How to Value CRE Rents After the Pandemic

Commercial real estate tenants are expecting and waiting for rents to drop. The industry is notoriously slow in responding to new market conditions, and most active players in the market, and either side of the table, are expecting pricing to come down over the next six to 12 months.

“Over the past few months, I have heard many tenants say the phrase ‘is that pre-COVID pricing?’ in response to a landlord quoted asking rent,” Xan Saks, partners and co-founder of Beta, tells GlobeSt.com. “From New York to Los Angeles, it is clear that there is an overwhelming belief by tenants—and prospective tenants—that commercial real estate rents have come down as a result of Covid-19. While it would certainly seem logical that mandated store and office closures, shelter in place orders, and continued uncertainty surrounding the virus would lead to reduced rents, the question we need to answer first is how do we value commercial real estate in a pre versus post COVID world?”