Reply to What are the commercial lease rates are at Friendship Heights?

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[quote=Anonymous][quote=Anonymous][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]

This doesn’t fully explain it. Because pre covid, commercial landlords loved them some empty buildings. And they loved to raise rents to kick out long standing stores to keep the buildings empty.

There’s a special place in hell for commercial landlords. I fear the covid will not teach them a lesson. [/quote]

Probably because DC doesn't penalize vacancy. They SAY they do, but they do not. We had a vacant house on our block for 18 years. There are two others within spitting distance vacant for the same amount of time. Our neighbors have called, talked to DC officials who stop by, etc. They've slapped notices on the houses, but they have NEVER raised taxes on them. We've checked online. I'm sure it's worse for commercial. An acquaintance of ours sold a restaurant building in CCDC that had recently shuttered restaurant. When I asked what was going in, he said the guy wasn't going to rent it right now (he was frustrated because he lives here and wanted a commission). DC should be penalizing building owners who don't have tenants. [/quote]

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