JMB Realty

With the new demands for Data Centers that can run Generative AI-based applications appearing in more and more areas of the market, are existing Data Centers that were built five to ten years ago or more, technologically obsolete? Data center designs were stable for about twenty years. If you built one twenty years ago, the one someone else built ten years later would have had pretty much the same design concepts. That is not the case today.

There is a vacancy rate crisis in the middle of commercial real estate that has been festering and expanding since 2020. Some real estate “experts” have only discovered this issue in the last year and have come out with some Captain Obvious Reports in 2023 pointing it out. Growing vacancy rates in commercial real estate, due to more people working-from-home on a permanent basis, has had more buildings losing occupancy rates and in turn, values for the last several years.

With all the post-COVID increases in vacancy rates in major metropolitan areas, a new, more comprehensive yardstick for valuation of a commercial building is necessary. These vacancy rates which we are seeing in many metropolitan areas are not going to go away anytime soon and the impact to the building’s worth is significant. No appraisal system has been developed to take into consideration this new permanent variable.