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Stuck between tenants that are demanding short-term, flexible leases and a financing and regulatory system that demands long-term leases, landlords risk being forced to choose between two unprofitable decisions.

In small commercial real estate markets, valuations can dictate sale prices rather than the other way around. Will this small market feature soon be coming to larger real estate markets?

With the paradigm shift in office demand and valuation methodologies lagging behind this new reality, investors are facing a tough balancing act–how much should they focus on valuation versus maintaining Net Operating Income levels? While landlords understandably don't want to hurt values and financeability in the short-run, Net Operating Income is what pays the bills and it has to be prioritized.

As the old joke goes, when it comes to a Ham & Egg sandwich, the Chicken is involved, but the Pig is committed. The Owner-Operator path is for Pigs only—delivering Space-as-a-Service yourself means fully committing to becoming an operating business. If done right, it'll mean higher profits, but expect valuations and financing to be an uphill battle.

Management Agreements are growing in popularity, but does everyone truly understand the risks and rewards? By directly exposing Landlords to potentially volatile Space-as-a-Service income, having a strong financial model that accurately reflect the Management Agreement becomes key for both Landlords and Operators.