3 ms·

The general case is hard, because ideally you want some level of vacancy, to keep availability high. It's probably better for the city to have overbuilt than un

The general case is hard, because ideally you want some level of vacancy, to keep availability high. It's probably better for the city to have overbuilt than under, and attempts to discourage vacancy are likely to discourage new construction. One approach I could see would be a carrot-stick approach, where the city subsidizes new construction by way of offering low-interest loans, but with the caveat that the loan can get called in if vacancy numbers rise by some amount for some amount of time, or perhaps a stipulation that requires the building be converted into residential if there's not enough commercial business (on threat of the loan being called in). Ultimately, regulation would require a clear distinction between 4 cases: Vacant because supply > demand (alright), Vacant because market price < projected value of not filling the space immediately (bad), Occupied on paper only, such as a company owned by the building owners with more floors of the building than employees (bad), and Occupied (good).

ttymck 3y ago
> It's probably better for the city to have overbuilt than under, and attempts to discourage vacancy are likely to discourage new construction. I am in agreement with the general points being made in this discussion, but this jumps out at me as completely backwards. I know commercial real estate != residential, but we've seen lack of discouraging vacancy has NOT led to increased construction. It just leads to rampant speculation and incredible negative externalities (see San Francisco, the subject of this discussion). I would need to see some evidence that discouraging office vanacy would lead to under-development. Wouldn't discouraging vacancy lead to lower prices ("market-clearing") possibly even inducing demand, in turn encouraging construction? I don't claim that you speak for economists, or politicians, or even all of the electorate, but I think your arguments are evident of the prevailing understanding and I'm seriously pessimistic about our future as a result. We are going to continue to do the same things and expect better results. If the "free market" is so great, but we have to hem and haw about how to make sure billionaire developers can extract tax incentives so they can layoff 10% fewer employees in the next downturn, then we are well and truly [word].
- OkayPhysicist 3y ago
  I think I may have been unclear. In that context, I meant non-specific vacancy discouragement, such as simply jacking up commercial property taxes. The ideal market solution would be something approximating a Georgist-style land tax, trying to tax non-improvement appreciation of property at ~100%, killing the land speculation business. But if you implement that at a city scale, there are other cities in every direction more than happy to let the financiers of new construction become obscenely rich off of that speculation. So your options are A) high level reform, at the state or preferably national level, to eliminate that axis of competition or B) trying to solve the specific ill of deliberate vacancy without murdering your city's competitive edge in attracting business and investment.
  - ttymck 3y ago
    Understood, thanks for clarifying. I didn't mean to attack your specific wording. I strongly agree with your mention of "preferably national level" regulation. More and more, across all issues, I see this as our biggest obstacle to progress. A patchwork of state + local policymaking turns everything into a regional feudalist race-to-the-bottom.

ttymck 3y ago

> It's probably better for the city to have overbuilt than under, and attempts to discourage vacancy are likely to discourage new construction. I am in agreement with the general points being made in this discussion, but this jumps out at me as completely backwards. I know commercial real estate != residential, but we've seen lack of discouraging vacancy has NOT led to increased construction. It just leads to rampant speculation and incredible negative externalities (see San Francisco, the subject of this discussion). I would need to see some evidence that discouraging office vanacy would lead to under-development. Wouldn't discouraging vacancy lead to lower prices ("market-clearing") possibly even inducing demand, in turn encouraging construction? I don't claim that you speak for economists, or politicians, or even all of the electorate, but I think your arguments are evident of the prevailing understanding and I'm seriously pessimistic about our future as a result. We are going to continue to do the same things and expect better results. If the "free market" is so great, but we have to hem and haw about how to make sure billionaire developers can extract tax incentives so they can layoff 10% fewer employees in the next downturn, then we are well and truly [word].

OkayPhysicist 3y ago
I think I may have been unclear. In that context, I meant non-specific vacancy discouragement, such as simply jacking up commercial property taxes. The ideal market solution would be something approximating a Georgist-style land tax, trying to tax non-improvement appreciation of property at ~100%, killing the land speculation business. But if you implement that at a city scale, there are other cities in every direction more than happy to let the financiers of new construction become obscenely rich off of that speculation. So your options are A) high level reform, at the state or preferably national level, to eliminate that axis of competition or B) trying to solve the specific ill of deliberate vacancy without murdering your city's competitive edge in attracting business and investment.
- ttymck 3y ago
  Understood, thanks for clarifying. I didn't mean to attack your specific wording. I strongly agree with your mention of "preferably national level" regulation. More and more, across all issues, I see this as our biggest obstacle to progress. A patchwork of state + local policymaking turns everything into a regional feudalist race-to-the-bottom.