Many commercial real estate owners would prefer to have a property empty than lower the asking rent because the real estate is more valuable to them as an investment asset than an income stream, and if they have to choose one they’ll choose the former. The value of real estate as an investment asset is often determined in large part by the rent asked for, regardless of whether anyone is paying it. This is why commercial real estate will give a commercial tenant a certain number of months free as a concession rather than a reduced rent rate even if the free months add up to more of a concession. Those free months of rent don’t count against the property value, but lowering the rent rate often does.
The whole system is fucked up and leads to a lot of empty commercial real estate just as allowing private equity firms to park their cash in residential properties for the same reason leads to property value bubbles and empty homes no one can afford to rent or buy.
And many such companies are over-leveraged. Hell, most big businesses period are over-leveraged because shareholders will handsomely reward executives willing to jeopardize the financial security of those companies, along with everyone who works for them or depends on them, for higher dividends while punishing executives that actually try to operate with healthy reserves. That’s how you get airlines going broke after a couple months of low income clamoring for your tax dollars instead of facing the music and getting bought low by someone else when they go bankrupt. And the politicians who rely on them for campaign contributions will give it to them while shafting the American workers.
In this case both Cheesecake Factory and their commercial landlords have been incentivized to build a relationship that falls apart when one can’t sustain their end of it because they operate with razor thin margins. The only way you can keep the relationship from falling apart is to institute a uniform pause on both of them for the same duration. You may not care what happens to Cheesecake Factory or their commercial landlords, but it’s an example of what will be repeated throughout the real estate market, which will ripple through the rest of the economy. All because politicians were too chickenshit to lead.
You’re missing my point. I’m not passing a value judgement on the tenants or the landlords. I’m saying the chaos of asymmetric shut-downs is poisonous. It’s not the “free market” at work. It’s government placing the burden of the Great Pause solely on the tenants because that way they only alienate the tenants and can still count on campaign contributions of real estate conglomerates and investment firms. Follow the money, it leads right to America getting fucked over by the ruling classes.
You pause it all together or you reap the whirlwind. Or rather we reap the whirlwind while the politicians cower.
