With facilities across the globe, international coating and laminating manufacturer FLEXcon has a significant investment in commercial real estate.
To determine whether the rent being paid in each market was above, at, or below market value, FLEXcon turned to Allegro for a comprehensive broker opinion of value.
The purpose of the project was to conduct an analysis of market rents for FLEXcon leasehold interests at five of its locations across North America and the United Kingdom, and to compare the results against the rates FLEXcon was paying at each of these facilities.
To achieve the most accurate analysis, Allegro completed the following broker opinion of value steps.
Conducting International Market Analyses
To understand the conditions of FLEXcon’s five previously identified markets in the U.S. and the UK, Allegro conducted separate market analyses for each. The analyses encompassed any trends impacting the current state of commercial real estate, including:
- Occupancy and vacancy rates.
- Sales volume.
- Market absorption.
- Major industries and employers.
- Unemployment rates.
The goal of this stage was to create a list of critical real estate and market trends that may be affecting the value of FLEXcon’s properties.
Evaluating FLEXcon Properties for Positive and Negative Attributes
Following the market analysis, Allegro reviewed FLEXcon’s facilities for advantages and disadvantages. The team surveyed each property for positive building attributes like updated HVAC or amenities, and for any functional obsolescence or deferred maintenance issues. The sum of these attributes relative to comparable properties ultimately affect the overall valuation of the properties.
Identifying and Reviewing Comparable Properties
To best determine the true value of FLEXcon’s facilities, Allegro ran a comparable analysis. During this stage, the team identified similar properties that had recently been leased or sold, or were being marketed for lease or sale, in each of the five markets.
The team specifically reviewed comparable properties with similar:
- Location.
- Zoning.
- Size.
- Age.
- Physical condition.
- Amenities.
Allegro also analyzed comparable properties that were being developed or were under construction, as they would likely impact the market in the near future.
Valuing FLEXcon Facilities and Reporting Findings
At the culmination of the project, Allegro reconciled existing market conditions and the list of comparable properties to value FLEXcon’s facilities. During this final phase, the team adjusted comparable properties to accommodate for differences in condition, amenities, location, size, age, and lease structure. Once complete, the full report and valuations were presented to FLEXcon.
Ultimately, Allegro’s broker opinion of value provided FLEXcon with a comprehensive understanding of their property values in comparison to current market dynamics, allowing the team to make financially sound commercial real estate decisions moving forward.
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