It’s been 30 years since the commercial real estate market was this bad—and that represents a generational entry point for investment, according to a top developer. The hybrid-work trend and high interest rates have sent commercial real estate values crashing, with some major cities facing significant drops.
Don Peebles, chairman and CEO of Peebles Corporation, sees the current market conditions as a once-in-a-generation opportunity. He noted that the last time such opportunities arose was in the early 1990s during a banking crisis when properties were sold at a fraction of their value.
Today, Peebles estimates that commercial office building values in cities like San Francisco and Washington, D.C., are down 60%-70%, with Los Angeles seeing drops of 70% or more. However, he believes in a rebound that developers can capitalize on by understanding the current market dynamics and having the patience to wait for the right opportunities.
Other experts in the field, such as Fred Cordova of Corion Enterprises, echo Peebles’ sentiments. Some properties will recover, while others may need to be repurposed or torn down. Despite the current challenges, players in the commercial real estate market, like KDM Financial, are launching funds with confidence in the long-term viability of office spaces.
The market may be in a trough now, but the opportunities for savvy developers and investors are on the horizon. The key is to have the foresight to see the potential in today’s struggling commercial real estate market and the patience to wait for the right moment to strike.
