[latchkey]

Retail != Office

Retail rent will fall because nobody is in the offices. Retail business will close because of less traffic, and thus there will be more space.

But, retail leases are typically 5-10+ years. Why would a landlord lower the rent now to a small business and get stuck in a long lease, when they don't know if the office space will recover and the big businesses will want to come back?

It is a game of chicken.

[profile53]

A lot of those five-year contracts were negotiated before Covid and I suspect they will expire in the next year or two. After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants.

Also, at the beginning of Covid, several big businesses just refused to pay retail rent as a negotiating tactic. It would not surprise me if that happens again.

[latchkey]

I'm not talking about past, I'm talking about current and future.

"Why would a landlord lower the rent now to a small business"

now.

[ImPostingOnHN]

as the post you responded to said:

> After a certain point, the building owner will have to choose between lowering rents, or having the building foreclosed on due to having no tenants

[latchkey]

Except that isn't their only choices. It'll depend on their finances as well as the market futures. Many many buildings sit empty for ages for a whole bunch of different reasons. Can't just generalize into a binary like that.

[ImPostingOnHN]

given the choice between no money and money, most will choose money, and no amount of 'it depends' will change that

the fact that some people let some buildings sit empty for some time doesn't mean most will let most sit empty for most of the time

after all, the next best alternative for building owners is foreclosure or abandonment or sale at a loss, the next best alternative for businesses is 1 of a thousand different places, or just a remote workplace

[latchkey]

> given the choice between no money and money, most will choose money

They might not have the choice. Nobody is going to rent ground floor retail space in an area with no foot traffic. It is a race to zero all around.