The valuer should investigate the following factors when valuing an investment building:

Type of construction, year built, standard of finish, size, presentation of the foyer, the amount of retail space (if any) and the potential for future development. Size and standard of foyer.
Generally, this factor is measured by distance from the centre of the CBD or a major transport node such as a railway station. This can be scaled from a locality map.
Internal areas, floor size, location of the service core (for example is it a central whole floor plant area?), toilets (male and female on separate floors?), tearooms, cleaners' facilities, fire escapes (for example is there direct access to the street or through the foyer?), size of floors and % of floor occupied
Fire detection and safety factors are most important, as the new owner may be liable for major costs in upgrading to current requirements. Does the building have sprinklers or smoke detectors only?

If there are only smoke detectors, there may be an outstanding order to install sprinklers.

Check the condition and availability of storage tanks, hydrants/fire hose reels, booster pumps etc. Are the floors fire rated? Are there any fire orders over the property by either the local council or an appropriate fire control body for example, the Fire Brigade (NSW) or the Fire Safety Committee (SA).
Location of the air conditioning plant. Are there separate air handling units on each floor (a zoned system)? The type of plant, including the number of cooling towers, chillers and boilers. Are they gas or oil fired? Age of plant and condition. Will a major overhaul be required in the immediate future?
Check and note on the plan the position of columns for a typical floor. Column free office space has more value than floors with columns because it allows the owner/tenants greater flexibility in subdivision design and a greater area to lease. Post stress concrete construction has the advantage of providing column free areas.
Any other services provided and their quality. Who owns the partitions?
Check for the presence of asbestos for all pre 1975 buildings. Removal takes time, is disruptive to the occupants and very expensive.
The lettable area efficiency of a building is an index calculated as follows:



LAI = lettable area index
NLA = net lettable area of building - see below.
GBA = gross building area – see below.

The National Public Works Conference standard for the measurement of gross floor area, fully enclosed covered area and unenclosed covered area is attached.

See measurement standards.

The fully enclosed covered area (FECA) can be equated to the net lettable area used by renters of commercial property and the unenclosed covered area (UCA) can be added if part of the leasing package.


Small professional offices may have an entertainment balcony off the boardroom which should become part of the net lettable area.


Note that the gross floor area (GFA) under the Conference standard is not the same as gross lettable area (GLA) used in commercial lettings. The gross lettable area is the area of the building measured by outside dimensions but ignoring external structural features such as columns.

The GLA is the area used to rent industrial/warehouse, houses and small commercial properties. To avoid confusion use either NLA or GLA after the measurement.


The valuer should be able to classify the subject building according to its power consumption. Inefficient buildings will consume much more power than modern "smart" buildings leading to functional obsolescence and higher operating costs. The valuer will have to determine whether or not such obsolescence can be cured.

The cost of power will increase for unusual electronic equipment, catering equipment etc in the building. It is not unusual to find buildings with an energy consumption of several times that shown in the tables below. This is caused by:
The range below been derived from temperate climates in Australia. In tropical and colder climates the energy consumption is higher:

megajoules/lpa/ m2

Air conditioning, fans etc: 60- 130
Air conditioning, refrigeration: 60- 100
Lifts: 25-  50
Public lighting & power: 49-  80
Carpark lighting & ventilation: 0-50

Total light & power: 185-410

Tenant light & power: 150-300

Building light & power: 435-710
Heating: air conditioning: 150-300
Heating: hot water service: 5-30


* Net lettable area.
Building: 2 500 operating hours/pa
Source: Property Council of Australia.

TOTAL ENERGY = the sum of electricity, gas, and fuel oil costs.


A number of the above factors affecting investment properties have been determined as Australian Standards for Occupational Health and Safety. These standards have become of such importance in the leasing of commercial buildings that the valuer must determine whether or not the subject building complies and most likely if it doesn't, it will have to be upgraded to the standards. The following is a summary of some of the most important standards:


In Australia most people work comfortably at temperatures between 20  260 Celsius. The preferred winter temperature is usually about 20 degrees lower than in summer. The Australian Standard AS 1837  1976 Code of practice for application of ergonomics to factory and office work recommends a temperature range of 21  24o Celsius for both offices and factories in summer.

Office temperatures can be localised. A desk situated in direct sunlight will be much warmer than the average temperature in the office and a desk situated directly under an air conditioning vent can be cooler than average. If there are continual complaints that the office is too warm despite the reading on the thermostat showing the temperature to be within the acceptable range, check that the thermostat has not been situated directly in the air flow from an air conditioning vent.

Some older personal computers can generate as much heat as small electric bar heaters raising local temperatures above the room average. This problem can be­ compounded by the clustering of computers in one particular section of the office.

Many of the complaints of discomfort in air conditioned offices occur in the wintertime. The cause of the complaints can be because if the air temperature is about 24oc this feels hot to the worker coming into the building from the outside air. The problem can be made worse if the air movement is less than 0.1m/second.


Humidity refers to the amount of water vapour in the air. The optimum comfort range for relative humidity is 40 60 %. Low humidity can cause dryness of the eyes, nose and throat and may also increase the frequency of static electricity shocks. Relative humidity above 80 %t can be associated with fatigue and reports of "stuffiness". If relative humidity is consistently high or low call in an air conditioning expert to conduct a review.


Ventilation refers to the movement of air and rate of fresh air input. Air movement of less than 0.1m/second can lead to stuffy rooms whereas above 0.2m/second draughts can be felt. The Australian Standard AS 1668 Part 21991 Mechanical ventilation1or acceptable indoor air quality sets out the absolute minimum requirements for fresh air. For each person a minimum rate of 10 litres/second/person for general office space or 10 litres/second for every 10m2 of floor space is recommended.


Air contaminants in the office can include bacteria, viruses, mould spores and dusts, solvent vapours or chemicals generated or used in the building. Air conditioning units that do not provide adequate amounts of fresh air can cause high levels of CO2. Stale air due to poor ventilation and excessive heat build up or humidity can also contribute to air contamination. Appropriate control measures for the reduction of air contamination include:


Environmental tobacco smoke is an indoor contaminant and there is growing recognition that nonsmokers may suffer adverse health effects through inhaling tobacco smoke. Organisations are increasingly expected to limit passive smoking risks in offices in the interest of their employees and clients.


Photocopiers and laser printers produce ozone gas during operation. It is possible to smell ozone at a concentration of between 0.01 and 0.02 parts per million (ppm), well below the Australian Exposure Standard of 0.1ppm. Ozone does not build up in the air.

It breaks down into oxygen quickly after is it released into the air. At concentrations above the Exposure Standard Limit ozone can cause eye and upper , respiratory tract irritation, headache and. temporary, loss of the ability to smell.

Investigations carried out by the WorkCover Authority of NSW indicate that modern photocopiers fitted with an ozone filter do not present any hazard to health, provided they are properly maintained. Preliminary investigations on laser printers indicate the same result.


The incidence of illness is significantly higher in some buildings than in others. The symptoms that characterize "sick building syndrome" are sore eyes, running nose, headaches, mucous membrane irritation, dry skin, dizziness and nausea. No single, specific cause has been found. It is believed that the syndrome is caused by a combination of poorly adjusted ventilation, air conditioning, temperature, humidity and lighting and psychological factors such as stress, management style and tedious work schedules.

Using the solutions to each individual aspect of the office environment covered here . may help in alleviating the symptoms of the sick building syndrome.


The basic requirements for adequate fighting are that the work must be easy to see and the light comfortable to the eyes. Illumination is measured in units of LUX (lumens/m2). Suitable light levels based on Australian Standard AS 1680  1990 Interior lighting are:

Sharp differences in illumination between adjacent areas should be avoided. Ideally the surrounding area should be slightly lower in luminance than the task area itself, except in special cases such as viewing outlines against a luminous background. Light should fall from the side rather than from the front to avoid reflections on the work surface.

Glare causes visual discomfort and is usually caused by light sources, which are too bright or inadequately shielded.


Colours determine the level of reflectance as follows:

White or off white is recommended for ceilings, as they should reflect greater than 80%of light. Walls should have a reflectance between 50% 75% and have a gloss or semigloss finish. Walls near windows should be light in colour whereas those away from windows should be medium coloured below eye level.

Floors should reflect less than 20% of light and therefore should be dark coloured. The use of colourful posters and pictures relieves the monotony of the surroundings and also provides relief from eyestrain.


A good rule of thumb for personal space is to allocate 6.25m2 per individual workstation, including furniture and fittings, but excluding passageways and amenities. 10m2 per person for the general, air conditioned office areas including passageways and amenities, is recommended in Australian Standard AS 1668 Part 2  1991 Mechanical ventilation for acceptable indoor air quality.


The capitalization method requires the determination of the expected rental net income to be received in the future. The valuer has to determine both the market rental value and existing rents (passing rents) of the property. For large complex office buildings in the CBD this part of the valuation is most difficult. In fact, some valuers claim that the determination of rental equivalents from a complex rental schedule is 90% of the valuation.

Commercial leases are becoming more complex, for example, a recent commercial lease in Sydney ran to 86 pages long and another consisted of 46 pages with smaller typeface! The valuer is concerned with a typical lease agreement appropriate for the subject property. The overall rent determined after analyzing the rental schedule is the market rent if the agreements have met all the criteria in the willing landlord willing tenant theory. The terms and conditions of particular importance in the lease agreement are:

Standard commercial leases require the tenant to “make good” the premises at the expiration of the lease. Being a standard condition adjustment would be required if the lease did not have a make good clause (the equivalent rent would need be lowered) or the make was particularly onerous (the equivalent rent would need be raised). An example of the last would be a situation were the floor plate and ceiling panels were in imperial units and it is difficult to find non metric parts.

Leases are generally standard within a building but this may not always be the case. In the private sector, the most common commercial lease, is the Property Council of Australia Lease. The standard form public sector lease may be the Commonwealth Lease for Commonwealth tenants. Rental levels of major leases are available from the Land Titles Office (LTO) if registered.

After registration the information is public domain regardless of any attempt by the building owner/agent to keep it confidential. If the details of leases in the subject building cannot be determined because of privacy clauses then a disclaimer to that effect should be added to the valuation report.