Valuation
Key variable: vacancy risk
Astrid Grantner-Fuchs MSc MRICS
The vacancy risk has a significant impact on the sustainable achievable income and thus the market value of commercial space.
Managing Director EHL Immobilien Bewertung GmbH
In the income approach, vacancy risk is typically captured by applying percentage discounts to the gross income and by taking into account a market-standard risk of rental loss. The amount of these discounts depends on the type of proper- ty, the quality of the location, the rental situation, and market dynamics. The starting point for the analysis is an inventory : • Current vacancy rate • Remaining terms and structure of rental agreements • Creditworthiness and industry risk of tenants • Competitive situation at the location • Historical rental periods for comparable properties
For commercial space, the assessment of re-letability is also particularly important: • Attractiveness and flexibility of the floor plans • Technical equipment and state of modernization • Visibility, accessibility, and foot traffic Methodologically, vacancy risks are quantified in two ways: 1. Market-based derivation: Compari- son with vacancy rates and new lease durations in similar properties and locations. 2. Property-specific forecast: Scenario
In tight markets with structural changes in demand – for example, due to e-commerce or changes in consumer behavior – a more conser- vative risk assessment is required. In such situations, the valuation is based on a flat-rate discount for structural vacancy applied to the determined value. In weak locations, this can be as high as 30 %. As with the determination of sustainable rent, the vacancy risk is not a flat-rate figure, but requires an individual assessment specific to the property and market.
analyses of future occupancy rates, ta- king into account planned investments or expected changes in demand.
Reference projects: Valuation
ShoppingCity Seiersberg
DEZ Shopping Centre Innsbruck
This third largest shopping mall in Austria and the largest in the pro- vince of Styria is only 20 minutes by car from the Graz city centre. The location also connects direct- ly with the A9 motorway.
The DEZ in the Amras district of Innsbruck has roughly 130 shops with an annual visitor frequency of nearly 7.5 million as well as direct connections to the Inntal autobahn A12.
Total space Customer
88,400 sqm Finanz. Bank.
Total space Cusomter
36,000 sqm Finanz. Bank
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Retail Market Report
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