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If rents are bi-modal, as one of the parent posters suggests, then how can all properties be valued based on the higher end (e.g, tenants with deep pockets) when not all tenants actually have deep pockets? Shouldn't the entire demand curve be considered when deriving the multiplier and therefore the price of the commercial property?

Not everyone can get the deep pocket tenant. The staggering number of empty store fronts reflects that.

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I don’t think there’s a sane answer to your question.

I think the real answer to your question is “financialization” and zero interest rate policy.

Banks don’t hold loans, they make fees for issuing them and sell them off as securities. There’s so much money chasing so little return that it’s very easy to sell anything that looks “conventional” even if the market really ought to be more skeptical. Since almost everyone involved makes their money off the transaction, they have so many incentives to keep the party going, even though it sure seems like it’s unsustainable and must eventually crumble.

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