Offices with services or serviced offices? Exploring the valuation issues

Abstract

This paper explores the conceptual and methodological issues relating to the valuation and appraisal of commercial properties where revenue generated by the provision of additional services constitutes a significant proportion of the total income flow. The paper focuses on two main areas. First, the valuation and development of the serviced office model is discussed. Second, the implications of the growing interest of landlords in acting as access managers and suppliers to their tenants are considered. The US debate on business enterprise value and hotel appraisal is reviewed. It is concluded serviced offices owner occupiers have two main assets – the tangible property asset and intangible business asset(s) – which are symbiotically linked but separable. In order to appraise these interests valuers need to be able to value businesses and property since the income flows derived from service provision will have different drivers and risk profiles than pure property‐derived income flows.