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Metropolitan DC Local Politics
Reply to "What are the commercial lease rates are at Friendship Heights?"
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[quote=Anonymous][quote=Anonymous]Don’t forget to factor in that landlords can write off a vacancy as a loss. That’s usually more valuable than renting for a reduced rate. They also use the rental rates to calculate the value of their buildings for refinancing—which they then use to build a new building somewhere else. If they base their business model on $100 a sqft but rent for $50, they’ve just reduced the overall value of their building. [/quote] You're looking at it on an accounting (accrual) basis, while ignoring cashflow. If I have a building and owe $10k/month on the mortgage that I usually rent out for $20k, then choosing to bring in $0 instead of a reduced rent of $5k or $10k is going to drive me into bankruptcy cash-wise. Now if you own the building outright, you're correct the loss may be worth it.[/quote]
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