Do rising home prices affect nearby commercial property?
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[{"id": "gjcc1rf", "text": "If it\u2019s sat vacant for a while and comparable homes would sell for a lot more it\u2019s highest and best use could be redevelopment into a single family house (especially if the spread is that wide, assuming $500k buys you the land on which you could build a $2mm house). If it\u2019s going to be an eyesore even if you don\u2019t have zoning the town might get behind it. Good luck", "replies": [], "depth": 1}, {"id": "gjcccch", "text": "Commercial appraisal is generally a combination of income and comparable sale approach. Home value doesn't matter if the homes are on 10 acres and there are only 50 expensive homes nearby, or if the commercial property has the zoning and potential to become homes. Basically, you dont have enough information here to tell you anything.", "replies": [], "depth": 1}, {"id": "gjccgq1", "text": "Operating commercial property is priced based on cap rate on NOI. If you are looking at a vacant property there is going to be no NOI to value it. Price will be based on the highest and best use and the income you could generate in that scenario. A developer would look at what IRR they could achieve by purchasing the property, redeveloping by converting to residential or finding a commercial tenant and then ultimately selling or refinancing. \n\nAnother option would be an owner/occupier like a dentist office that might be interested in the property for themselves and therefore willing to pay a bit more. \n\nMarket forces are still the same. It\u2019s worth what someone is willing to buy it for.", "replies": [], "depth": 1}, {"id": "gjcddr9", "text": "Strictly speaking no. In Silicon Valley the residential homes kept going up during the shut down of business offices. Vacant commercial buildings are having tough time even finding tenants often sell less than 2020 with no prospects. So SFBA esp Silicon Valley slump in commercial rental rates, property values are lower $/sf than before the pandemic. Some look like as low as 5-10 years ago while residential is at least 2-3X.", "replies": [{"id": "gjcli9o", "text": "The other day I was reminiscing about the very small office I had in a small city downtown location.  I'd spend a few days a week there - and would occasionally sleep there, and I can imagine a setup like that one being hugely popular in these trying times.  \n\nThere was a great breakfast and lunch place on the first floor, that's probably just doing take-out now, and bathrooms for tenants with keys.  It really wasn't a suitable place to live (and the lease probably didn't allow it), but there was 24/7 access, and it would be perfect for someone who needs time away from a stressful household.\n\nAnd sure enough: [https://www.easyoffices.com/us/office-space/ca/silicon-valley](https://www.easyoffices.com/us/office-space/ca/silicon-valley)", "replies": [{"id": "gjcsbk5", "text": "I agree. I think small offices are going to trend, with many working \u201cfrom home\u201d in their personal office 10-15 min away", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gjcusyv", "text": "Heck no. COVID prime example. Housing going up and commercial (office and retail) getting slaughtered", "replies": [], "depth": 1}, {"id": "gjdokh4", "text": "Utility, Scarcity and Effective Purchasing Power. Land Value plus building value equals total value", "replies": [], "depth": 1}, {"id": "gjfafee", "text": "Have a look at brookside in Kansas city. Flipper come  in, goat yoga follows.", "replies": [], "depth": 1}, {"id": "gjnxizn", "text": "It could in some rare instances when a neighborhood is gentrifying. If more affluent people move in and it changes the neighbor, it will affect the tenant quality, thus being able to raise rents and compress cap rates. Besides that, if you live in a middle class neighborhood where houses went from $300k to $400k, chances are it will not change, since the consumption and the spending power of the people moving in the area has not change.", "replies": [], "depth": 1}]