By John Smollen, Head of Exchange Traded Products and Strategic Relations, MIAX, and Jesse Stein, Managing Principal, Advanced Fundamentals LLC
Consider the value of a 15-story Class B office building with four elevators in the central part of any American city.
While its value may have always fluctuated, based on some tangible, measurable factors you could estimate closely its value in February 2020. Then came the pandemic.
All the tenants are now working successfully from home. You don’t know how many will renew their leases or what office space in general will be worth post-pandemic.
Now multiply that scenario tens of thousands of times across every class of commercial real estate and you begin to see the scope of the commercial real estate valuation problem.
While it is certainly true that the pandemic has ravaged many classes of assets, those investment sectors often have something previously unavailable