Market value indication
For a first approximate assessment where the property, rent and data basis is sufficient.
Learn more →Flats with shop, practice or office
Valuing mixed-use buildings
The shop downstairs, the flats upstairs: a mixed-use building brings several markets together under one roof. I value each part on its own and the building as a whole.
Jens Krüger · Let’s talk: +49 172 868 5666
Mixed-use buildings combine different sub-markets within one property. Flats and retail, office, medical practice or restaurant space can differ considerably in rent level, lettability, lease structure and market demand.
As an expert, I derive the property value from the property as a whole – while looking at each type of use separately.
Understanding residential and commercial parts separately
Mixed-use buildings typically have flats on the upper floors and commercial space on the ground floor or in individual parts of the building. For the valuation, it is not enough to treat all floor space and rents in the same way.
Relevant factors include the proportion and position of residential and commercial space, the type of commercial use, the layout of the space and its potential for alternative use, the tenancy structure, vacancy, and parking and ancillary areas. A property that is mainly residential with a small shop unit has to be assessed differently in economic terms from a building with roughly equal residential and commercial shares.
Deriving sustainable income by type of use
The markets can also differ markedly within the commercial space. A shop in a high-footfall location, a medical practice, an office or a restaurant unit appeal to different groups of occupiers and may have to be assessed differently in terms of rent level and lettability.
Contractual rents and market rents are therefore considered by type of use. The tenancies are analysed from a valuation perspective; this does not replace a review under tenancy law.
Term, adjustments and actual use
For commercial units, lease terms, renewal options, termination provisions, indexation or stepped rents and the specific type of use can be of particular economic significance.
Lease terms are taken into account insofar as they are relevant to the economic valuation of the property. A legal review of the commercial lease is not part of the property valuation.
Change of occupier and marketability
A highly specialised commercial unit that another occupier could only take over at considerable cost has to be assessed differently from flexibly usable office or retail space.
Layout, access, technical equipment, accessibility, parking and the use permitted under building law can all play a role. The more a unit is tailored to a particular occupier, the more important the question of how easily it could be re-let if that occupier leaves.
Residential and commercial income in the valuation model
Mixed-use buildings are generally assessed on an income basis. Residential and commercial income is first examined separately, and the sustainable income of the property as a whole is derived from this. Operating costs, remaining useful life and the property yield or other suitable property market data must be applied consistently with the model.
With mixed-use properties in particular, it has to be checked whether the available property market data matches the subject property in terms of the type and ratio of uses. The guide ImmoWertV & ImmoWertA explains more about model consistency.
Residential location, footfall and accessibility
The quality of a location may have to be assessed differently for the individual uses of a mixed-use building. Residential location, customer footfall, visibility, accessibility and parking may therefore be weighted differently depending on the use.
Plot size, shape, development density and land value also remain relevant to value. On the difference between the standard land value and the land value of the specific plot, please see the guide standard land value & land value.
Assessing vacancy and actual usability
A flat that is briefly vacant has to be assessed differently from a commercial unit that has been empty for some time. With commercial space in particular, the time needed to re-let, necessary conversion works and the actual potential for alternative use can play a particular role.
In older mixed-use buildings or buildings that have been converted several times, historic layouts, merged units and cellar or storage areas can also mean that existing area figures should not simply be adopted. If required, a separate floor area measurement can be carried out.
The state of modernisation and foreseeable capital expenditure are taken into account in the valuation where they are relevant to the case and apparent from the inspection or the documents. This does not include a full technical building survey.
Which valuation fits a mixed-use building?
Short-form valuation
Depending on the property and the task, a valuation with more compact documentation can be agreed individually.
Learn more →Full market value report
For a comprehensive investigation, derivation and documentation of the market value. The scope and fee are calculated individually.
Learn more →Pre-purchase consultation / pre-acquisition assessment
For mixed-use buildings, the scope of a pre-purchase consultation or pre-acquisition assessment is agreed individually according to the property and the task – with a view to purchase price, income, condition and investment needs.
View pre-acquisition assessment →Floor area measurement
When existing living, usable or lettable areas are to be checked or recalculated.
Learn more →Which documents are needed?
Depending on the property and the instruction, the following are particularly helpful:
- Land register extract
- Cadastral map
- Building drawings and floor plans
- Living, usable and lettable area calculations
- Tenancy schedule or rent roll, separated into residential and commercial units
- relevant residential and commercial leases
- Details of vacancies
- Details of parking spaces, garages and ancillary areas
- Details of management and operating costs, where required
- Overview of modernisation and major repairs
- Energy performance certificate, if available
- Information on rights and encumbrances
- documents on conversions, changes of use or development options, if applicable
For more complex properties, further documents may be required depending on the task. Not everything needs to be complete at the first enquiry.
I carry out site inspections from my offices in Dresden, Berlin and Lemgo.
Would you like a mixed-use building valued?
Send us the key data, residential and commercial leases (if available) and the reason for the valuation. After reviewing them, you will receive an individual quotation before placing the instruction.
Let’s talk.You speak directly to me: +49 172 868 5666