Managing Commercial Real Estate Before and During Economic Recessions

The United States economy and real estate markets have been healthy for an unprecedented period of time. Unfortunately, national economies and real estate markets are subject to economic cycles. Now, due to the unforeseen COVID-19 pandemic in combination with underlying market conditions, the chances of a significant economic recession are increasing. Best practices for effectively managing commercial real estate holdings in the next several years will be different than those for the last ten years. While it remains everyone’s goal to maximize profits and yields, sometimes the short-term goal is to minimize losses. Both before and during a recessionary downturn, best management practices require specialized knowledge and experience in order to minimize losses.

In their decades of professional practice, senior management at Federal Appraisal LLC has lived through several significant recessionary periods. This market experience allows them to advise businesses and investors on how best to preserve profits and minimize losses during challenging economic times.

Federal Appraisal provides the following appraisal and consulting services to assist their clients with preserving value during recessionary periods and economic downturns:

  • Property tax appraisal and consulting services during economic downturns
    • reducing property taxes
    • property tax assessment appeals
    • litigation/expert testimony
  • Identification of potential surplus property for pre-transactional or re-positioning due diligence
  • Analysis of opportunities for investment in distressed properties
  • Appraisal and consulting services for gift and estate tax planning and reporting purposes
  • Feasibility studies for development, renovation, and/or changes in real estate highest and best use
  • Marketability studies for the impact of recession on demand (for multifamily, office, retail, industrial properties, and more)

Case Study One – Concrete Pipe Manufacturer

Federal Appraisal advised a regional manufacturer on the value of its various real estate holdings, identifying surplus property to be sold and for how much, and what property was to be preserved and maintained to maximize value to the company. The process identified millions of dollars in untapped, idle value which could be redirected to core business activities.

Case Study Two – Property Tax Appeals on Commercial Real Estate Investment Portfolio

The senior management at Federal Appraisal reviewed the investor’s portfolio, identified the properties deserving property tax reductions, completed property tax appeals, negotiated tax reductions for some properties, and provided expert testimony in trials for tax reductions for others. The process saved the client more than $10,000,000 in property taxes.

Case Study Three – Opportunity Investor

Federal Appraisal provided pre-acquisition appraisals and due diligence support to an investor buying a portfolio of troubled power plants, earning the investor yields greater than 25%.

Read more at Impairment Studies.