In the movie Smoke Signals, screenplay by Sherman Alexie and based on his short story collection The Lone Ranger and Tonto Fistfight in Heaven, a pair of young women are always driving a car backwards. There are extensive symbolic explanations of why this happens. According to Alexie, such commentary misses what really happens. They do because it's an old car on a reservation and the transmission is shot, so it only runs in reverse.

The duo is stuck with one mechanism when they need another. A new paper by Danny Ismail and Harsh Hemnani of Green Street suggests that many CRE investors and owners are doing the same thing. They focus on net operating income, but the authors say that is looking in the past because the metric "is akin to a big ship that turns very slowly." What it tells you might have been accurate a year ago but doesn't say where things are going.

As the paper notes, the main approach to valuation involves dividing a yield into a cash flow metric. "The conversation of the last year has been focused on the interplay between inflation, interest rates, and cap rates," they said. "In other words, 'denominator risk' dominated."