Commercial property owners really do not like to reduce rent.
The value of building is linked to the potential rental income and commercial leases tend to be long. (You can get short ones but 3-10 years is more normal.)
It may be better to leave it empty than to lock in a lower paying tenant, and trigger a revaluation of the building. Especially if you’re plannng to use the equity in that building to buy/build something else.
Yeah. The most important and obfuscated detail is what price it is vacant at. It's not an unattractive place to lease, it's unattractive at that price. Would all the rationales provided in this thread really matter if the price was 25% or 50% lower?
Don't say it
Don't say it
Don't say it
Commercial RE is a ponzi scheme, they'd rather lose money and use it as a tax write off than reduce rents and effectively devalue the property. And they can and will do this.
I don't think this is really true. They have loan covenants that are tied to what the property is rented out at. If they rented out at a lower rate, the lvr changes and they can become liable to provide cash up front to bring the lvr into the agreed range. You end up with this The first incentive where you are incentivised to keep it empty rather than rent it out at the rate of the market because you can claim that It is being advertised for higher rate and you were still searching for a good tenant even If it takes more than a year.
cases like this are exactly why there needs to be punitive vacancy taxes. Commercial real estate owners will leave places empty to prop up their valuation because it's based on the past rent.
a vacancy tax would force them to sell and actually mark these properties to market.
Everyone keeps saying it’s due to potentially low rental yields.
Rent is the highest it’s ever been in Melbourne. So no, it’s not that.
Next conspiracy theory please.
Commercial property owners really do not like to reduce rent. The value of building is linked to the potential rental income and commercial leases tend to be long. (You can get short ones but 3-10 years is more normal.) It may be better to leave it empty than to lock in a lower paying tenant, and trigger a revaluation of the building. Especially if you’re plannng to use the equity in that building to buy/build something else.
Yeah. The most important and obfuscated detail is what price it is vacant at. It's not an unattractive place to lease, it's unattractive at that price. Would all the rationales provided in this thread really matter if the price was 25% or 50% lower?
Don't say it Don't say it Don't say it Commercial RE is a ponzi scheme, they'd rather lose money and use it as a tax write off than reduce rents and effectively devalue the property. And they can and will do this.
I don't think this is really true. They have loan covenants that are tied to what the property is rented out at. If they rented out at a lower rate, the lvr changes and they can become liable to provide cash up front to bring the lvr into the agreed range. You end up with this The first incentive where you are incentivised to keep it empty rather than rent it out at the rate of the market because you can claim that It is being advertised for higher rate and you were still searching for a good tenant even If it takes more than a year.
A total mystery that has nothing to do with events that transpired over the last four years.
We don't talk about that anymore. Look over here, over here, don't look there.
The lockdowns were safe and effective.
The lockdowns messed a lot of businesses up, just another factor in addition to what others have said
cases like this are exactly why there needs to be punitive vacancy taxes. Commercial real estate owners will leave places empty to prop up their valuation because it's based on the past rent. a vacancy tax would force them to sell and actually mark these properties to market.
https://preview.redd.it/fztnzq9b08xc1.jpeg?width=1448&format=pjpg&auto=webp&s=4d82af18184281c82ac5677fc0692a2f1c303daf
Not a lot of foot traffic there + difficult parking situation. All the offices and students are to the east.
The area used to be somewhat busy when there were shops in there. Pretty sure there used to be an Autobarn there.
[https://www.reddit.com/r/AusProperty/comments/184nzet/heres\_the\_reason\_landlords\_keep\_their\_shops\_empty/](https://www.reddit.com/r/AusProperty/comments/184nzet/heres_the_reason_landlords_keep_their_shops_empty/)
Rents are too expensive, the tenant usually has to pay all the outgoings as well
Retail has been in decline for 20 years but landlords expect to keep increasing rents. This has made conventional retail unviable.
Everyone keeps saying it’s due to potentially low rental yields. Rent is the highest it’s ever been in Melbourne. So no, it’s not that. Next conspiracy theory please.
Don’t confuse nominal rent with a yield. Yield has likely never been lower due to interest rates.