Its far more complicated than that. Most of the owners of these properties are institutional, not individuals or small groups. They are far more concerned abo

Its far more complicated than that. Most of the owners of these properties are institutional, not individuals or small groups. They are far more concerned about the valuation of the real estate than it's cash flow. The cashflow side has issues too, but from a valuation perspective, once you sign a rent at a lower rate, then that will trigger a shift from the inflated, unrealized rent in the valuation model, to the actual rent in the lease. It's entirely likely that the dip in value from the signed lease is more impactful than the actual cashflow from that lease. It doesn't matter that you couldn't get the rent in the model today, since pushing out the assumption results in less of a hit in value than signing an actual lease would. This all gets billed as "the market will bounce back". Remember there are a lot of upfront costs for the land lord as well. They put in a lot of money upfront for buildouts/base building work, and it may be 2-3 years before they actually break even on the money they put into the space. If you're not sure that the business model is going to last that long then it absolutely makes sense to sit on the vacancy. Source: worked at a nationally invested REIT that had a good number of properties that have this same issue.