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Why do commercial spaces sit vacant? (2025)

freerange.city

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Re: Why do commercial spaces sit vacant? (2025)

#91

Post by fl4regun »

grebc wrote: post #83
em-bee wrote: post #76

Earlier quoted context omitted.

there is a problem to be solved. empty shops make shopping areas unattractive. walking through a half empty mall or shopping street is depressive. i see this all the time in china and in developing countries in general. they build huge malls, and then they can't fill them because there are not enough businesses who can pay the rent being asked. at least there is growth and the place will fill up eventually. but until…

If you think there’s a better use it’s a free market. It’s even up for lease, you don’t even need to buy it ;)

real estate must be the worst thing to use as an argument for "it's a free market" - because its one of the types of things which every stock is it's own, truly unique monopoly. I can't "freely" produce the same commercial property, unless I already own that property.

Re: Why do commercial spaces sit vacant? (2025)

#92

Post by nemomarx »

em-bee wrote: post #78
WCSTombs wrote: post #35

(2025). > The obvious thing cities could try is to put more pressure on building operators to fill their spaces, but the building operators are already under a ton of pressure — they’re losing a bunch of money! So, cities could do something like put a vacant storefront tax and… make them lose even more money? If that “worked,” the mechanism would be to force a lot of commercial property to default, which could put a…

another possible remedy would be to find ways to change the conditions of the loan so that building owners can continue to pay off their loan at better rates that match the income they can make from rent.

If the banks would prefer to adjust their loans instead of defaulting on them I think they would just naturally do that? They may not want to take a longer loan though.

Re: Why do commercial spaces sit vacant? (2025)

#93

Post by teddyh »

alper wrote: post #82

I'm in Berlin where there's a glut of offices which are all sitting empty. I'm living next to a top line historic renovation/office space and it took them 8-9 years to complete the renovation at probably an astronomical cost and now it's been sitting empty for a year or so. This financial model is also the main reason why it's so hard to convert these buildings to residential. Somebody has to eat the markdown.

The ICC? https://en.wikipedia.org/wiki/Internationales_Congress_Centr...>

Re: Why do commercial spaces sit vacant? (2025)

#94

Post by laughing_man »

jwarden wrote: post #12

This explanation seems very implausible to me. By lowering the rent by X%, and therefore reducing annual revenue by X%, you admit the building is worth X% less. But by leaving the building X% vacant, also reducing the annual income stream by X%, you and the bank can somehow pretend the building is worth what it would be if full? I doubt owners and banks actually believe this. Is there some policy that forces this?

It's not a question of what the banks believe, but rather what they believe officially. As long as they keep pretending the loss doesn't need to get accounted for.

Re: Why do commercial spaces sit vacant? (2025)

#95

Post by nitwit005 »

grebc wrote: post #64
dazc wrote: post #36

Earlier quoted context omitted.

Care to enlighten us?

Comments below. There’s no actual problem here to be solved. If people feel they have better uses for a property they should put their money where their mouth is.

How, specifically? If they refuse to acknowledge the building is worth less than they expected, they aren't going to sell it to you at a price where you can make money either.

Re: Why do commercial spaces sit vacant? (2025)

#96

Post by vel0city »

makeitdouble wrote: post #65
schlipity wrote: post #42

Earlier quoted context omitted.

You should take it and then switch seats with your wife. Happy wife, happy life.

> Happy wife, happy life. Why wouldn't that happy cycle work with the husband ?

From a Christian perspective:

> Husbands, love your wives, just as Christ loved the church and gave himself up for her...In this same way, husbands ought to love their wives as their own bodies. He who loves his wife loves himself

Too many people ignore this part of that "submit yourselves to your husbands" quote.

For those of us who think of themselves as Christian, I think sitting in a less comfortable seat is probably small potatoes to what Christ did on the cross.

Just throwing out some biblical ideas here. I know there are a lot of other perspectives.

Re: Why do commercial spaces sit vacant? (2025)

#97

Post by bombcar »

grebc wrote: post #72
NoboruWataya wrote: post #55

Earlier quoted context omitted.

I mean, it's highly unintuitive, which I would say makes it difficult to understand. The main weirdness is that lowering the rent would force a revaluation whereas letting the building sit vacant for an extended period of time apparently would not. If this is truly driven by regulatory capital requirements, then it seems like a gap in the regulations. Also foreclosure generally isn't the only option: the borrower cou…

Banks care that you pay their loan first and foremost, how you do that as the borrower is up to you. They care about the regulatory requirements in so far as you either meet it, or you don’t at the time of writing a loan. And maybe you get a yearly review. Also people are looking at this in a very isolated view. Just because a building is vacant doesn’t mean the owner has no other option than just lower the rent. Typ…

That's the missing link on these - the owner is making payments either way - the bank is getting their money.

They don't want to disrupt the flow or trigger contract clauses, so they cover the missing cashflow from elsewhere.

Re: Why do commercial spaces sit vacant? (2025)

#99

Post by advisedwang »

bsder wrote: post #10

The "problem" is that we let people claim the "rent" is X for certain people and "Y" for other people--both at the same time. Just stop that. The "solution" is that you should have to pay tax on what you claim the rent is after a small grace period (Less than 24 months certainly. Probably less than 12 or at least prorated starting before that.). If your financial agreement requires and claims that the rent is $5000,…

The article touches on vacancy takes, and I think this has a similar effect. As the article says, the even if you apply a tax like this, lowering the rent would still lead to foreclosure, so won't happen. So piling a tax on top might make some revenue, and it might make some operators go bust but it won't actually directly* get the property to be occupied.

* maybe if the operator goes bust, the rents on the building can be lowered with a new property value for future loans. Then perhaps it can be occupied. But that's very uncertain, especially if this happens to a whole city at once.

Re: Why do commercial spaces sit vacant? (2025)

#100

Post by Animats »

Article is from 2025, and "extend and pretend" is coming unglued.[1] Extend and pretend was big around 2024.[2]

The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move. That can crash the rental market. A building half rented at rent X is more profitable than a building fully rented at rent 0.5 X.

[1] https://propmodo.com/the-end-of-extend-and-pretend/

[2] https://www.newyorkfed.org/research/staff_reports/sr1130

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