_So, you want to be a commercial property valuer? Find out what the job is really like

What is your job? 

I value commercial properties – from single, small units, right up to multi-million-pound portfolios and everything in between. The bulk of my work is valuing buildings on behalf of banks and funds who need to know exactly what the properties on their books are worth. But we do also work directly for owners of commercial properties. 

How long have you been a commercial valuer?

Just under 20 years. I’ll never forget my very first valuation job which was a bonded warehouse type pub in Sunderland on the banks of the River Wear. It was one of those places that was always heaving on a match day.

What are the biggest misconceptions about your job?  

People think I can tell the value of a commercial building just by looking at it. Alas, it’s a bit more complex than that. For example, if that property has a lease, I need to study it to assess what the principal terms are that could affect value such as how long the lease is for, who is responsible for repairs, whether there are any rent reviews and also assess the financial strength of the tenant before I can even begin to arrive at a value. 

People also assume it’s just a case of putting a figure on it. If only. The lion’s share of my time on a job is spent providing advice to a client on what things are impacting on or have the future potential to impact on their property’s value.  

Above: Kevin Scully

How do you value a commercial property?

As well as the physical inspection itself, and looking at the lease, the main thing I use is knowledge of the market. That really is key to an accurate valuation.

And by that I mean, what deals are going on, how the market is moving, what’s selling - and for what price - and also what’s due to come on to the market. You need to look ahead for predicted upturns and downturns and I do this by listening and talking to our capital markets and agency guys on a day-to-day basis. 

Most of the time, particularly if it’s an investment property, then the value of the building lies in the lease, rather than the bricks and mortar.

An investor is effectively buying an income stream. Therefore, how long the lease is and how financially robust the tenant is, have a significant impact on the value.

Tell us about the most memorable buildings you have valued

Oh where do I start [laughs loudly]. A few weeks back, I was asked by a bank to go and value a vacant shop in a suburban neighbourhood. A straight-forward enough job. Or so I thought.

To cut a short story even shorter, there was a strange smell coming from the basement and I uncovered a full-on illegal cannabis farm. Complete with plants, lights and dripping water. I quickly called the police and headed back to the office.

We value lots of old properties, rich in history, which are always a pleasure to look around. We recently valued an operational papermill in a stunning spot on the River Tyne. That was an interesting one. The owner was looking for advice on - not only the value - but also on potential future uses for the site if it was redeveloped.

I have just valued the splash park, Wet and Wild, which was a bit different. I didn’t try out the slides though if that’s what you’re wondering. It was purely an inspection followed by an assessment of the lease and the income stream.

I would say the worst jobs were a game factory, full of dead deer, ducks and rabbits and a manufacturing plant that makes donna kebab meat. I don’t think I have eaten either, since.       

What are you currently working on?

I’ve been working with my colleague Rob Flucker, who’s a residential valuer, on valuing a substantial mixed-use portfolio of 750 houses and a significant number of commercial investments.

There is currently a lot of uncertainty, largely as a result of Brexit, with the investment market slowing as a result, especially for larger lot sizes.  

Private investors continue to be active in the sub £2m bracket, however, the main problem we have in the region is a lack of available stock. The North East has good supply and demand dynamics so hopefully, once there is a bit more certainty in the economy, we will see more development in the region.

Kevin Scully is Partner in the Valuation & Advisory team at Knight Frank Newcastle. He can be contacted on 0191 594 5022 or kevin.scully@knightfrank.com