Why do commercial spaces sit vacant?
In yesterday’s mailbag post , Matthew Yglesias responded to a question about why commercial spaces sometimes sit vacant for years at a time. Matthew’s answer started off on the right track, then veered off course. So, as one does , I quickly fired off a note in response.
That note went (and is still going) more viral than anything else I’ve written this year. Fun! There were a lot of questions for clarification, and a few asks for me to expand this into a post.
So here’s an expanded version of the note. For any email subscribers who didn’t see the note, I hope this is interesting. I have a feeling that a more complete explanation won’t be as viral as the short note, but for those who found the note compelling I hope you’ll share this article widely and give others something to bookmark.
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To start, here’s the question that inspired this post:
Can you explain why it makes economic sense for landlords in high-priced metros to keep commercial real estate empty for years at a time? … I understand there's a lot of social pressure on landlords to keep rents high or face the wrath of their neighbors, but how can that pressure still work after ten years of losses?