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gdilla · 2023-08-12 12:56:32

Maybe that's what they said but they were also on the hook for rents or big real estate assets collecting dust.

harryh | karma 13836 | avg karma 3.21 · | 2016-01-08 21:18:37+00:00

If those companies couldn't survive renting real estate at market rates, they deserved to die as they weren't using their capital as well as other businesses.

matt_s | karma 3121 | avg karma 2.01 · | 2023-04-10 20:36:20

Yeah I might be off on my comment thinking from the perspective of how sometimes they’ll jack rent up to flip tenants to bigger businesses with bigger wallets. Like if a few tenants don’t renew on a 15 story bldg then jack the rates up to get the rest out and hope for a larger company to lease the full building since they won’t want to build in this economy.

Mediterraneo10 | karma 8206 | avg karma 3.28 · | 2020-06-12 12:52:14

> Bulk foreclosures and massive vacancies will hurt landlords and lenders respectively.

Will they? At least for commercial real estate in large cities where shops are going bust due to high rents, it is often claimed that owners are fine with letting the space stay unoccupied for long periods of time, because they are playing some kind of long game.

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christkv | karma 1794 | avg karma 1.37 · | 2023-05-21 09:47:17

That was it :) creating an incentive to not rent out space at all. Probably even worse now with the high fed rate

sukilot | karma 2382 | avg karma 1.24 · | 2020-06-14 21:20:55

They are likely treating it like real estate and taking a temporary loss in order to prop up future value when the economy recovers.

amelius | karma 42902 | avg karma 1.63 · | 2022-07-05 09:20:02

Yes, it sounds like they are about to head down the same road as many large firms who sold all their real estate because short-term investors said it was a good idea.

jf | karma 8097 | avg karma 9.36 · | 2010-10-05 01:51:25+00:00

This was a very depressing thing to do after the bust. So many buildings were for lease during those times.

kuschku | karma 11518 | avg karma 1.46 · | 2016-01-09 04:58:43+00:00

The new investors used the real estate only to sue the first company to get money – after the first company went bankrupt, no one rented the real estate again, it’s empty now.

It wasn’t "at market rates", it was far above that, and just intended to bleed out every piece of property from the company and transfer it as profit to the investors.

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pavel_lishin | karma 46523 | avg karma 3.63 · | 2016-09-02 19:17:02+00:00

Maybe afarrell wasn't talking about the oligarchs being the ones renting out the spaces.

bunderbunder | karma 15074 | avg karma 4.1 · | 2018-06-11 04:20:50+00:00

Wild guess:

Dropping the rents would prompt their remaining tenants to renegotiate their contracts.

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khuey | karma 7710 | avg karma 4.69 · | 2023-07-18 12:21:13

They're going to lose the buildings eventually when the loans need to be refinanced at much higher interest rates while commanding much lower rents.

maxxxxx | karma 29489 | avg karma 3.55 · | 2018-01-15 03:14:25+00:00

In theory you are right but I think the problem is that a lot of property bought by investors stays empty so the rental supply goes down.

userinanother | karma 269 | avg karma 1.02 · | 2023-10-31 16:21:21

Well actually… didn’t they lease buildings with shell companies and almost no recourse by building owners? I think a bunch of commercial real estate holders are gonna be holding a bag of pants.

pmoriarty | karma 58518 | avg karma 5.75 · | 2019-07-20 16:20:03+00:00

"It's almost never the case that they can make more money by keeping the rent high and units vacant."

Unless they can hold out until property values rise and they can sell for a profit.

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cinntaile | karma 4441 | avg karma 1.74 · | 2021-08-10 07:10:04

In the end they still have to find tenants, so the properties can't be empty forever or we'll have a lot of bankruptcies on our hands.

seydor | karma 7759 | avg karma 1.79 · | 2022-06-05 01:27:59

The value was transferred to the companies who no longer pay that rent, no?

loa_in_ | karma 1839 | avg karma 1.78 · | 2023-03-22 15:28:14

Armchair opinion: They should sell the properties to make up if they're having a deficit. Not predicting how this market situation would play out sounds like mismanagement.

Melting_Harps | karma 1584 | avg karma 1.06 · | 2022-08-22 14:58:30

As they should, propping up commercial real estate (and by extension housing) isn't in anyone's interests besides the investment class who pushed out the small businesses during COVID closures for failure to make payments. They saw massive spikes in value on their holdings and overall portfolio but now that the interest rate hikes have cooled the housing and real estate market a bit they want to justify these inflated costs by forcing people back into the office instead of seeing sensible price corrections.

Personally speaking, and with Adam Neumann's new move and VC funded warchest, I'm convinced the real estate market will sooner self-cannibalize itself instead of correcting to a pre-2008 bubble mania and they are throwing anything they can to prop it back up by forcing back in office and making them re-inflate all the surrounding housing options. The truth is that after the layoffs they cannot spare losing more talent, so calling their bluff is really more a calculated risk and the worst case scenario is taking a few more offers via Linkden more serious this time around.

If they and the entire tech Industry stand their ground then we might have a chance at making it a norm because right now it's still incredibly shaky, and the truth is that it's foolish to even explore given how much unnecessary GHG is produced from commuting.

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PragmaticPulp | karma 66674 | avg karma 12.83 · | 2021-04-26 17:34:21

Keeping it empty would remove it from the housing pool, driving rents up.

I think the comment is saying that investors are using cheap loans to buy up properties and rent them out. This increase the supply of rentals and drives rent prices down.

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