Here is the problem:

> Half empty, the building is only generating $500k per year in net income instead of $1M.

> Let’s imagine the owner lowers the rent by 30% to fill the building.

> Now, reality has proven the operator can only make $700k per year.

No. When the building sat half empty, reality had already proven that it could not generate what they thought it could.

This is the insane fallacy driving this whole thing, and no amount of explanations about commercial mortgages will prove anything other than that a larger number of people than we thought are participating in the same delusion. If you cannot rent the space for what you thought it could rent for, your building is already worth less than you thought, and it is sheer folly to think that you can alter that fact by pretending you are waiting for higher rent later.

> So, cities could do something like put a vacant storefront tax and… make them lose even more money? If that “worked,” the mechanism would be to force a lot of commercial property to default, which could put a lot of new space on the market at lower prices, which should lower the commercial rent. But it would also hurt the banks a lot, which has a history of leading to bad consequences and subsequent bailouts.

There is another problem. What we need is to dig deeper into that theory and push harder and harder for solutions where all the financial loss gets pushed onto the people at the top who have a lot of money. If the banks are making money off this kind of nonsense then they should fail.

> I’ll give this some more thought, but if any actual commercial real estate professionals have ideas I’d love to hear from you in the comments!

No! Commercial real estate professionals are mostly just more people buying into these same fallacies! What we need is more people outside that self-deluding system saying "this is nuts, I'm taking $100 million from you" and resetting the entire system.

Why do commercial spaces sit vacant? (2025)