With the holiday parties before us, and the rotten financial news about the state of Europe keeping investors cautious, perhaps it is time to reflect on change in the commercial real estate industry.
Smart commercial real estate buyers are planning for the contingency that a debt provider may fail or withdraw financing even after a commitment is issued.
The “smart” MBA money knows that commercial real estate assets are priced based on the present value of future cash flows discounted at an appropriate risk premium.
Unless you are buying trophies in select cities such as New York and San Francisco, fair valuations for most assets are dramatically below those established at the market peak.
As we watch the gasping Euro economy, we know that the sequel will be staged in the United States, unless generational leadership is shown by the US bipartisan debt-reduction committee.