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Or would hedge funds and REITs just buy these spaces (or keep them to rent out after building them—a common practice for developers) and continue to charge high

Or would hedge funds and REITs just buy these spaces (or keep them to rent out after building them—a common practice for developers) and continue to charge high rent with more empty storefronts? I’ve thought for years that the growing number of commercial vacancies, even pre-Covid, would “sort itself out.” It certainly hasn’t yet.

AnthonyMouse 6y ago
The thing you're seeing with covid is that places are empty for the same reason they became empty, and the owners are speculating that demand will rebound in the future (e.g. once there is a vaccine) so they have no reason to sell for less today. If you change the zoning at a sufficient scale, rents would be expected to decline permanently, so there would be nothing gained by holding out until tomorrow.
- carlob 6y ago
  IIRC Vancouver taxes empty properties more than the ones in use to prevent this kind of speculation.
- drdeadringer 6y ago
  > The thing you're seeing with covid is that places are empty for the same reason they became empty, and the owners are speculating that demand will rebound in the future (e.g. once there is a vaccine) so they have no reason to sell for less today. This partly explains why I saw -- with two temporary-by-design blips -- a particular downtown San Jose corner location empty for 10 years. Last I saw, they finally rented it out as an office, but that was just shy of Covid19. Apparently a decade is the minimum for "wait for better demand" or they had//have pockets deep enough to play a long game. I just don't understand how some people are happy with empty store-fronts. "I want the blightful eyesore, not the bustling tax money" doesn't make sense to me.
sumtechguy 6y ago
Most of those 'empty' buildings are just ways for people to park money. If you rent it fine. If you dont that is fine too. The rent is not what they are looking for. They are basically looking for something that has maybe a slightly better yield than bonds. When you look at it as parking of assets as a hedge against inflation it makes more sense what is going on. But taxes you might say. They charge dumb rents on these places. So if you get a sucker willing to pay a way over priced rent for say 6 months or a year it may cover the taxes for 10-20 years. Meanwhile the cash value has usually at least matched along with inflation. Even if they do not cover with a sucker the rate of inflation may be higher than the taxes. Plus the possibility of buying into a 'hot market' and the value does actually increase (but that is speculation which is some of it). Why the 'dumb' rent why not have a reasonable one? Because they do not really want to rent. They do not want to deal with 'hey landlord the roof needs to be replaced again'. They want to deal with that when the time comes to liquidate it for whatever reason. Many people look at like the are running a property business. There are many of those types of companies out there (which is why they can play this game). But there are many people just looking to 'not be poor' and live off daddies money for the rest of their lives from their trust fund.

AnthonyMouse 6y ago

The thing you're seeing with covid is that places are empty for the same reason they became empty, and the owners are speculating that demand will rebound in the future (e.g. once there is a vaccine) so they have no reason to sell for less today. If you change the zoning at a sufficient scale, rents would be expected to decline permanently, so there would be nothing gained by holding out until tomorrow.

carlob 6y ago
IIRC Vancouver taxes empty properties more than the ones in use to prevent this kind of speculation.
drdeadringer 6y ago
> The thing you're seeing with covid is that places are empty for the same reason they became empty, and the owners are speculating that demand will rebound in the future (e.g. once there is a vaccine) so they have no reason to sell for less today. This partly explains why I saw -- with two temporary-by-design blips -- a particular downtown San Jose corner location empty for 10 years. Last I saw, they finally rented it out as an office, but that was just shy of Covid19. Apparently a decade is the minimum for "wait for better demand" or they had//have pockets deep enough to play a long game. I just don't understand how some people are happy with empty store-fronts. "I want the blightful eyesore, not the bustling tax money" doesn't make sense to me.

sumtechguy 6y ago

Most of those 'empty' buildings are just ways for people to park money. If you rent it fine. If you dont that is fine too. The rent is not what they are looking for. They are basically looking for something that has maybe a slightly better yield than bonds. When you look at it as parking of assets as a hedge against inflation it makes more sense what is going on. But taxes you might say. They charge dumb rents on these places. So if you get a sucker willing to pay a way over priced rent for say 6 months or a year it may cover the taxes for 10-20 years. Meanwhile the cash value has usually at least matched along with inflation. Even if they do not cover with a sucker the rate of inflation may be higher than the taxes. Plus the possibility of buying into a 'hot market' and the value does actually increase (but that is speculation which is some of it). Why the 'dumb' rent why not have a reasonable one? Because they do not really want to rent. They do not want to deal with 'hey landlord the roof needs to be replaced again'. They want to deal with that when the time comes to liquidate it for whatever reason. Many people look at like the are running a property business. There are many of those types of companies out there (which is why they can play this game). But there are many people just looking to 'not be poor' and live off daddies money for the rest of their lives from their trust fund.