<
https://www.businessinsider.com/bank-financing-urban-planning-pandemic-retail-apocalypse-vacant-storefront-2023-10>
'You've probably seen it in your own neighborhood. Some restaurant or dry
cleaner or hardware store closes because it can't make rent, and the space just
sits there, empty, for months. Years, even. The pandemic boarded up so many
storefronts across America that it turned what was already a Retail Apocalypse
into something out of "The Walking Dead," fueling the "doom loop" that's
ravaging even the mightiest cities. Urban dwellers fled and offices emptied
out, which means walk-in traffic at street-level storefronts has taken a dive.
Retail vacancy rates in major cities have soared by as much as 30% since the
pandemic began — and in some "superstar urban cores," McKinsey & Company
predicts, they could rise by another 26% this decade.
Still, as apocalypses go, this retail one is puzzling. If demand for
storefronts is down, why don't landlords just lower the rent and get a tenant
in there? That's supposed to be the magic of capitalism — its ability to
auto-adjust to anything the world throws at it. But that's not what is
happening with vacant shops. Even before the pandemic, one study found,
street-level retail spaces in Manhattan were remaining vacant for an average of
16 months.
So if COVID isn't to blame for all the shuttered stores, what is? Well, when a
landlord doesn't lower the rent to get a new retail tenant, it's because that
landlord can't. The market that sets retail rents isn't only between tenants
and landlords. It's also between landlords and the banks that finance the
buildings. And the banks, in many cases, won't let property owners lower their
rents enough to fill their properties. The pandemic may have emptied out
America's storefronts, but it's banks that are keeping them that way.'
Via Christoph S.
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
