What they could also do, if they don't want to ride commercial property prices, is bundle the property in a fund, and have it owned/managed by selling shares, but with the caveat that Amazon is effectively on 'rent control' and gets an infinite lease, until it decides to bail out.
Not profitably. Renting out apartments is profitable, but paying property tax and maintenance costs on a bunch of housing that you hold empty isn't. And to artificially control the supply the housing needs to be empty. (This is actually one way we know this isn't happening at a large scale right now: vacancies are at historic lows)
Buying up a bunch of real estate to drive up the price and sell for a profit also doesn't work. For the same reason that a pump-and-dump scheme needs other bag holders: when you start selling the price will drop too quickly
The thing about real estate on that scale is, to not get ripped off you have to time it carefully.
It probably would cost amazon less to buy 10 potential properties and resell 9 of them, than to announce their intentions and then attempt to buy their chosen property.
In Atlanta, we already learned that lesson by announcing the BeltLine (mixed use alternative transit development corridor around the city) before acquiring any of the land. A decade later, after court battles involving the city purchasing land via the Board of Education in order to prevent further price gouging, we still don't have all the land needed, and only ~10% of the project is completed.
They might well turn to speculators willing to buy out the property even at less than current price. If you own a 250k property and haven't been paid the rent you expect for months 50%-75% on the dollar so you can pay your own expenses might look attractive.
How is that going to make them money? They would have to withdraw enough units to raise the market price across an entire city -- and forego the rent on all of those.
That kind of thing only makes sense if the city is imposing some kind of rent control or similar so they can't rent them out for the market rate and start getting weird incentives for rich people accounting chicanery.
If they could buy 10K on-rental-market units at an average price enough under $100K each to leave room to build luxury housing there, it would make a hell of a lot more sense to just continue to rent them.
As long as corporations can make a profit (low enough interest rate, high enough rent), they will continue buying the properties. It may be difficult to build fast enough to overwhelm their ability to buy, and in a large number of areas, the market isn't anywhere near saturated.
With them holding the property, they push prices up for buying, which forces people into renting. It's a vicious cycle that just encourages them to buy more property. At some point the whole market may collapse, but hell, they may get a bailout.
Buying the assets for enough to cover the landlord's debts. then liquidate the assets for market value. The government could even just hold the assets themselves.
To be fair... what you described is not what's being suggested by the "Urban Wealth Fund".
What the "Urban Wealth Fund" idea would do is essentially have that property put into a pool of property with ... for instance ... the State's property. And then give out shares based on the value of the property the city put in.
I can understand why someone holding real estate would not want to do that. Especially if the city is putting in something in Flatiron... that may not be very valuable in price, but can be leased for FAR more than any of the property that the state might put in. (Even though the state's property may be more valuable in price, as some of it includes Beaux Arts buildings, but can't be leased for as much.)
It's far smarter for the city to just go it alone in that instance. (Well, I guess "smarter" is too loaded of a word, so maybe I should just say that the city would derive far more profit from just leasing the space on its own.)
And that's just the single instance you mention. It gets even more complex when you talk about the city kicking in an asset like... say ... Central Park.
Probably fine if they own their buildings? I can't imagine how they would adapt that quickly, but if it still concerned you you could hedge with brownfield developers or even REITs that don't own (whose costs would presumably plummet)? Not at all an expert.
My wife’s family did this also. They owned the buildings and leased them back to the company.
It saved their butts when a partner they took on tried to take over their very valuable company.
I don’t see the problem unless there’s obvious overpricing, corruption, or failures to disclose. At some point it makes better sense to put property under a holding company or similar.
Where this will end up is that Amazon will figure out a way to put these at private residential homes [1] and the property owners will be able to earn extra cash. Won't work in all places or on all types of properties but I can definitely see it being possible in certain locations.
[1] After figuring out how to defeat any zoning issues.
If they buy up enough land quietly they can then spin it out as a REIT and lease it back from themselves, thus writing off capital gains and moving them under operating expenses as a major tax dodge.
If they did it loudly people would start speculating which will present reduced wealth extraction by siphoning off rent. The goal is to avoid letting other people get rich and cornering all the capital for yourself. Stealth is a pirate's best friend.
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