For appraisers seeking to potentially expand their earning opportunities, the office market could be a viable option. In fact, the U.S. office market is on a definite upswing, according to recent studies.
U.S. downtown and suburban office markets in second quarter 2015 reached their highest net absorption levels since fourth quarter 2006 and second quarter 2007, respectively, registering a combined 21.4 million square feet, according to the CBRE Q2 2015 U.S. Office MarketView report.
And, a recent analysis of net absorption in central business districts versus suburbs by Reis economic experts showed that recovery in the office sector appears to be moving from a story of gateway markets to something more broad-based. The analysis also noted that if the job market continues its healthy trajectory of recovery this year, and if office vacancies decline at a faster pace, effective-rent growth should maintain what can be considered a relatively robust showing, given that national vacancy levels are still relatively high.
Developing opinions of value for office buildings can be exciting and challenging. In The Valuation of Office Properties: A Contemporary Perspective, published by the Appraisal Institute, author Barrett A. Slade, Ph.D., MAI, SRPA, SRA, notes the office building maintains a significant presence in the urban landscape and is an integral part of the global economy. Slade also noted that there are many types of office properties, each with unique valuation nuances that must be carefully examined.
The Appraisal of Real Estate, 14th Edition, also published by the Appraisal Institute, says office districts can contain combinations of buildings ranging from small, low-rise structures to large, multistory buildings. And the buildings in an office district may be owner-occupied structures or serve a variety of tenants.
The textbook also notes there can be a variety of value influences, including locational considerations, building configuration, physical characteristics, direction of observable growth, character and location of competition, availability of land for expansion, pedestrian or vehicular traffic count, and vacancy and rental rates.
With the U.S. office market experiencing upward mobility, now might be an ideal time for appraisers to enhance their knowledge and explore how to pursue assignments in this space.
Appraisers, share your comments about appraising office buildings.