5 ms·

You seem to have created a system with a runaway negative feedback loop.

by c3534l 9y ago

b4lancesh33t 9y ago
I'm not seeing it. It may not be overall good policy, but it seems like this would induce rental, if perhaps at a lower price. Where is the negative feedback? Care to elaborate?
- c3534l 9y ago
  Suppose I my tenant leaves. I make the calculation that it'd be cheaper to sell the building. No one wants to buy it because it's missing a tenant. It stays unused, depressing the area around it. That depression, in turn, makes companies much more likely to fold if a tenant leaves. This makes more companies fold, which increases the likelihood that more companies will fold. Eventually, the entire area will be poison and not even under the most generous of rent agreements will either tenants or companies want to do business there.
  - onion2k 9y ago
    No one wants to buy it because it's missing a tenant. At some price someone will decide that the building is a worth while risk. You might not like that price, but there will be a price you like more than getting hit with high taxes for owning an empty building. The point here though is not to keep you, the landlord, rich; it's to make a city full of shops with happy customers, taxable sales, etc. If you can't make your building work for you then your business has failed and you need to move aside to let someone else use that real estate asset. That's how capitalism works.
    - b4lancesh33t 9y ago
      Agreed with everything except the last sentence. Pure capitalism will let some buildings sit idle. But I think many people believe that pure capitalism optimized for things other than human well-being.
    - lr4444lr 9y ago
      That just begs the question: why can't we leave the system as is, because at some price, the tax assessment on a vacant building without any tenant revenue will push the landlord to offer a lease price for which there is demand?
      - lotsofpulp 9y ago
        Because the timeframe of the system's feedback loop is too long. By the time the landlord reacts and accepts a lower price point, the customers might have had to move on to a different location, or the business operators too. The whole reason we even have cycles of growth and contraction is because feedback loops are too slow so we always react too slowly, and when we do we over correct. But that might be an unsolvable problem and just a fact of nature.
- deleted 9y ago
  [deleted]
vinceguidry 9y ago
No, if this really is a failure for the street-level commercial real estate market to clear due to low price elasticity, which vacant shop fronts seem to announce quite loudly, then a political solution increasing the costs of intransigence should at least cause some landlords to shit or get off the pot. They can ratchet the penalty up a notch every few years to force more of them to come to Jesus. It is, after all, a purely pecuniary concern on the part of the landlords. More generally speaking, real estate market failure is very much a problem that local policy can solve. Global investors are looking for safe havens for their wealth. As much of the attractiveness has to come from the local legal environs, which can be more or less friendly to those types of investors. It just takes the political will, which admittedly, can be quite thin.
Aloha 9y ago
You do it as a 18 month rolling window - if the property has been empty for 9 months out of the 18 month rolling window, the penalty should apply, in addition there could be relief triggers based on both local, citywide and regional occupancy, if local occupancy was below a certain level (business close because of prolonged construction, or a crime issue, of if there was a city wide vacant windows problem the penalty could be waived by the city. I'm not sure if such a policy would help, it could act as something tantamount to rent control - but its not hard to make a policy in such a way that it wouldnt have a negative feedback loop.
venomsnake 9y ago
You cannot have runaway negative feedback loop. Negative feedback loop tries to preserve the status quo. When the outcome self amplifies this is positive feedback loop. The positive feedback loop may be virtuous (more education, better jobs, more resources on education, even more good jobs) or vicious (high unemployment, low resources for education and training, even higher unemployment) rinse repeat.

You seem to have created a system with a runaway negative feedback loop.

by c3534l 9y ago

You seem to have created a system with a runaway negative feedback loop.

I'm not seeing it. It may not be overall good policy, but it seems like this would induce rental, if perhaps at a lower price. Where is the negative feedback? Care to elaborate?

c3534l 9y ago
Suppose I my tenant leaves. I make the calculation that it'd be cheaper to sell the building. No one wants to buy it because it's missing a tenant. It stays unused, depressing the area around it. That depression, in turn, makes companies much more likely to fold if a tenant leaves. This makes more companies fold, which increases the likelihood that more companies will fold. Eventually, the entire area will be poison and not even under the most generous of rent agreements will either tenants or companies want to do business there.
- onion2k 9y ago
  No one wants to buy it because it's missing a tenant. At some price someone will decide that the building is a worth while risk. You might not like that price, but there will be a price you like more than getting hit with high taxes for owning an empty building. The point here though is not to keep you, the landlord, rich; it's to make a city full of shops with happy customers, taxable sales, etc. If you can't make your building work for you then your business has failed and you need to move aside to let someone else use that real estate asset. That's how capitalism works.
  - b4lancesh33t 9y ago
    Agreed with everything except the last sentence. Pure capitalism will let some buildings sit idle. But I think many people believe that pure capitalism optimized for things other than human well-being.
  - lr4444lr 9y ago
    That just begs the question: why can't we leave the system as is, because at some price, the tax assessment on a vacant building without any tenant revenue will push the landlord to offer a lease price for which there is demand?
    - lotsofpulp 9y ago
      Because the timeframe of the system's feedback loop is too long. By the time the landlord reacts and accepts a lower price point, the customers might have had to move on to a different location, or the business operators too. The whole reason we even have cycles of growth and contraction is because feedback loops are too slow so we always react too slowly, and when we do we over correct. But that might be an unsolvable problem and just a fact of nature.
deleted 9y ago
[deleted]

vinceguidry 9y ago

No, if this really is a failure for the street-level commercial real estate market to clear due to low price elasticity, which vacant shop fronts seem to announce quite loudly, then a political solution increasing the costs of intransigence should at least cause some landlords to shit or get off the pot. They can ratchet the penalty up a notch every few years to force more of them to come to Jesus. It is, after all, a purely pecuniary concern on the part of the landlords. More generally speaking, real estate market failure is very much a problem that local policy can solve. Global investors are looking for safe havens for their wealth. As much of the attractiveness has to come from the local legal environs, which can be more or less friendly to those types of investors. It just takes the political will, which admittedly, can be quite thin.

Aloha 9y ago

You do it as a 18 month rolling window - if the property has been empty for 9 months out of the 18 month rolling window, the penalty should apply, in addition there could be relief triggers based on both local, citywide and regional occupancy, if local occupancy was below a certain level (business close because of prolonged construction, or a crime issue, of if there was a city wide vacant windows problem the penalty could be waived by the city. I'm not sure if such a policy would help, it could act as something tantamount to rent control - but its not hard to make a policy in such a way that it wouldnt have a negative feedback loop.

venomsnake 9y ago

You cannot have runaway negative feedback loop. Negative feedback loop tries to preserve the status quo. When the outcome self amplifies this is positive feedback loop. The positive feedback loop may be virtuous (more education, better jobs, more resources on education, even more good jobs) or vicious (high unemployment, low resources for education and training, even higher unemployment) rinse repeat.