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PANDEMIC RE-DEFINING RISK

One of the words used to describe the pandemic is "accelerator". Certain commercial real estate asset classes were pushed into being obsolete due to the onset of the pandemic. What is not spoken of often is how it has re-defined risk. A few months prior to the pandemic taking hold, our firm was retained by a commercial landlord of a medical office building that was underperforming. Our role was to conduct a highest and best use study (i.e. re-positioning) and make recommendations on how to maximize return. Months after the impact of the pandemic began to show, what was an obsolete building requiring a re-positioning suddenly became more valuable due to the security of office tenants that are medical practitioners notwithstanding the low financial return. The landlord opted for security over risk from alternate uses. Ultimately, the project went from a potential re-development into one that made the best of the current asset through modernization of the capital improvements. #recg #highestandbestuse #repositioning #risk #commercialvaluations

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