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Article is from 2025, and "extend and pretend" is coming unglued.[1] Extend and pretend was big around 2024.[2] The other side of this is that landlords hate t
by Animats 4mo ago
Article is from 2025, and "extend and pretend" is coming unglued.[1]
Extend and pretend was big around 2024.[2]
The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move. That can crash the rental market. A building half rented at rent X is more profitable than a building fully rented at rent 0.5 X.
[1] https://propmodo.com/the-end-of-extend-and-pretend/ https://propmodo.com/the-end-of-extend-and-pretend/
[2] https://www.newyorkfed.org/research/staff_reports/sr1130 https://www.newyorkfed.org/research/staff_reports/sr1130
- goodpoint 4mo ago> That can crash the rental market ...as if it was a bad thing.
- dietr1ch 4mo agoThis just says that they have too much power and society would be better off having a vacancy tax that aimed to reduce abuse by landlords while at the same time ensuring the city doesn't look like post crisis Detroit, which makes it worse for everyone.
- ryanmcbride 4mo agoYup. Unfortunately landlords have plenty of time to lobby against things like this while the rest of us are busy contributing to society.
- limagnolia 4mo agoMost of the US does, its called property tax. Or in some cases, land value taxes.
- ryanmcbride 4mo agoYou really thought you ate with this huh
- Grombobulous 4mo agoThat doesn’t work very well in practice because a half vacant commercial property has lower property value than a full one. There are buildings that seem to purposefully keep commercial space vacant to devalue the building: https://therealdeal.com/chicago/2021/09/10/trump-gets-another-tax-break-on-trump-tower-retail-space/ https://therealdeal.com/chicago/2021/09/10/trump-gets-anothe...
- prepend 4mo agoProperty tax isn’t based on vacancy rate, it’s based on property value. The article writes a bit about property value being based on rents. So a completely rented building pays the same property tax as an empty building with no renters.
- deleted 4mo ago[deleted]
- flurben 4mo agoI used to think the same thing, until recently. Where I live (NC, USA) there was a big issue where commercial property owners have been able to reduce their property tax assessments, not on the basis of 'comparable sales' (like everyone else), but on the basis of the income derived from the property. I can't say how widespread this practice actually is, but it's not unheard of. Apparently property tax rules are going to vary widely by jurisdiction, which country / which state or province / etc.
- 4mo ago
- jujube3 4mo agoThe city doesn't want commercial real estate values to collapse either, since buildings are taxed based on their value. If extend and pretend is ending, tax revenues are about to take a nosedive.
- dietr1ch 4mo agoThe city is better off having its citizens participate more in the economy and paying taxes through it than staying home or not starting business because rent is too high.
- inigyou 4mo agoNot necessarily. That's what's best for the city as in a geographical area where people live. What's best for the city as in an organisation with bureaucrats and finances is probably whatever increases revenues.
- bluGill 4mo ago> The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move. That too is a "it depends". For a failing mall, getting anyone into the empty spaces starts to become important to the other tenants because anything that draws people into the mall is a potential customer. Customers will even no shop you just because they know there is nothing else in the mall. Thus some malls near me have museums and the like inside - anything to get traffic.
- AnthonyMouse 4mo ago> A building half rented at rent X is more profitable than a building fully rented at rent 0.5 X. That's assuming rents would decrease by half, and also that it's still half occupied. A building half rented at X isn't more profitable than a building fully rented at 0.7 X. A building 25% rented at X isn't more profitable than a building fully rented at 0.5 X.
- NoMoreNicksLeft 4mo agoIf the space is commercial, it's more valuable for the tenants. More traffic, more random sales opportunities. If half-occupied, it looks like a ghetto, and they only get deliberate traffic.
- LoganDark 4mo ago> The other side of this is that landlords hate to reduce rent to rent vacant spaces because their paying tenants will demand rent reductions or move. Since when have tenants known each other's rents?
- solomonb 4mo agoThe current tenants will see the listing for the vacant unit.
- amanaplanacanal 4mo agoIs this one of those secrets, like you aren't supposed to ask your coworkers how much they are getting paid?
- BrenBarn 4mo ago> That can crash the rental market. At this point I think that's exactly what we need in a lot of places.
- throwburn202605 4mo agoI was told capitalism made for efficient use of resources.(inb4 oh you sweet summer child) If the land isnt being used efficiently the owning entity should fail and a new productive use made. Whether thats tearing it down for the public to get better use of the land; rerouting roads, community swimming pool, park etc. Replacing with a more economic building; factory, stadium, appartments (zoning not withstanding). Or a more productive entity getting use of it. Bagholders being entrenched and protected are becoming a weight around the neck
- prepend 4mo agoIt’s more efficient than other market allocation methods. But it’s not perfectly efficient.