Valuations on distressed properties as of midyear 2024 have declined an average of 43% from their original issuance, CRED iQ reported. The decline has increased by 140 points from six months ago. 

By valuation grouping, distressed properties valued at less than $5 million have seen the largest declines in assessed values at an average of 51%. Those valued at $100 million or more have seen assessments drop by 37%. 

The top three largest overall declines for 2023 and 2024 were in the office sector, which also saw the largest single-property valuation decline. That distinction falls to 1740 Broadway, an office property in Midtown Manhattan, which is now valued at $175 million, a drop of $430 million. Overall, valuations on distressed office properties are down by 53%.  

Not far behind is retail, which registered an average valuation decline of 52%. In this sector, sizable assessment declines include a $360-million drop for the Mall of America in Bloomington, MN and a $244.6-million decline for Mall de las Aguilas in Eagle Ridge, TX, which is now valued at just $10 million. 

The hotel sector saw an average valuation decline of 40% on distressed properties. Multifamily was largely flat compared to six months ago with a 35% decline, while assessment declines for distressed industrial improved from an average of 32% to 10% over the same time period. 

Pictured: 1740 Broadway. Credit: Kevin Chu and Jessica Paul Photography.

Kidder Mathews has added valuation advisory specialist Eric Cross, MAI as an SVP in Downtown Los Angeles. For more than 20 years, he has focused on valuation assignments in Los Angeles, Orange, Riverside, San Diego, San Bernardino and Ventura counties and also has extensive experience in the Central Valley, including Sacramento.

Cross began his commercial real estate appraisal career with Cushman & Wakefield, followed by CBRE, before forming Independent Valuation Consultants, Inc., which he ran for 10 years before joining Kidder Mathews.

His valuation experience includes traditional property types as well as special-purpose properties like churches, rail yards, equestrian centers, schools, and sea & airport facilities (FBO). He has represented a wide range of clients, with owners and occupants including Starbucks, Waste Management, CVS, United Grocers, LA Fitness, Trader Joe’s and Taco Bell.