If you’re a commercial real estate owner, you don’t need us to tell you the market is in rough shape. The numbers speak loudly enough. According to data collected by commercial real estate information and analytics company CoStar, 232 million square feet of surplus commercial real estate is on the market. That’s twice pre-pandemic levels which means commercial appraisals are more important than ever for anyone looking to sell right now.
How Did We Get Here? And Where Are We Going?
When the Covid-19 pandemic hit, offices were vacated and workers were sent home. Contrary to many people’s expectations, this abrupt pivot to remote work actually, well, worked. Productivity didn’t plummet as predicted; the economy (mostly) hummed along. And now that we’re near the other side of things, employees are reluctant to give up the freedom they have gained. They’re not returning to the offices.
Some companies are forcing workers back, sure, but many others are accommodating remote and hybrid arrangements, which means that the demand for commercial real estate is lower than ever. The need for office buildings isn’t about to disappear, but it is undergoing monumental change.
University of Pennsylvania Wharton School of Business professor Joseph Gyourko says it’s too early to predict where, exactly, things are going but we know that when commercial leases begin expiring in five to seven years, the landscape won’t be the same. Companies that provide flexible working arrangements will reconfigure their offices. Operations will shrink and the newest, best buildings will see the greatest demand. Older buildings may be converted into apartment complexes and so the impact will spill over into the residential real estate market.
Nobody can be sure how this will all settle, which is why prices are so volatile. Selling commercial real estate is thus an especially tricky task at present. Getting the highest value appraisal depends on the appraiser taking a deep and dynamic look at where things are and where they’re going, and that’s no easy task.
In view of the uncertainty rattling the market, many analysts are cautioning companies against selling. Individual circumstances nonetheless sometimes intervene, and not everyone can abide by conventional wisdom. Sometimes there are forces greater than the market at work. For those in this position, identifying an appraisal company experienced in commercial appraisals is especially important.
Have a Question for the Appraisal Experts?
To learn more about how you can get your highest value appraisal despite these turbulent times, do not hesitate to contact Appraisals Unlimited either by calling 781-449-7600 or emailing us at firstname.lastname@example.org.