How we assess commercial property
We assess commercial property each year at its full market value. This is the price at which a property should bring in a competitive and open market.
The 3 methods used to determine real property value include:
- Sales comparison approach: Compares a property to comparable sold properties.
- Cost approach: Land plus replacement cost new of the structure(s) less depreciation.
- Income approach: Capitalization of net operating income.
Commercial property valuation generates figures for land and improvement(s). State law requires all land to be valued as if vacant, using the Highest and Best Use principles. Values are determined using the sales comparison approach by first analyzing comparable vacant land sales.
The next step is to establish the total property value. We consider all three approaches to appraise improved commercial and industrial properties. However, the method that offers the best evidence of market value will be employed. The cost approach adds the depreciated improvement(s) figure(s) to the land value. The income and market approaches generate a total value; the improvement figure is calculated by deducting land from this total.
Property owners receive an official property valuation notice whenever a new value is generated. The statement contains the prior and current year values for land and improvements.