Which assessment method is primarily used for commercial properties?

The income approach is the primary assessment method used for commercial properties because it focuses on the revenue-generating potential of the property. This approach evaluates the value based on the expected future cash flows that the property can generate, typically through rents or other income sources.

When assessing commercial properties, assessors consider factors such as rental income, operating expenses, and capitalization rates to determine the value. This method is particularly relevant for income-producing properties like office buildings, retail centers, and multifamily dwellings, as it reflects the economic utility of the property rather than just its physical characteristics.

Other methods, while useful in certain contexts, may not capture the financial performance of commercial properties as effectively as the income approach. For example, the cost approach considers the cost to replace or replicate the property, which may not reflect its market performance. The sales comparison approach relies on recent sales of similar properties, which can be difficult to apply in markets with limited comparable transactions for commercial real estate. The market value approach can be broad and not specifically tailored to the revenue considerations that are central to commercial property assessments.

Therefore, the income approach stands out as the most appropriate and widely accepted method for valuing commercial real estate, making it the ideal choice in this context.