Over the past year, we’ve had more conversations about property valuation than ever before—and for good reason. In many commercial real estate sectors, especially office, we’re seeing meaningful declines in asset values as demand patterns shift, financing costs rise, and investor sentiment cools. For owners, lenders, and prospective buyers alike, this trend is not just a pricing issue—it’s a strategic and legal inflection point that requires careful planning and real-time responsiveness.

The office sector has taken the brunt of the hit. With hybrid and remote work now cemented in many industries, vacancy rates have risen in both urban cores and suburban business parks. Even Class A buildings in strong markets are struggling to maintain occupancy, while older, less amenitized properties face obsolescence at a much faster pace than anyone predicted just a few years ago. In many markets, cap rates are expanding, net operating income is under pressure, and the resulting decline in value is starting to show up in appraisal reports and refinancing conversations.

But office isn’t the only sector feeling the impact. Retail—especially regional malls and big-box anchored centers—is still adjusting to long-term e-commerce shifts. Industrial, while still relatively strong, has cooled slightly from its pandemic-era peak. And multifamily, once viewed as a safe haven, is starting to see pricing reset as supply ramps up in certain metros and rent growth slows.

As advisors to CRE investors, we’re focused on helping our clients assess what these value changes mean across their portfolios and deal pipelines. For those holding office assets, the conversation often centers around repositioning or repurposing: Can the space be modernized? Is a conversion to residential or mixed-use feasible? What local incentives or zoning variances might make that viable? These aren’t easy questions, but they’re becoming necessary ones.

Declining values also have immediate implications for financing. As property values fall, so do loan-to-value ratios. That means borrowers facing loan maturities may struggle to refinance at levels that avoid equity gaps. In these situations, we work with clients to explore workouts, debt restructures, preferred equity options, or recapitalization strategies that can extend their runway and protect their equity positions.

From a transactional standpoint, falling values can also disrupt purchase and sale negotiations. Buyers may seek retrades or extended due diligence, while sellers weigh whether to accept lower offers or hold through the downturn. We’re increasingly building valuation adjustment clauses and termination protections into purchase agreements to account for shifting market data mid-deal.

Despite these headwinds, we’re not advising clients to sit still. While price corrections are real, they also open the door to long-term opportunity—especially for investors with patient capital and a strategic lens. Some of the best deals in CRE history were made in moments of dislocation, and this market is no different. The key is understanding your downside risk, locking in flexible terms, and structuring transactions that allow for operational volatility.

In times like these, legal guidance isn’t just about protecting your downside—it’s about positioning you to move decisively when opportunity strikes. Whether you’re navigating a refinancing challenge, considering a distressed acquisition, or rethinking your portfolio strategy, we’re here to help you interpret market signals and act with clarity.

Property values may be declining, but smart, adaptive investors can still find upside in the uncertainty. Let’s talk about how to protect your assets—and position for what comes next.