting the economic conditions, attitudes and reactions of buyers in the market.
The Remaining Economic Life is calculated by subtracting the Effective Age from the Total Economic Life.
Economic Life – Effective Age = Remaining Economic Life
A 40-year-old home that has had substantial renovations may have an effective age of 30 years.
65 years – 30 years = 35 years Remaining Economic Life (REL)