5 ms·

I don't understand why they can't have shorter leases with lower rent. I'm not sure why they can't do that and swallow their pride a bit. They can charge the ne

• lamontcg 3y ago
  It isn't better than making $0 because now at lower rents the property gets revalued to be lower, and when the rents and underlying property is used as collateral on loans then they adjust higher than they already would in a rising rate environment to cover the risk of default. It works out better to kick the can down the road for as long as possible, hoping that something will change and to put off the day of reckoning, so they fight it tooth and nail. The market is only going to adjust downwards when there's a real crisis and fire sales start happening due to forced liquidation that causes everything to get marked down to market. Then there's no point in kicking the can down the road any more.
• dsr_ 3y ago
  One of the things that can be done is to maintain the illusion of a high rent by working out lease terms. For example, a 60-month lease at $75/sqft might come with the first 4 months of rent in each calendar year for free, making the actual price $50/sqft. Or, a ten year lease on biolab space might come with the landlord paying for the initial buildout and equipment installation, equal to a 30% discount.