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Listen, guys, I need you to take this seriously so I know how to feel about vacancy taxes. Please assist me to group think about this idea that is novel to me. If I apply a vacancy tax is it a viable way for me to force the return of experimental retail where everyone with a new sandwich shop and goth clothes boutique so they avoid paying the tax?
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Jun 4, 2017 01:54
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RuanGacho posted:Listen, guys, I need you to take this seriously so I know how to feel about vacancy taxes. Well the primary purpose of a vacancy tax is simply to make up for the fact that existing laws often provide for paying less property tax when a building is partially or wholly unoccupied. Or they make up for the fact that without a business in the space, sales taxes and other taxes the city might collect from said business are no longer being collected at as high a rate. So as a first step, the vacancy tax restores the tax receipts the city might not otherwise get. Secondly yeah, it does a bit to encourage offering cheap rents to business that frankly don't have a good shot at making it. But things look nicer when at least your outward facing property looks occupied. Note that in many cases a landlord might see fit to put up with the vacancy tax and leave the place unrented until they get what they feel is a fair price, or because existing contracts with other tenants might specify that the other tenants are always to have the cheapest rate in the building and they don't want to lower the rent of people already paying them.
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Jun 4, 2017 02:08
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RuanGacho posted:Listen, guys, I need you to take this seriously so I know how to feel about vacancy taxes. Presumably it would depend on the nature of the tax (when I tried for city council years ago I argued for fines to combat blight). You might wind up with a lot of Spirit Halloween stores where something stupid goes in just to fill the void. We had one storefront that rotated through a few businesses, one of which being named "hip hop clothing store" and owned/managed by what appeared to be an elderly chinese Mr. Rogers and that seemed to operate as a sort of "fell off a truck" Ross/TJ Maxx except more nonsensical and far, FAR less interesting than you're probably thinking. I do still have the neon parrot sign I bought for $50 after they got evicted. You'd also need to ensure the city/county is set up to actually handle the planning/permitting needs of things moving in. My city's permitting division is notorious for being exceptionally slow and incompetent; the current (hopefully permanent) tenant of hip hop clothing store space apparently had to directly appeal to the city council to intervene because the permits just languished. I've seen businesses come and go and a lot of the new tenants seem to take a weirdly long time to actually open.
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Jun 4, 2017 02:13
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fishmech posted:Well the primary purpose of a vacancy tax is simply to make up for the fact that existing laws often provide for paying less property tax when a building is partially or wholly unoccupied. Or they make up for the fact that without a business in the space, sales taxes and other taxes the city might collect from said business are no longer being collected at as high a rate. So as a first step, the vacancy tax restores the tax receipts the city might not otherwise get. Thanks. The current issues I'm wrestling with are complex enough that it doesn't seem like a vacancy tax would do anything except ruffle feathers based on this. Zachack posted:Presumably it would depend on the nature of the tax (when I tried for city council years ago I argued for fines to combat blight). You might wind up with a lot of Spirit Halloween stores where something stupid goes in just to fill the void. We had one storefront that rotated through a few businesses, one of which being named "hip hop clothing store" and owned/managed by what appeared to be an elderly chinese Mr. Rogers and that seemed to operate as a sort of "fell off a truck" Ross/TJ Maxx except more nonsensical and far, FAR less interesting than you're probably thinking. I may be able to ensure that the permitting process is 80% more automated than it is now in the next 5 years so this is a good insight, thank you.
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Jun 4, 2017 02:19
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RuanGacho posted:Listen, guys, I need you to take this seriously so I know how to feel about vacancy taxes. It's a blight tax. Empty storefronts are bad for the neighborhood but landlords don't give a poo poo if they can afford to just sit on the empty space until a tenant with deep enough pockets comes along.
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Jun 4, 2017 02:43
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withak posted:It's a blight tax. Empty storefronts are bad for the neighborhood but landlords don't give a poo poo if they can afford to just sit on the empty space until a tenant with deep enough pockets comes along. We have a problem where there's basically two kinds of commercial space available, one is old side of town owned by all the same guy who whines when the newer side of town gets any kind of activity plotted in it, but he doesn't do anything to keep up his spaces, but is generally affordable to exist in. He's not at 100% capacity any more because he won't upgrade and maintain the buildings anything more than code/health regulation requires. Another third is owned by Kroger subsidiaries and kept up but will do things like not allow the regionally acclaimed Butcher (people come from all over to get product from him) to move in next to their grocers, which is reasonable but it is killing options in the town because of the third type in town Newer stuff on the south side has kept up retail but is owned by investment groups who would rather let stuff sit vacant than local businesses start up, this is why I was curious about the vacancy tax, to see if it could act as a disincentive to that behavior but considering the other two would fight it equally as hard I don't see how it would solve anything in our situation other than to piss people off for "government taxes!" The current battle is to make the local government budget sustainable without going all in on an anchor store like this thread has talked about, it's heavily developed bedroom community and needs commercial tax bases, but it's in a place people want to live unlike what apparently is rural America. I'd like to think that if things work out alright it would be a good model for revitalizing towns across the country, where people are reasonably close to the services and jobs they need without making the largest cities where the jobs are exclusively.
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Jun 4, 2017 03:17
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Eh revitalizing towns in outlying areas basically requires the return of massive amounts of family farm/small scale agriculture in their hinterlands. That's what they relied on for an economic base that could drive business within the town. And a large part of that was simply travel being too slow for going the next town over to make sense. As soon as you had cars, driving to the county seat which had more stores anyway made sense - driving 20 miles took under an hour now!
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Jun 4, 2017 03:22
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fishmech posted:Actually the people like you who think a place no longer getting rented means a business is losing huge sums of money is what's "loving dumb". Land lords make money by renting. Not renting is bad including with respect to property value. Opportunity cost is thing. So is financing costs and taxes.
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Jun 4, 2017 04:01
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asdf32 posted:Land lords make money by renting. Not renting is bad including with respect to property value. Opportunity cost is thing. So is financing costs and taxes. Landlords also make money through monopoly which means owning real estate even if you can't rent it, also prevents someone else renting it, giving you greater control over rent prices.
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Jun 4, 2017 04:04
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Yeah, if you have three buildings in a small area (for example) and they're 15% vacant, you're not going to drop the rent to get a lower vacancy rate because then all your other tenants will realize they can pay you less money, so even with higher occupancy rates you're making less money. EDIT: Now what is complete bullshit is when those building owners whine about their low occupancy rates, having not lowered the rent even a bit -- which is definitely what's going on in my city. That's when they can gently caress right off. PT6A fucked around with this message at 04:10 on Jun 4, 2017 |
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Jun 4, 2017 04:08
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asdf32 posted:Land lords make money by renting. Not renting is bad including with respect to property value. Opportunity cost is thing. So is financing costs and taxes. Property taxes are a minimal expense, especially on small vacant storefronts, even when the locality doesn't have explicit tax breaks for vacancy. You can easily go without tenants in large amounts of your holdings for years at a time without losing any significant money since your remaining tenants make up your expenses.
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Jun 4, 2017 04:14
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fishmech posted:Nope, sorry but rent no one wants to pay isn't a loss, it's simply money you couldn't make. Your actual loss is the actual upkeep costs. Let me get this straight. If I take a two week unpaid vacation from my job, and I get paid $1000 a week - I don't lose a single cent from the wages I don't earn while on my vacation. Lol that's phantom economics. Every cent you don't make is a cent you lose. This is capitalism. The goal is to make money, period. Not avoid losses. The buildings cost money to build in the first place, and you certainly don't pay that off in the first year of rent. Probably not in the first 5 years of rent.
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Jun 4, 2017 04:18
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ISeeCuckedPeople posted:Every cent you don't make is a cent you lose. Nope. Unless you wanna believe you're losing trillions of dollars a year, lol.
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Jun 4, 2017 04:27
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fishmech posted:Nope. You sound like someone happy with their $8.50 wage.
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Jun 4, 2017 04:29
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PT6A posted:Yeah, if you have three buildings in a small area (for example) and they're 15% vacant, you're not going to drop the rent to get a lower vacancy rate because then all your other tenants will realize they can pay you less money, so even with higher occupancy rates you're making less money. Well 15% isn't that high considering the average is typically around 10% or so. Vacancy=inventory so there always should be some. But the idea that deliberately high vacancy rates above that are a common profit strategy would be false. A 20% rate needs to create 25% higher rents just to break even. Vacant store front also depress the whole are so they're doubly bad for that reason. My town has a storefront vacancy problem right now but I guarantee it's not a profit making strategy it's simply stupidity and mis-management and undoubtedly temporary.
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Jun 4, 2017 04:30
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Note their name and regdate.
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Jun 4, 2017 04:33
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asdf32 posted:Well 15% isn't that high considering the average is typically around 10% or so. Vacancy=inventory so there always should be some. But the idea that deliberately high vacancy rates above that are a common profit strategy would be false. A 20% rate needs to create 25% higher rents just to break even. Vacant store front also depress the whole are so they're doubly bad for that reason. Ideal solution to vacancy is not on the supply side but on the government side. Tax businesses for vacancy and use the taxes to subsidize businesses who rent vacant spaces. Win-Win.
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Jun 4, 2017 04:34
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ISeeCuckedPeople posted:You sound like someone happy with their $8.50 wage. So you really are dumb enough to not understand that all the money in the world isn't already yours. You sound like someone who's never had a job, much less property.
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Jun 4, 2017 04:55
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RuanGacho posted:We have a problem where there's basically two kinds of commercial space available, one is old side of town owned by all the same guy who whines when the newer side of town gets any kind of activity plotted in it, but he doesn't do anything to keep up his spaces, but is generally affordable to exist in. He's not at 100% capacity any more because he won't upgrade and maintain the buildings anything more than code/health regulation requires. One quasi-solution that I've seen cities in my area do to address this has been to relax leasing and permitting requirements in vacant corridors to allow for temporary pop-up stores. Many landlords don't want to commit to long-term commercial leases if they think that property valuation trends are on their side. They're so afraid of locking in a below-market rate for someone that they'd prefer a vacancy. The business owners get to sell, the landlords get to keep their flexibility and earn fees on space usage.
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Jun 4, 2017 06:28
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fishmech posted:You shouldn't do that, because that's not a real direct loss. Their actual losses from leaving a space vacant are vanishingly small. You're running of this weird presumption that the financing of the building was costless and that there are no other opportunities for the capital looked up in the property. The others have listed actually plausible reasons so I'm not even sure why you're going on this tangent.
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Jun 4, 2017 06:35
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MiddleOne posted:You're running of this weird presumption that the financing of the building was costless and that there are no other opportunities for the capital looked up in the property. The others have listed actually plausible reasons so I'm not even sure why you're going on this tangent. I believe the argument is that the upkeep costs are not particularly substantial especially over large properties which are partially used (as the amenities for the site/building require upkeep on a site/building wide level regardless of how many people are using the space) and that the reliability of property ownership and letting as a form of money making (because you can't conjure more space in developed areas from the ether) makes it a desirable enterprise even if it doesn't have a hypothetically ideal rate of return.
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Jun 4, 2017 07:02
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You don't drop your prices because word gets around and your other tenants will figure out exactly how little you're renting for, and demand a reduction.
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Jun 4, 2017 07:05
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OwlFancier posted:I believe the argument is that the upkeep costs are not particularly substantial especially over large properties which are partially used (as the amenities for the site/building require upkeep on a site/building wide level regardless of how many people are using the space) and that the reliability of property ownership and letting as a form of money making (because you can't conjure more space in developed areas from the ether) makes it a desirable enterprise even if it doesn't have a hypothetically ideal rate of return. No, money isn't free. No one who actually owns multi-million dollar properties thinks like this. As I said, for a far more plausible explanation: VVVVVVVVVV Gumbel2Gumbel posted:You don't drop your prices because word gets around and your other tenants will figure out exactly how little you're renting for, and demand a reduction.
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Jun 4, 2017 07:07
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MiddleOne posted:No, money isn't free. No one who actually owns multi-million dollar properties thinks like this. As I said, for a far more plausible explanation: VVVVVVVVVV The two are not exclusive.
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Jun 4, 2017 07:09
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So, wealth tax
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Jun 4, 2017 08:07
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Aliquid posted:So, wealth tax Or property tax. Anything that punishes hoarding real-estate and land without having any commercial activity is a net positive for the economy.
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Jun 4, 2017 08:10
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In accounting there is no loss from not renting out a property you fully own, however in economics it's a opportunity cost. Of course this ignores other factors that might be affecting the choice to rent out that may be an issue more than the foregone revenue, such as fitout costs, lease lengths, zoning and planning, negotiations, etc, etc. That said, from my experience property tends to attract those ppl who are not so much interested in running a business as they are maintaining safe, low effort investments in things that feel they understand. Which is why they will make poor decisions like not getting rid of large opportunity costs. Also: quote:You don't drop your prices because word gets around and your other tenants will figure out exactly how little you're renting for, and demand a reduction. For commercial properties customers are usually on long term leases so they have little leverage to get reductions, and if you have vacant properties for a significant amount of time it's pretty obvious that you are setting your prices above market clearing levels.
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Jun 4, 2017 14:54
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OwlFancier posted:I believe the argument is that the upkeep costs are not particularly substantial especially over large properties which are partially used (as the amenities for the site/building require upkeep on a site/building wide level regardless of how many people are using the space) and that the reliability of property ownership and letting as a form of money making (because you can't conjure more space in developed areas from the ether) makes it a desirable enterprise even if it doesn't have a hypothetically ideal rate of return. It's this. Your routine expenses are going to be covered by what your nonvacant spaces are already paying you. That just leaves very minor additional costs for the vacant space. It becomes something else entirely if literally all your rentable space is vacant and you do not operate some sort of other business that can cover costs but that's rarely the case with this sort of scenario.
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Jun 4, 2017 15:18
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MiddleOne posted:Or property tax. Anything that punishes hoarding real-estate and land without having any commercial activity is a net positive for the economy. This was/is a big problem in Detroit and literally took the death of some of the dudes who were doing it before these places actually got fixed and started renting out again.
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Jun 4, 2017 15:22
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MiddleOne posted:Or property tax. Anything that punishes hoarding real-estate and land without having any commercial activity is a net positive for the economy. Same with houses/apts etc
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Jun 4, 2017 15:33
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Uncle Jam posted:This was/is a big problem in Detroit and literally took the death of some of the dudes who were doing it before these places actually got fixed and started renting out again.
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Jun 4, 2017 15:43
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OwlFancier posted:I believe the argument is that the upkeep costs are not particularly substantial especially over large properties which are partially used (as the amenities for the site/building require upkeep on a site/building wide level regardless of how many people are using the space) and that the reliability of property ownership and letting as a form of money making (because you can't conjure more space in developed areas from the ether) makes it a desirable enterprise even if it doesn't have a hypothetically ideal rate of return. Well it depends. As it happens land prices have gone up in many places which has made it easy on many owners that got in at the right places at the right times. But for new property prices have anticipated income baked in so unusually high vacancy rates will likely translate into real loss. And again, opportunity cost is also a real thing Fishmech.
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Jun 4, 2017 16:20
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asdf32 posted:And again, opportunity cost is also a real thing Fishmech. There are also massive opportunity costs in desperately cutting rent prices just to no longer say a slot is vacant.
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Jun 4, 2017 16:30
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As someone who leased commercial property for many years, I would like to point out that there are a whole bunch of ways that commercial landlords get properties leased out without technically lowering the per-square-foot charges appreciably. Free rent for the first three months, 'free' modifications and improvements to the property to suit your particular business, screwy ramp-ups in the rent where you start out at x-per-square foot and it doubles after the first year, then doubles again after the second year, so the overall cost-per-square foot over the life of the leases doesn't look so bad to the existing tenants. Also, it's dependent on when the existing leases expire and the potential difficulty that a current tenant would have in moving - if you have a lot of custom modifications to the building(high-voltage power, etc.), or you're doing retail where the lost-customer cost to move is so high that you'd lose money to move. Landlords know this and keep it in mind when negotiating. The point of this post is that -if- landlords borrowed money recently to buy the property, they -will- get it leased, one way or another, or they're in deep financial poo poo. If the landlords own it outright and are more interested in the ultimate rise in property values, plus the tax writeoff, they're less driven to get it leased.
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Jun 4, 2017 17:54
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So my former employer owns a poo poo ton of property in a little city called Port Orchard. Apparently multiple buildings on the main drag. The city has been trying to revitalize the area for years now, but can't because the owner absolutely refuses to develop or rent out the properties that he owns. He literally prefers them to sit there and rot because as he told the local paper, he's "an investor, not a developer". gently caress that guy.
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Jun 4, 2017 19:23
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Solkanar512 posted:So my former employer owns a poo poo ton of property in a little city called Port Orchard. Apparently multiple buildings on the main drag. The city has been trying to revitalize the area for years now, but can't because the owner absolutely refuses to develop or rent out the properties that he owns. He literally prefers them to sit there and rot because as he told the local paper, he's "an investor, not a developer". Is eminent domain not a thing where you live?
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Jun 4, 2017 19:25
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MiddleOne posted:Is eminent domain not a thing where you live? eminent domain isn't simple, fast, easy, or above all, free. You have to pay for what you seize.
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Jun 4, 2017 19:35
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We had the same thing happen in my hometown. There was a really cool bank building in the heart of downtown that sat vacant for at least 30 years because the owner refused to do absolutely anything with it or sell it. Then the owner finally died and now it's an awesome ice cream/pie shop 
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Jun 4, 2017 19:37
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Discendo Vox posted:eminent domain isn't simple, fast, easy, or above all, free. You have to pay for what you seize. Just pointing out that this is hardly an unresolvable situation. VVVVV: I stand correct. 
MiddleOne fucked around with this message at 19:45 on Jun 4, 2017 |
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Jun 4, 2017 19:37
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MiddleOne posted:Is eminent domain not a thing where you live? Not for commercial development, no. This is in Washington State.
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Jun 4, 2017 19:43
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