L2 MR Appraisal Kent

Question 1

Can you run me through this example?

Answer 1

• Intrusted my client (TT) to provide a MA for an upcoming RR
• Client wanted overview of local market
• Inspected property
• Collated Comparable
• Adjacent unit most comparable
• Adjusted rental levels of comps to account for smaller size/short lease terms
• Provided my Client with a report with MA + market overview

Question 2

Why are Open Market Lettings more relevant than rent reviews or lease renewals?

Answer 2

Arms length transaction
Provide real time market evidence reflecting supply, demand and current rental expectations

Question 3

How did you determine which comparable were the most relevant for this appraisal?

Answer 3

There had a been a few recent transactions on the estate which I therefore prioritise. I just had to make adjustments for size, spec and lease length.

Question 4

How did you conduct the inspection of the subject property, and what key factors did you assess?

Answer 4

I inspected the property externally and internally, assessing key factors such as size, configuration, specification, condition, access, parking, and location within the estate. I also noted any distinguishing features, including eaves height, loading facilities.

Question 5

How did you structure your report to ensure the client clearly understood your recommendations?

Answer 5

I structured the report with an executive summary, property details, market overview, comparable analysis, rental assessment (ERV), and conclusion. I also included a rationale for adjustments made and a recommendation on the likely rental level achievable.

Question 6

How did you communicate any limitations or uncertainties in your appraisal?

Answer 6

I included a section on assumptions and limitations, highlighting factors such as data availability, potential market fluctuations, and the subjectivity of adjustments. I also advised the client on how future market changes could impact rental values.

Question 7

How did the local industrial market conditions influence your appraisal?

Answer 7

Kent experienced 9% rental growth in industrial in 2024
Strong demand and limited supply, especially for smaller units

Question 8

What Grade was the industrial unit?

Answer 8

Grade A

Question 9

What were the current rental values in kent?

Answer 9

£12 psf was agreed

Grade A - £12

Question 10

What does market sentiment mean?

Answer 10

Market sentiment refers to the general outlook or perception of market participants such as investors, developers occupiers and agents.

It’s essentially how people feel about the market—whether they are optimistic, pessimistic, or uncertain.

It is often influenced by factors such as economic indicators (interest rates, inflation, employment), government policies (e.g. tax changes), supply and demand dynamics, investment trends, political stability or uncertainty.

Question 11

How do you assess market sentiment?

Answer 11

Speaking to agents,
Property market reports, transactions, yield movements, occupier trends (demand/vacancy rates/growth forecasts),
Economic indicators (interest rates, GDP growth, inflation, employment levels

Question 12

How does current market sentiment influence lease negotiations between landlords and tenants?

Answer 12

Market sentiment is a key factor in market appraisals, as it directly influences rental values, lease incentives, and investment yields. In a strong market where demand for industrial space is high and supply is constrained, landlords can command higher rents and offer fewer incentives, such as rent-free periods or capital contributions. Conversely, in a weaker market with lower demand, tenants have greater negotiating power, leading to more flexible lease terms and downward pressure on rents.