Insights & analysis
Thoughts and insights about valuing real estate. Regularly updated with posts that apply to what is happening today.
Insights
Commercial real estate faces a fundamental challenge: As properties become more operationally complex, the tools used to financially analyze them aren't keeping pace which in turn risks the investability of the asset class. Our vision for the future of commercial real estate cash flow modelling and reporting.
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Billions of dollars in office assets risk becoming stranded—not because of physical obsolescence, but because of how we value lease terms. As tenants demand more flexibility, outdated valuation methods have become a major bottleneck. In London this past March, Sam presented why traditional models are falling short, explores alternative approaches, and lays out a practical path forward.
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Sam and expert Marc Morin from Seva Commercial Real Estate look at potential options for repositioning an office property—a building once owned by Sam’s great-grandfather over a century ago. The building is 100% leased today, but with key lease rollovers ahead, it’s time to model some scenarios in ReturnSuite.
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Podcast
In early June I had the opportunity to join Caleb Parker for a special episode of his podcast the Caleb Parker Show. We covered a wide range of topics, including the future of financing, valuations and the potential shift towards permanent capital in office real estate. We also chatted about my experience as a landlord, shifting from traditional office to Space-as-a-Service and the challenges with valuing and financing flex properties.
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Very few industries offer investors 20x multiples on earnings. Software is able to achieve high multiples through high levels of earnings growth, while real estate has offered investors bond-like safety. Office investors are currently facing a double headwind–not only has the Risk-Free Rate increased, but market sentiment has also moved against offices. In order to stay in the 20x club, we need to re-look at what levers are available to us.
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Insights
Imagine not being able to get insurance for your car because too many of your neighbours had already gotten from the same local company. Why doesn't this happen?
This situation sounds similar to the position Landlords find themselves in—forced to limit flexible leasing options because they can only afford to absorb a limited amount of flexible leasing risk. Insurance companies this problem of concentrated risk by turning to the reinsurance market. Can Landlords do something similar?