Commercial properties have the following characteristics:
- uses may include retail, food service, office or other general commercial uses
- they are multi-purpose buildings that typically include interior finish
- special purpose features are limited
- they can usually be converted to another use without extensive alterations.
MPAC uses the cost approach to value many commercial properties. However, in locations (primarily GTA) where there are an abundance of sales, MPAC uses the direct comparison approach to derive current values for commercial properties.
The cost approach determines the assessed value by means of estimating the replacement cost of the buildings and structures, adjusting that cost for any depreciation in the actual property being valued (which includes physical deterioration and obsolescence), then adding the value of the land.
The theory underlying the cost approach is to determine value in exchange by applying the principle of substitution, which means that no rational buyer will pay more for the property than that amount for which the buyer can obtain a property of equal desirability and utility, assuming no undue delay.
Follow the links below for more information about how commercial properties are assessed:
Additional resources for commercial property owners: