Understanding Industrial Real Estate Appraisals
What is an Industrial Appraisal?
An industrial appraisal is a professional estimate of the market value or replacement cost of industrial properties, including manufacturing plants, warehouses, logistics hubs, processing facilities, and resource-based sites. These appraisals are used for financing, insurance, taxation, acquisitions, asset management, and legal purposes.
Industrial appraisals differ from standard commercial appraisals as they account for specialized infrastructure, zoning, and operational requirements unique to industrial properties.
Approaches to Value in Industrial Appraisals
Direct Comparison Approach (Sales Comparison)
Compares the subject property to recently sold industrial properties.
Adjustments are made for differences in size, condition, location, zoning, and special features.
Income Approach (For Income-Producing Industrial Properties)
Determines value based on rental income, lease terms, and operating expenses.
Cost Approach (For Unique or Specialized Facilities)
Estimates value based on the cost to replace the property with a similar one, accounting for depreciation and land value as-vacant.
Used for custom-built facilities, heavy manufacturing plants, and high-tech industrial sites where comparable sales are limited.
Types of Industrial Properties Appraised
Warehouses & Distribution Centers – Storage, fulfillment, and logistics hubs.
Manufacturing Plants – Heavy and light industrial production facilities.
Processing Facilities – Food, chemical, lumber, and resource-processing plants.
Cold Storage & Refrigeration Facilities – Temperature-controlled logistics spaces.
Heavy Equipment Yards – Open industrial land used for storage and operations.
Resource & Mining Infrastructure – Sites with crushers, conveyors, mills, and refineries.
Cannabis & Agricultural Processing Facilities – Indoor and greenhouse cultivation sites.
What Factors Are Considered in an Industrial Appraisal?
Building Size & Layout – Square footage, floor load capacity, ceiling height, and loading bays.
Zoning & Land Use – Industrial classifications, environmental regulations, and permitted uses.
Construction Type & Materials – Steel frame, tilt-up concrete, reinforced foundations, and fire-resistant components.
Mechanical & Utility Systems – HVAC, electrical power capacity, ventilation, and water/waste systems.
Specialized Equipment & Infrastructure – Cranes, rail spurs, truck bays, reinforced flooring, and hazardous material handling.
Location & Market Demand – Proximity to highways, ports, rail access, and workforce availability.
Site Improvements – Parking lots, security fencing, and stormwater drainage.
What is NOT Included in an Industrial Appraisal?
Certain items are not included in the appraised value of an industrial property because they are considered movable chattels rather than part of the real estate. These items may have value, but they are not classified as real property and are typically appraised separately under a machinery and equipment appraisal.
Movable Equipment & Machinery – Freestanding manufacturing equipment (CNC machines, lathes, presses), forklifts, cranes, and vehicles (unless permanently affixed), portable generators and air compressors, computers, IT systems, and servers.
Inventory & Supplies – Raw materials and finished goods, spare parts, lubricants, and consumables, packaging materials.
Temporary & Portable Structures – Shipping containers and sea cans, movable sheds and temporary storage units, office trailers and portable workspaces.
Why is an Industrial Appraisal Important?
An industrial appraisal provides an accurate, well-supported valuation that helps businesses, investors, and lenders make informed financial decisions. Whether for purchasing, selling, financing, insuring, or redeveloping industrial properties, a professional appraisal ensures that property values reflect real market conditions and operational needs.