How would you value an office building? Or retail center, or hotel, or apartment complex?

There are 3 generically accepted principles when valuing a real estate building. The asset class will have peculiarities that are unique, and will further effect how you utilize these 3 types of valuation

1.) Direct Capitalization Approach: Simply, the NOI divided by a cap rate. Cap rate is typically derived by looking at what's trading in the market. NOI can be T12, in place, or F12. Most will use F12, though a stingy buyer in a buyers market can easily get away with the idea of "im not paying for NOI that isn't yielding now". Best Property Type Fit = Apartments

2.) Discounted Cash Flow Approach: Involves a 10yr (time can vary) cash flow projection. Commonly derived from an accepted Argus model that takes into account rent rollover, vacancy, lease types (gross, NNN) and opex. Apply a sale price at the final year of your cash flow projections -- often using a NOI/cap rate approach. Take these annual cash flows +sale price and discount it back (using a discount rate %) to a present value - aka the valuation. Best Property Type Fit = Office, Retail, Industrial, Hotel

3.) Sales Comparable Approach: Often most preferred by appraisers, it simply looks for a comparable asset (type, age, quality, location) that has recently been sold. Then apply the $/unit or $ PSF to the building in question. Best PRoeprty Type Fit = All types.

Often times during a valuation you would want to look at all 3 options. Sometimes there are issues that make one or the other less accurate. For example, there might not be a comparable asset that has traded recently in the submarket you're located - so you wouldn't put as much weight on the sales comparable value. Say you are selling an apartment that has a stabilized income statement and a sales comp within the last year...you would likely use those two options and not place any weight on the DCF approach.

hope this helps. Assuming this is for an entry level interview, judging by the question, you may want to add in some technical understanding about how to derive the value. i.e. knowing you to get to your NOI, and what effects it...also knowing the relationship between cap rates and value, etc..