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What I don't get is the endgame. When the lack of cashflow makes the landlord go bankrupt and the lender has to repossess, doesn't that look bad for them? If
by mrgoldenbrown 3y ago
What I don't get is the endgame. When the lack of cashflow makes the landlord go bankrupt and the lender has to repossess, doesn't that look bad for them? If you try to sell me a property with the promise that it can bring in $100/sq foot, but nobody has wanted it at that rate for 3 years, and it's in a neighborhood full of other vacant storefronts, why would anyone believe you? There's gotta be some externality that I don't understand.
- entropicdrifter 3y ago>There's gotta be some externality that I don't understand. The banks are over-invested in commercial real estate, is my guess, and they're attempting to price fix to prevent the price from dropping too quickly and putting the banks themselves under water
- jjk166 3y agoIf you're betting that the lull in demand is a temporary thing and in the not too distant future people will start paying the prices they did before, then it makes perfect sense. On a larger scale, even if you know some locations are never going to see the demand they once did, so long as some fraction do recover, then it's an overall winning strategy. Where that breakeven point is exactly is tough to say, but I'm sure you can find a good number of people bullish on long term commercial real estate.
- callalex 3y agoThe endgame does not matter. Banks are publicly traded, and like every publicly traded company, the only timespan that matters is 1-4 quarters.