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
Why doesn’t a third party go up the chain of ownership and offer to purchase the contract/perpetual lease at some value (which would give real cash to the owner today vs. nothing today) and then modify the contract to enable the middleman to finally lease the property and generate a return?
Opening a business is more than paying rent to a landlord, you need to get permits, licenses, and comply to a ton of other regulations.
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Why doesn’t a third party go up the chain of ownership and offer to purchase the contract/perpetual lease at some value (which would give real cash to the owner today vs. nothing today) and then modify the contract to enable the middleman to finally lease the property and generate a return?
Not the only issue. Why are we building more and more offices and warehouses that remain empty. I work in construction, I see it everywhere
Opening a business is more than paying rent to a landlord, you need to get permits, licenses, and comply to a ton of other regulations.
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Not the only issue. Why are we building more and more offices and warehouses that remain empty. I work in construction, I see it everywhere
If you rent it out for 1k a month within 1 day you make 24k in in two years
If you manage to rent it out for 1.5k im 4 months you make 27k in the remaining 18 months and 500 more every month in the future.
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.
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