Valuation
Commercial Property Valuation in Colorado
What is your commercial property worth? Run the numbers yourself with the calculator below, then ask us for a broker opinion of value built on Front Range comparable sales and current lease rates for your property type.
On this page
How Commercial Property Valuation Works
Commercial property valuation starts with income. For most income-producing buildings, value equals net operating income divided by a market cap rate, checked against recent sales of similar properties. Owner-user buildings lean more on comparable sales, and new or special-purpose buildings may also use the cost approach.
- Income approach: NOI divided by cap rate, or a discounted cash flow over a hold period.
- Sales comparison: price per square foot and cap rates from recent comparable sales.
- Cost approach: land value plus replacement cost, less depreciation.
Use the Commercial Property Valuation Calculator
The calculator below handles the first pass of a commercial property valuation: enter price, NOI and cap rate (leave one blank to solve for it), plus loan terms to see debt coverage and cash-on-cash. Other tabs cover NPV, IRR, loan amortization and FMRR. Sample inputs are illustrations, not current market rates.
For a valuation you can act on, ask us for a broker opinion of value, or hire a state-certified general appraiser when a lender requires one. Investors planning a trade can also read our 1031 exchange Colorado guide, and the IRS like-kind exchange overview explains the tax side.
Commercial Property Valuation Calculator
Time value of money, discounted cash flow, loan amortization and the everyday property metrics, in one place. Enter cash you pay out as negative and cash you receive as positive.
Property quick metrics
The first-pass numbers on any income property. Fill in what you know; leave the one you want solved blank between price, NOI and cap rate.
Time value of money
Five-key solver. Choose the value to solve for, fill in the other four. Present value is usually entered as a negative (money out), payments and future value as positive (money in), or the reverse.
Annual cash flows: NPV and IRR
Year 0 is the initial investment (negative). Enter each year’s cash flow after debt service, and the net sale proceeds in the final year of the hold.
| Year | Cash flow | Sale proceeds |
|---|
Grouped cash flows
Financial-calculator style entry: give each cash flow an amount and how many consecutive periods it repeats. Useful for level leases, stepped rents or a lump sum at the end.
| Group | Amount | Repeats |
|---|
Loan amortization
Payment, annual debt service, balloon balance and a full schedule by period or by year.
Capital accumulation (FMRR)
Financial management rate of return, using the standard capital accumulation method. Negative cash flows after year 0 are discounted back at the safe rate one year at a time and netted against earlier positive flows; positive flows are compounded forward to the end of the hold at the reinvestment rate, with optional tiers that apply once the accumulated balance exceeds each ceiling.
| Year | Cash flow |
|---|
Growth and percentages
Rent escalations, value projections, percent change and compound growth between two numbers.
Project at a constant rate
Change between two values
Add or subtract a percentage
Statistics
Paste a list of comparable rents, cap rates or prices per square foot. Numbers can be separated by commas, spaces or line breaks; dollar signs and thousands separators are ignored.
Debt service coverage (DSCR)
Test a loan against a lender’s coverage requirement and see the largest loan the income supports. Enter 0 for amortization to test an interest-only loan. Figures shown are samples, not current rates or terms.
Cap rate
Build NOI from income and expenses, then solve the cap rate from a purchase price, a value from a market cap rate, or enter both to compare price against value.
Want a broker opinion of value?
A calculator gives you the math. A broker opinion of value adds the market: recent Front Range sales, current lease rates for your property type, and what buyers are underwriting today.
Common Questions
How do you value a commercial property?
Most commercial property is valued three ways: the income approach (what the property’s net income is worth to a buyer), the sales comparison approach (what similar buildings sold for) and the cost approach (land value plus what it would cost to build, less depreciation). For income property, the income approach usually carries the most weight. For owner-user buildings, recent sales of comparable buildings often matter more.
How do you calculate commercial property value based on rental income?
Start with net operating income (NOI): gross rent and other income, less vacancy and operating expenses, before debt service. Then divide NOI by a market cap rate. Example with sample numbers: $175,000 NOI divided by a 7.0% cap rate = $2,500,000. The cap rate is the hard part. It comes from recent sales of similar properties, not a rule of thumb.
How much does a commercial property appraisal cost?
It depends on the property type, size, complexity and the scope of the assignment, so get quotes from state-certified general appraisers. Most commercial loans require a lender-ordered appraisal. A broker opinion of value is a different tool: a market-based estimate from a broker that helps you decide whether and when to sell, but it is not a substitute for an appraisal.
What are the commercial real estate valuation methods?
The three standard approaches are income, sales comparison and cost. The income approach uses either direct capitalization, which divides one year of stabilized NOI by a cap rate, or discounted cash flow, which projects income over a hold period, adds a sale value at the end and discounts it all back at a required return.
How do you value industrial property?
Leased industrial is usually valued on income: market rent per square foot, lease terms and tenant credit drive NOI, and recent industrial sales set the cap rate. Physical features move both rent and price, including clear height, dock and drive-in doors, power, yard space and truck access. Owner-user industrial buildings are often priced on recent sales per square foot of similar buildings nearby.
The calculator and examples on this page are for education only. Sample figures are illustrative and are not current market rates, an appraisal, or a guarantee of value. A broker opinion of value is not an appraisal. Verify all figures with your lender, CPA and attorney before relying on them.