Commercial Property Valuation Question - Skagit County, WA

[Dan Toomey]

Hello!

I am relatively new to the real estate game and was hoping there might be a few commercial real estate folks out there willing to pass some knowledge onto a relative newbie. 

I recently purchased my first commercial property which is a 3,650 square foot medical building located in Sedro Woolley, WA. The building has two suites. The larger side is about 2,500 sq ft and is currently rented for $2,000 a month. This side has a three year lease which expires in 2020. The smaller side is about 1,100 sq ft and is currently vacant. 

The smaller side (currently vacant) has been recently updated and I feel I could get around $1,100. With this side occupied at $1,100, the building in total would gross $37,200 with net operating income of around $25,000. This NOI includes a R&M discount of $4,000 and a 6% vacancy discount, but does not include a management fee. Applying a 9% CAP rate to this building, I get an estimated value of around $280,000. I'm using a 9% CAP rate because the building was built in the 1950's.

I'm wondering if I would be better off trying to get the smaller side leased and then listing the property or if I should list the property with the smaller side vacant. If I can get both sides leased the building would be more attractive to an investor looking for cash flow. However, if I can find a buyer looking for a 1,100 sq ft office space the building would be more valuable with the smaller side vacant. 

Any advice or input on this would be greatly appreciated!