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Originally Posted by sonick
Just one data point but the lease in our downtown Vancouver office is due next year, the landlord has put an offer of reduced and free rent, where the total cost of the 5 year renewal is actually coming out to slightly less than the last 5 years of rent.
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Office market has been hammered hard after COVID. That’s why you see many prime office real estate being sold for pennies on the dollar. An office in San Francisco last trades hands for something crazy like 12m. It might sound a lot, but when you consider the transaction before that was 318m, it’s basically below even land cost.
There are a lot of types of commercial re. One needs to know what to look out for. That’s the hard part. But one also can’t just say commercial RE is trash because this one type of commercial re is doing bad. If you look at numbers of data centers and logistic warehouses in major arteries, they command prices you can’t imagine based on their initial investment. I’ve seen returns of over 100x based on works of about 3 years.