REOC San Antonio
Commercial Real Estate Since 1974   
Kim Gatley
enior Vice President & Director of Research at REOC San Antonio

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CRE’s Pricing Disconnect

There is a disconnect in the public and private markets and across sectors.  Some small disconnect isn’t anything new but there’s been a significant repricing on public assets since COVID while valuations on the private side didn’t moved as much, especially earlier in 2020.  That said, the positive vaccine news increased valuations by the end last year which has closed some of the gap between the private market and the public market.

But the divergence in pricing across sectors remains. Retail properties, for example, have been hardest hit.  Retail sees the immediate link between the revenue a tenant makes in a store and the rent it pays for that store space.  Meanwhile, Industrial properties have continued to be very strong and even accelerated in some markets.

Office properties, on the other hand, have been in the middle because the link between the revenue of the company and the worth to the tenant is less direct. So, most of the tenants are going to pay rent through COVID, even though they’re not using that space. But that could soon change, as office tenant rethink their long-term space need plans, which could hit office valuations.

Click to read entire article: CRE’s Pricing Disconnect, (2/18/21)


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