There is actually a phenomenon colloquially called "extend and pretend," where it's better for commercial properties to sit vacant or half-vacant than lower the

There is actually a phenomenon colloquially called "extend and pretend," where it's better for commercial properties to sit vacant or half-vacant than lower the rent. The reason is, the building is financed based on it's calculated property value, and commercial property value is simply a multiple of the listed rent. Whether or not you're collecting the rent is immaterial -- after all it's perfectly normal to buy a vacant lot and built a building on it, or to buy an old warehouse etc. and refurbish it, etc., such that the bank has to make the lending decision based on projected rent rather than actual rent. So this is what they do. The problem is only when the projections are proven false, such as when you lower the rent to fill the space. If you do that, the bank must now lower the value of the building, which can easily make the building worth less than the loan. Further complicating things, commercial properties are usually on short-term financing, for example a 5-year "revolving" loan where the developer pays interest only for 5-years and then is expected to pay off the loan all at once (unlikely) or refinance (99% of the time). So, suppose the building has a $8M loan based on a theoretical $10M valuation. The developer is making the payments, whether from the partial rent, or his personal bank account, even though the building is vacant. The loan is now due to be refinanced. If the developer says, "I'll get a tenant in here any day now," the banker can nod and say "I believe you," and refinance the building. The developer keeps paying the payments and doesn't have to go bankrupt. The banker doesn't have to foreclose and write off the loan as a loss. Conversely, if the developer had cut the rent in half to get the building full, the banker now has to lower the building's value from $10M to $5M, and therefore the maximum loan is reduced to $4M. But the developer owes $8M to the bank, and doesn't have the money to pay it off. Not even the $4M to cover the difference and refinance the rest. In this scenario, the developer goes bankrupt and the bank has to foreclose on the property. Thus both parties choose "extend and pretend" as the rational action, even though it's not good for the developer and terrible for the surrounding community. From my friends in the real estate business, my understanding is that a shocking percentage of commercial real estate is currently operating in this "extend and pretend mode," which ironically just reinforces the pattern, since all the players involved know that if the banks started forcing the issue they would likely kick off a chain reaction of bankruptcies, write-offs, and a destabilized real estate market that would lead to huge losses for most or all of them. So instead, "this is fine."