Eli5: Why are so many office blocks and retail shops in UK that are ” to let” remain empty for months, rather than to reduce rent ? Why do landlords do this?

Question

Eli5: Why are so many office blocks and retail shops in UK that are ” to let” remain empty for months, rather than to reduce rent ? Why do landlords do this?

In: 1189

Answer 1

Lots of commercial property is bought as capital investment for balance sheets.

If you buy it and set a nominal rental value for it then you have an asset on your books at that value.

You can then borrow money against that asset for investments that have a great return.

If you rent out your property for less than what you say your property commands, then your ability to borrow money for those other investments is deplinished.

So better to keep your property empty with a nominal rent than demonstrate an accurate valuation of the asset you purchased.

Or it’s the other nonsense comments. Think about what is more likely.