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Meanwhile they’ll raise prices, which will cause inflation, and the cycle continues.


You hope that instead commercial real estate drops in price. The rent is the other great expense that no one talks about.


I've been wondering about this. Why is commerical real estate so expensive? Would that not suggest that there is a high demand by companies to operate somewhere? Or is it similar to other real estate, where giant corporate interests see value in controlling a scarce asset


Can’t find the source, but the long of it is that the value of commercial property is a function of the rent that you can get.

If you are ‘looking’ for a renter at a given rate, then the value isn’t reassessed.

If you lower your rate and rent it at a reduced rate, then the value gets reassessed. If it gets reassessed too low, now your loan gets margin called and you need to pay cash to keep your loan to value within a set range. If you don’t have that money, then it’s in your interest to keep looking at unrealistic rents.

There is also commonly a provision to tack missed payments on to the end of the loan + interest so the financiers aren’t that quick to foreclose. Finally, any changes to the agreement require a % of financiers to agree which gets difficult when the financiers get more numerous.


It's kinda like NYC, where the prices are still astronomical, but the demand is just not there. They just aren't willing to negotiate the price, because the other's aren't changing their prices, so they all sit vacant.




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