The obvious answer with commercial rel estate is cap rate. When determining the use of your building you should be designing it for its "Highest and Best" use. Who are the target tenants, what revenue can they derive from using your building and what will they have to pay for the conversion specific to their use. Then look at the uses of other buildings in the area and what their advertised cap rates are. This gives you an idea of what you will be able to charge. The SF is calculate by the exterior of the building as the other poster said. You can then multiply this by current market rates for rent from the most likely tenant to determine your gross rents and then you can make your other assumptions and calculate the cap rate for your building.
Nov 3, 2014