Here is an example.

You have 2 recently completed identical office bldgs sitting side by side. One is fully leased the other is vacant. The fully leased property sells for $12m. How much should the vacant building sell for.

The investor or developer would work it backward. She would start with $12m and deduct say $1m for the HARD cost of improvements-drywall, labor, toilets, etc.

Then she would deduct the SOFT-intangible (non physical) costs. These include leasing commissions, mtge payts, insurance, re taxes, utilities, investor overhead (staff, etc), etc until such time as you receive the first rent check from the tenant at time of occupancy. Assume you compute this cost at $1m (usually has a contingency built in) then the investor/developer would likely offer $10m for the vacant bldg.

The latter represents the intangibles and this is the mistake that most new developers make-they underestimate all of the soft costs (after initial bldg completion) which can be a big number. I know because i made that mistake.