Reply to Downtown DC is a storefront ghost

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]I've never understood why landlords do this; presumably there is benefit they get from letting these storefronts sit empty than from lowering the rent to at least get something, but I'm not sure what it is (maybe a tax loss thing?).  Seems like something the city should take action to combat.[/quote]

Commercial real estate is valued at some multiple of annual rent.  I forgot the exact figure since I'm not in this space.  But that is unlike how residential real estate is valued

So a landlord could value a property at X based on current rent.  However if he lowers the rent he will immediately lower the value of the property.  The mortgages on these properties are also for much shorter terms than the 30 year for residential.  So you can see how lowering rents could quickly escalate to them losing the property [/quote]
There is also the issue that as an illiquid asset, lowering the rent would require the owners to mark to market the new value that they has ripple effects for investment value and returns. [/quote]

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