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Price Per Square Foot Formula:
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Price per square foot is a common metric used in commercial real estate to compare property values and assess the cost efficiency of space. It represents the cost of one square foot of space and is calculated by dividing the total price of a property by its total area.
The calculator uses the simple formula:
Where:
Explanation: This calculation provides a standardized way to compare properties of different sizes and values in the commercial real estate market.
Details: Calculating price per square foot is essential for commercial real estate investors, buyers, and appraisers to make informed decisions, compare properties, and determine fair market value.
Tips: Enter the total price of the commercial property and the total area in square feet. Both values must be positive numbers to calculate an accurate price per square foot.
Q1: Why is price per square foot important in commercial real estate?
A: It provides a standardized metric to compare properties of different sizes and locations, helping investors make apples-to-apples comparisons.
Q2: What is a good price per square foot for commercial property?
A: This varies significantly by location, property type, and market conditions. Office, retail, and industrial properties all have different typical price ranges.
Q3: Does price per square foot include land value?
A: Yes, when calculating for an entire property, the price per square foot includes both the building and the land it sits on.
Q4: How does price per square foot differ from rental rates?
A: Price per square foot refers to purchase price, while rental rates are typically quoted as cost per square foot per year for leasing commercial space.
Q5: Are there limitations to using price per square foot?
A: While useful for initial comparisons, it doesn't account for property condition, layout efficiency, location specifics, or additional features that affect value.