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We work and Regus dedicated offices in main location are empty and crazy expensive. I wonder why they don’t reduce their prices.
by devops000 2y ago
We work and Regus dedicated offices in main location are empty and crazy expensive. I wonder why they don’t reduce their prices.
- wombatpm 2y agoBecause they locked in at high valuations. They start cutting prices and the whole house of cards start falling like dominos. Checkmate.
- JumpCrisscross 2y ago> They start cutting prices and the whole house of cards start falling like dominos. Checkmate. This is also true in a bank run. Yet those still happen. And I don't think it's because commercial landlords are more altruistic or forward-thinking than depositors.
- unsnap_biceps 2y agoI wonder if it's to keep the price floor higher so if it turns around, they're back in the green. A gamble, but one it seems often is used with commercial rentals, they rather leave them empty then have a too low paying tenant.
- maeil 2y agoNot an expert, but could this have to do with financing? I've read of property owners keeping high rents despite it leading to empty spaces because "lower rents -> lower property assessment value by banks -> worse financing terms". I'm sure someone here can correct me.
- JumpCrisscross 2y ago> "lower rents -> lower property assessment value by banks -> worse financing terms" It's worse. They're often in technical default of their loan terms if rents fall below a level. From the landlord's perspective, leaving units empty and waiting for a turnaround is rational: it preserves option value. For the lender, the limit provides an objective signal of hardship ex ante. Ex post facto, they're riding the same option value as the landlord, provided the payments come through.