A New Wave in Commercial Property Valuation Prompts Questions About the Market’s Future

Since the pandemic, remote work has grown exponentially in popularity. Millions of companies worldwide have turned to this new mode of working to overcome quarantine restrictions and retain employees. However, remote working has become less common as return to the office mandates have increased. At the end of 2023, only 26% of American households had a remote worker. While remote working has become less glamorous, commercial real estate is still threatened by this cultural trend.

According to a report, work-from-home patterns have threatened commercial property valuations, particularly in office blocks. Investors and the banks or private equity firms that back them have struggled to service their debt as inflation and interest rates have surged in the last few years. Although the pressure to enable remote working may be lessening, commercial real estate needs to reflect on its uncertain future.

Todd Rissel, founder of e2Value, a leading SaaS platform that provides asset valuation tools, says that commercial real estate isn’t prone to collapse because of remote working. However, the future of working has already begun shifting. Stakeholders must reexamine what these shifts mean for insurance and valuation on a wider scale.

While Todd agrees that commercial property valuations were dropping due to remote work, he asserts that this trend is unlikely to replace in-person working. This point is further supported by the industry’s trends throughout the past few years. As Todd explains, the residential market was the first to experience dropping valuations, then it infiltrated into the commercial. The founder’s view is informed by his company’s 25-year reign in the industry and his expertise in the insurance sector.

For office buildings, decreasing property valuations have resulted due to severely underutilized structures with very few staff coming in each day. The risk for insurance companies and owners is heightened due to the lower occupancy. Todd notes that this trend spells out danger for insurance claims and financial losses.

“If there is no one at your building to recognize issues, the infrastructure will degrade quickly,” says Todd. “Small problems will snowball into major concerns that could ultimately lead to permanent damage that forces tenants to relocate for multiple years depending on the severity. This interferes with company operations and can cause millions in lost profits.”

With the explosion of artificial intelligence technology, some companies are poised to have fewer humans dwelling in their offices, creating the same issue remote work did. On the other hand, AI companies are springing up and will need space. Since the industry is rapidly changing, it’s hard to predict what 2024 will hold for commercial property investors and financiers. However, e2Value’s full-feature asset valuation services will emerge as a leader in supporting these owners as they navigate through the changing circumstances.

The company supports the valuation of residential, commercial, farm and ranch, and other structures. From small retail stores to hospitals, e2Value provides custom valuation tools that can calculate replacement costs and actual cash value for virtually any commercial structure. This technology can be integrated with a company’s existing systems, seamlessly joining an organization’s workflow. e2Value’s Pronto^Ⓡ  software simply requires a property address to generate a complete valuation report with images, measurement tools, and data scoring.

Todd Rissel and other operators in asset valuation, insurance, and real estate encourage industry professionals to stay informed and agile during this innovative period of societal development. Change is bound to happen and technology is our most reliable resource for weathering issues in the commercial and residential markets.