At a 5% cap rate, $100K recovered = $2M in value.

The multifamily sector has experienced significant value compression since the 2022 peak. Most analysis has focused on the revenue side — cap rate expansion driven by rising interest rates.

The office sector faces structural headwinds that are well documented: hybrid work, elevated vacancy, and compressed valuations. What is less discussed is that the energy expense structure of office buildings has also become more complex.

Commercial real estate lenders have historically focused their underwriting scrutiny on revenue — rent rolls, lease abstracts, tenant credit quality. Expense line items, including utilities, were reviewed at a summary level.