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Some landlords have mortgages to pay too - so in that case "rent holiday" is basically "landlord pays for tenant". But commercial real estate seems to be a diff

Some landlords have mortgages to pay too - so in that case "rent holiday" is basically "landlord pays for tenant". But commercial real estate seems to be a different beast. I've witnessed a large amount of commercial property being empty for years at a time (5+) in a fairly expensive area of NY. Commercial landlords in this case probably owned the buildings outright and were in agreement to keep rents high even if it made it longer to find the next tenant. It probably is not like that everywhere, but I was really surprised that half of the building would just sit unoccupied for so long.

concerned_user 6y ago
I have heard that with commercial space you can take building depreciation costs and write that off as an expense so it might be not as expensive for a landlord to keep the property vacant as you would imagine. Also sometimes as I understand it is new tenant who has to clean up and bring the building up to code to open, and if there is plenty of other properties to lend they might find something with less upfront costs. Location is everything in cities like NY, especially for businesses that rely on people traffic so few hundred feet closed to rail station might be a lot more expensive so they just wait for tenant that can utilize that.
ryoshu 6y ago
My naive understanding is that the empty storefronts offset as a tax loss from a more lucrative line of business from the matrixed holding company that owns the property. The empty storefront on 5th Ave. doesn't matter to the owners because the numbers work out on a spreadsheet.
- WalterBright 6y ago
  Losses reduce the taxable income, they are not tax credits. If you're paying a 20% tax rate, you still lose 80% of those losses.
seganddr 6y ago
Suspending mortgage payments should be looked at also
- exclusiv 6y ago
  They have forebearance of 180 days and you can extend another 180. But this will unwind very badly because it's still due yet the renters and homeowners won't be in a position to pay lump sums. From a Planet Money episode, essentially the mortgage servicers will go bankrupt as they are the only ones that can't defer payments in the flow. You have renters, landlords, banks, mortgage servicers, investors and the federal government guarantees a lot of mortgages. It seems most plausible that homeowners who don't pay will end up with longer mortgages versus a balloon payment they won't be able to handle.
- matwood 6y ago
  Do you also default on all of the bonds that are backed by mortgages?
  - nightski 6y ago
    The current proposal in Congress reimburses landlords and mortgage holders with taxpayer money subject to stipulations. This proposal is actually much cheaper than the UBI esque one.

concerned_user 6y ago

I have heard that with commercial space you can take building depreciation costs and write that off as an expense so it might be not as expensive for a landlord to keep the property vacant as you would imagine. Also sometimes as I understand it is new tenant who has to clean up and bring the building up to code to open, and if there is plenty of other properties to lend they might find something with less upfront costs. Location is everything in cities like NY, especially for businesses that rely on people traffic so few hundred feet closed to rail station might be a lot more expensive so they just wait for tenant that can utilize that.

ryoshu 6y ago

My naive understanding is that the empty storefronts offset as a tax loss from a more lucrative line of business from the matrixed holding company that owns the property. The empty storefront on 5th Ave. doesn't matter to the owners because the numbers work out on a spreadsheet.

WalterBright 6y ago
Losses reduce the taxable income, they are not tax credits. If you're paying a 20% tax rate, you still lose 80% of those losses.

seganddr 6y ago

Suspending mortgage payments should be looked at also

exclusiv 6y ago
They have forebearance of 180 days and you can extend another 180. But this will unwind very badly because it's still due yet the renters and homeowners won't be in a position to pay lump sums. From a Planet Money episode, essentially the mortgage servicers will go bankrupt as they are the only ones that can't defer payments in the flow. You have renters, landlords, banks, mortgage servicers, investors and the federal government guarantees a lot of mortgages. It seems most plausible that homeowners who don't pay will end up with longer mortgages versus a balloon payment they won't be able to handle.
matwood 6y ago
Do you also default on all of the bonds that are backed by mortgages?
- nightski 6y ago
  The current proposal in Congress reimburses landlords and mortgage holders with taxpayer money subject to stipulations. This proposal is actually much cheaper than the UBI esque one.