With everyone going with Sq. Ft. valuations, how should I advertise and/or price my building?

I have a re-purposed 1915, Main St., one story, 15' ceiling, movie theater measuring 32'x100' on a 32'x105' lot. The front of the building has a 10'x30' mezzanine area with 7' ceiling and an office, projection room and toilet upstairs plus stairs up to it. The back 20'x30' of the building has restrooms, hallway and kitchen below with stairs to a balcony area above looking over the center of the building. I've always considered the building as 3000 sq. ft. The back 5' is now walled in by my neighbors so it is storage/garbage area. If I use the full 32' as width for the front and back upstairs areas I have 4320 sq ft. Is this right?
In Leasing Property - Asked by Tim S. - Oct 27, 2014
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Answer(s)

Lynn T.
Broker/Agent
New City, NY

The entire footprint of the building should be used in determining the square footage. This means the property should be measured from the exterior of the building when you measure it. When you buy commercial real estate it works the same way as when you buy an orange. You only eat the inside, but you have to pay for the whole orange, including the peel.

Oct 27, 2014
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Robert B.
Broker/Agent
Brookfield, WI

The use of the building may be more valuable than the sq ft. A specific user who needs the open seating space may be looking for something like this that is ready to use with little upgrades. Look at the market rent to a captive audience once a specific use is defined,. People will pay over sq ft rates if the floorplan is workable with minimal build out and the property is ready to occupy quickly.

Oct 28, 2014
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Greg S.
Broker/Agent
Irvine, CA

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
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

You measure the entire building, from a value perspective when I am evaluating commercial transactions I factor out in Mezzanine (and balcony area in your case) or below grade space to come up with a usable area.

Nov 24, 2014
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