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Business, CRE

How ‘Replacement Cost’ Can Afford Assets a Competitive Edge

To say a property falls “below replacement cost” refers to the idea that if that existing property were built from scratch today, it would be more expensive to develop given significantly higher construction costs, including land, building materials, labor, and permitting. Therefore, when acquiring a commercial property at a significant discount to replacement cost, investors can potentially be afforded a safety margin and a competitive edge, all else being equal.

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