The price is not right because too many properties are "poker chips" in a larger investment game. The nominal value of the "poker chip" is based on the "list price" of the rental rates for the properties rather than the actual rents being collected.
I am seeing office properties with 80% vacancy rates where the owners are still raising rents on the remaining tenants when the leases expire. Of course, the tenants move out. But the prospective sale price for the property is based on the new higher rent per square foot - and an 80% occupancy rate, which is not going to happen.
Loans against those properties are based on that inflated valuation suggested by the nominally higher rental rates and unreachable occupancy rates. Investors who own the properties must have enormous cash reserves, or they are underwater with their loans to banks.
Maybe the property owners are not as dumb as they appear to be.
In the metro area nearest to me there are several enormous projects downtown, where office buildings are being converted to residential apartment complexes. They seem to fill them with renters as fast as they can finish them.
I wonder if the new residents "work from home".
In the suburban ring there seems to be a number of projects where large apartment complexes are built in the former parking lots of an empty shopping mall. Those also fill up as fast as they are completed.
Building for conventional single-family detached homes has dropped to almost zero around here.
I don't know any bank or institutional lender that will extend a loan against a property based on a "nominal value." In every situation I've come across with clients and investment partners, the bank demands to see existing leases in place as part of the appraisal process. If a property is listing space for $40 per square foot and is 80% vacant, then I don't know anyone with half a brain who will accept that $40 as the basis of the appraised value for lending purposes.