Google searches and A.I. often don't deliver the most important of all value-adds, context. Have you read a headline that says:
"15% of the Commercial Property Sector At Risk Of Over-Valuation"? I haven't. Ever. Anywhere. Offices, which are the biggest concern for over-valuation and default right now, make up less than a fifth of commercial real estate. Might we ever see a headline that references the other 80-85%?
What percent of the total commercial property investment market in 2023 does each sector represent? Here goes:
- Multifamily properties account for about 33.7% of the total commercial property investment market.
- Industrial properties represent approximately 24.9%
- Offices account for only 14.7%
- Retail only accounts for about 16.4% of commercial buildings.
- Mega warehouses (50,000sf-plus) account for less than 1%
- Hotels are about 7.4% of the total.
- And roughly 1.9% is for 'other', maybe data centers?
These are not alternative facts. Or politically motivated in any way. Or designed to dilute the seriousness of some over-leveraged and/or overvalued commercial assets. This is simply another example of how without doing a deeper analysis of CONTEXT, we all lose out because we base our conclusions and summaries and feelings, and often our headlines and policies, on selective facts, without complete, accurate data....and/or context.
In this lies the greatest value-add of professional agents. Taking the above into context, if about 15% of all commercial property is office space and 50% of that sector is grossly overvalued, that represents around 7.5% of all commercial property, probably less. And yes, some buildings in other areas are overvalued too and prone to default, mostly due to over-leveraging, the false assumption that interest rates never rise, and rather ambitious proforma's of rent growth. Now.....who wants to volunteer a more accurate headline?
