Comment by asdff
6 days ago
We are in commercial zoning oversupply to be honest. New retail units going up all the time under apartments failing to lease because there is only so much retail demand, at least at the prices offered but we know people would rather take a loss from an empty unit they can write off than actually lower rent and underlying asset value they use for collateral for loans.
If there is oversupply, why are retailers forced to rent and not able to purchase at the depressed market price?
(My theory, landlords are holding onto property in the hope of future returns rather than making a currently rational sale, and doing specific things like holding units empty or 364 day leases to avoid revaluations)
Yes, and we need to punish them with things like vacancy tax. Just need to be careful we don't prevent good things -- for example, in Japan they have restaurants open only 4 hours a day in residential neighborhoods -- but we also don't want to let them do BS like "art gallery only open by appointment" but surely those also legitimately exist?
Really depends on local markets. NYC by comparison has a lot of new condos that go up with zero street level retail space.
It all gets filled up with an expansive lobby and amenities.
Makes the surrounding street life dead.
Jerry: You don't even know what a write off is, do you?
We need more until someone defects and starts leasing for a fair price.
Could we fix that with a vacancy tax for retail?
There are too many factors that intersect to lead to these outcomes that make it easy to detect any one silver bullet. Valuing a property based on rents seems to be another big issue since it sets up incentives to increase rent and valuations even when the real estate market doesn't support that rent increase.
Value the property tax based on rent, that won't interfere with the real market value.
It's part of the solution. Vacancy has negative externalities so we should tax it.