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Meanwhile there's unoccupied storefronts en-masse all over my city (DC). Its not something I thought I d miss in the world, but this small retail store thing se

Meanwhile there's unoccupied storefronts en-masse all over my city (DC). Its not something I thought I d miss in the world, but this small retail store thing seems like it's totally crushed out, between Walmart-ification & Amazon. What I haven't seen is the return of more affordable interesting local spots. We have a couple dive-y places that've hung on, but there's been very few below-average cost places that have opened. It seems unlikely but maybe someday there'll be some rebalancing, rents will go down, people will start trying to put up more down to earth accessible experiences & options.

tharmas 2y ago
I don't share your view. I think rhe landlords will eat everyone's wages. We are entering neo feudalism.
- awksedbashesc 2y ago
  Yep we just work online from home and will have to hustle to make rent each day
- chiefalchemist 2y ago
  Residential and commercial real estate will price what the market can bear. Raise the min wage... Housing will follow suit. Commercial, as I understand it, can't lower prices because that devalues the unit / building. To them, empty is better than offering a lower lease price
  - AlexandrB 2y ago
    So it's a "market" where prices can only increase. Seems like something will have to give eventually.
    - chiefalchemist 2y ago
      It's not only that particular market, it's effectively the whole credit based economy, underwritten by a financial system that fuels it. When credit and large assets are involve, these system(s) are intentionally tuned to avoid decrease in price. That would ccompletely undermine those entities making the loans. The Fed is on record as saying, "Our target is 2% interest". Imagine that, we're going to devalue your hard earned money 2% a year, and no one cases (because it's passed off with the euphemism "inflation"). We get more efficient and more effective and prices go...up??!! I highly recommend the book "Broken Money". Not so much for the Bitcoin and crypos stuff, but for the lessons on the history of money, the financial system, etc. https://www.lynalden.com/broken-money/ https://www.lynalden.com/broken-money/
  - nothercastle 2y ago
    Illiquid markets have poor price discovery. If the price drops below stated value typically transactions stop but prices take a long time to drop
nothercastle 2y ago
Real estate is owned by large firms that use the real estate as loan collateral. If you rent out space for less than you state it’s worth you have to restate the asset value and possibly put up more collateral which you don’t have or is better allocated elsewhere. There are a lot of shell games being played and eventually the music stop, assets get liquidated, loses get realized but until then property stays empty. There is no natural clearing mechanism that forces firms to take market value losses when they happen so the incentive is to pretend there are no losses until they are so spectacular that the entire firm goes bankrupt
- kurthr 2y ago
  Exactly, came here to say this. For many that do operate the real estate there are loans to leverage the property and those loans come due if rental rates (or sale prices) fall below a limit stated in the loan. That's part of why you'll get free months rather than a reduced rate, but also why so much is empty. Often the commercial part of 5/1 and 5/2 designs is a loss where all the profit is in the residential above it (and for code acceptance).
  - AtlasBarfed 2y ago
    They should just make them into storage units
  - lotsofpulp 2y ago
    This is not true. Lenders are not stupid, they are not going to be fooled by giving away 11 months free and charging a higher rent for 1 month. Or for giving away 1 month and charging a higher rent for 11 months. Commercial real estate loans will have a provision to periodically analyze the property’s revenue (not just monthly sticker price). See debt service coverage ratios. https://www.investopedia.com/terms/d/dscr.asp https://www.investopedia.com/terms/d/dscr.asp
    - kurthr 2y ago
      It's not about fooling. It's about the contract. The property can have met the debt service (cash flow) ratio, but still be in violation of the the rental price covenant. Those covenants require immediate repayment of the loan.
underseacables 2y ago
Where? I live in Dupont Circle. Are you talking about in Southeast? I'm not seeing empty storefronts except in really high crime areas.
- downrightmike 2y ago
  poverty creates crime

tharmas 2y ago

I don't share your view. I think rhe landlords will eat everyone's wages. We are entering neo feudalism.

awksedbashesc 2y ago
Yep we just work online from home and will have to hustle to make rent each day
chiefalchemist 2y ago
Residential and commercial real estate will price what the market can bear. Raise the min wage... Housing will follow suit. Commercial, as I understand it, can't lower prices because that devalues the unit / building. To them, empty is better than offering a lower lease price
- AlexandrB 2y ago
  So it's a "market" where prices can only increase. Seems like something will have to give eventually.
  - chiefalchemist 2y ago
    It's not only that particular market, it's effectively the whole credit based economy, underwritten by a financial system that fuels it. When credit and large assets are involve, these system(s) are intentionally tuned to avoid decrease in price. That would ccompletely undermine those entities making the loans. The Fed is on record as saying, "Our target is 2% interest". Imagine that, we're going to devalue your hard earned money 2% a year, and no one cases (because it's passed off with the euphemism "inflation"). We get more efficient and more effective and prices go...up??!! I highly recommend the book "Broken Money". Not so much for the Bitcoin and crypos stuff, but for the lessons on the history of money, the financial system, etc. https://www.lynalden.com/broken-money/ https://www.lynalden.com/broken-money/
- nothercastle 2y ago
  Illiquid markets have poor price discovery. If the price drops below stated value typically transactions stop but prices take a long time to drop

nothercastle 2y ago

Real estate is owned by large firms that use the real estate as loan collateral. If you rent out space for less than you state it’s worth you have to restate the asset value and possibly put up more collateral which you don’t have or is better allocated elsewhere. There are a lot of shell games being played and eventually the music stop, assets get liquidated, loses get realized but until then property stays empty. There is no natural clearing mechanism that forces firms to take market value losses when they happen so the incentive is to pretend there are no losses until they are so spectacular that the entire firm goes bankrupt

kurthr 2y ago
Exactly, came here to say this. For many that do operate the real estate there are loans to leverage the property and those loans come due if rental rates (or sale prices) fall below a limit stated in the loan. That's part of why you'll get free months rather than a reduced rate, but also why so much is empty. Often the commercial part of 5/1 and 5/2 designs is a loss where all the profit is in the residential above it (and for code acceptance).
- AtlasBarfed 2y ago
  They should just make them into storage units
- lotsofpulp 2y ago
  This is not true. Lenders are not stupid, they are not going to be fooled by giving away 11 months free and charging a higher rent for 1 month. Or for giving away 1 month and charging a higher rent for 11 months. Commercial real estate loans will have a provision to periodically analyze the property’s revenue (not just monthly sticker price). See debt service coverage ratios. https://www.investopedia.com/terms/d/dscr.asp https://www.investopedia.com/terms/d/dscr.asp
  - kurthr 2y ago
    It's not about fooling. It's about the contract. The property can have met the debt service (cash flow) ratio, but still be in violation of the the rental price covenant. Those covenants require immediate repayment of the loan.

underseacables 2y ago

Where? I live in Dupont Circle. Are you talking about in Southeast? I'm not seeing empty storefronts except in really high crime areas.

downrightmike 2y ago
poverty creates crime