Rather than lowering rents, landlords are offering more freebies than ever to retain tenants or attract new ones. In Manhattan, cash gifts for tenants—typically used for kitting out new office space—have more than doubled since 2016. Across America, the average number of rent-free months has risen to its highest since 2013. Some property developers remain optimistic, betting that demand for office space will eventually bounce back. But with each new variant of covid-19, plans for a wide-scale return to the office have been delayed, and delayed again. And changing patterns of attendance look set to reduce the overall demand for space.
Landlords will add a keurig to the lobby and act like they’re building a community
Rather than lowering rents
They can’t. I mean, they literally can’t lower rents. They are never, ever coming down. Ever. Not even after a 10 year depression where the building sits empty. “Well they’d rather lower the rent and get a tenant than keep the rent too high and get nothing.” That’s where you’re wrong, bucko.
Once upon a time, this was true. But today, there are a whole host of financial instruments that base themselves on the rent price. Lower the rent, and a chain reaction of negative events occurs. Property owners are leveraged up to the hilt. They borrow as much as they can against their properties to invest in other ventures. If the rent goes down, they’d have to actually pay for their properties, and that must never be allowed to happen.
Every day, Marx’s articulation of the Tendency of the Rate of Profit to Fall makes him look more and more like he was a time traveler who just happened to see how capitalism played out then went to the 19th century to write about it.
honestly that sometimes makes the most sense to me because its hard to believe one man could have so much natural insight.
That would be a cool sci-fi story. Something like 11/22/63 but in reverse, it would mostly be historical fiction about Marx’s drunken shenanigans with a backdrop of his desperate attempt (writing the manifesto and Capital etc) to save the world from the future he came from, only to ultimately have us wind up back where we are now.
I cover this stuff in the press (boo hiss) and you’re 100% right. this is a battle to the death for office owners, and their banks. No one could handle having to actually pay for all of this real estate.
We actually have a problem here that there are way too many giant vacant offices just occupying space where people could live. To the point where office space is dirt cheap, but housing is insanely expensive. But this has even been a problem before covid.
