CRE equilibrium is a difficult – but important – measure.

Equilibrium is when the state of something is balanced.  Corporate need for labor is aligned with the labor market.  The cost of labor is aligned with what businesses want to pay for labor (sort of…).  Total Cost of Occupancy is aligned with what businesses expect – and it doesn’t rise or fall too much beyond expectations.

But real estate equilibrium does not exist as a magic formula.  Every business will value different components of a market differently.  Some will care more about the labor side, some more about the competition side, others about inflation or new college graduates.

With all the talk about real estate data being more readily available, the part that people are missing is the understanding of how to use that data.  It’s not just about looking at a graph and saying “yep, this market looks good”  or “hmm…maybe I can negotiate another $1 off my deal.”  If that was the case we would all be off gaming the stock market and living like millionaires.

And ultimately that’s what all of this is about.  Data and its availability is important.  The other requirement is for smart, independent researchers to take that data and turn it into gold.  Real estate market analysis is more complicated than any stock evaluation – particularly due to the current ways leasing is done.  Without the smart people all we’re left with is a bunch of good but useless data.

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