Even before the pandemic, big tenants were shortening their lease terms in large cities like San Francisco and New York. COVID-19 has only accelerated that trend, with the hub-and-spoke model gaining popularity.
Lisa Knee, co-leader of EisnerAmper's national real estate practice, thinks many tenants will ask for short-term leases, which will drive down valuations. She believes early terminations could also put pressure on valuations.
"When somebody goes in there to determine the value of the property, there's going to be a risk each time a tenant leaves," Knee says. "Whether it's a short-term lease or you terminate a lease early, the appraisers or the banks are going to look at that because that's going to create risks."
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
