How is industrial property valued?

The capitalisation approach treats a property as an income-producing asset: take its net annual income and divide by the yield (cap rate) that similar assets are trading at, and the result is an estimate of value. It's a quick, widely used method for leased property, and it's the same logic that links rent and price in a sale and leaseback — a higher sustainable rent, at a given yield, supports a higher price.

Direct comparison instead looks outward, at what genuinely similar properties have recently sold for, adjusting for differences in location, size, specification and lease profile. It's especially useful for owner-occupied or vacant property where there's no income to capitalise, and it grounds a valuation in actual market evidence rather than a formula.

Discounted cash flow takes a longer view, modelling the property's income and costs — including future rent reviews, lease expiries and any capital works — year by year, and discounting that stream back to today's value using a chosen discount rate. It suits more complex assets where income isn't flat over time, such as properties with staged rent reviews or upcoming vacancy risk. In practice, valuers often triangulate between methods rather than relying on just one.