Student Number

Task 1: 

You have been instructed by your client to complete a current market valuation on a single tenant industrial property located in Mt Wellington for mortgage security purposes. The bank has specifically requested that you value this property having regard to the direct capitalisation approach.

Your client has advised you that the building was subject to a new gross lease that commenced a year ago, to a freight company for a five-year term.  You have also been provided with the following information to help you complete the valuation:

Valuation date:                                                 Today
Gross floor area:                                               1000m²
Net floor area:                                                  950m²
Number of carparks:                                         20
Current gross contract rental:                            $250,000 per annum (including carparks)
Non recoverable operating expenses:                 $50/m² per annum
Current net market rental:
                   Warehouse:                                 $160/m²
                   Carparks:                                     $25 per space per week
Discount rate:                                                 9.00%
Market yield:                                                  8.00%
Next rent review:                                            1 year from today
Ratchet clause:                                               Yes
Rental payments:                                           Annual at end of period

Task 2: 

You have been asked to value an industrial building which was built in 30 years ago, by way of the Cost Approach. The property is currently vacant. You have been provided with the following assumptions/ determinants: 

Land area:           8,500 square metres

Assessed market land value rate: $300 per square metre plus GST

Warehouse gross floor area: 2,500  square metres

Office gross floor area: 600 square metres

Warehouse current building cost: $850 per square metre plus GST

Office current building cost: $1,750 per square metre plus GST

Professional fees: 9%

Life of building: 80 years

Construction period:            21 months

Discount rate/ finance costs: 6.50%

Depreciated site development $250,000 plus GST

Council rates:            $46,000  per annum plus  GST

Insurance premiums:            $7,000 per annum plus GST

Holding costs: Assume 0.50 period

Depreciation:           Use straight line

Use the cost approach answer template provided on canvas to estimate the value of this property.

Round dollar amounts to the nearest whole number.