Falcon Towers | 170m | 44s | Langham Developments | Arc Studio

[Jack Harris]

Meanwhile on FB Marketplace:

View attachment 602863

at least the second tower is present in the ad lol

 

[SMayo]

And they shall sit empty for years like Fox retail. I don't understand developer economics of sitting on empty space vs dropping base rates.

I believe it's mainly for tax benefits.

 

[David A]

I believe it's mainly for tax benefits.

If you lose $1,000 and that allows you to save $450 in taxes, aren't you still $550 in the hole?

I believe it is for one of two reasons. First, the owners of most of these company are not monitoring the performance of individual properties that closely. Someone in Toronto does not see empty store fronts here.

Second, various property owners do not want to start a price war in a weak market, so they avoid doing that to keep rents higher on paper at the sacrifice of more vacancy. It is like a cartel.

 

[SarcasticMarmot]

If you lose $1,000 and that allows you to save $450 in taxes, aren't you still $550 in the hole?

I believe it is for one of two reasons. First, the owners of most of these company are not monitoring the performance of individual properties that closely. Someone in Toronto does not see empty store fronts here.

Second, various property owners do not want to start a price war in a weak market, so they avoid doing that to keep rents higher on paper at the sacrifice of more vacancy. It is like a cartel.

I think your two reasons are the larger portion. However, I do not think these large companies see a vacant space as losing money. They (using your example) see saving $450 in taxes as making $450, and renting the place out as making $1000 dollars. Yes, you could make $550 more but is it worth the effort? Seems like for many landlords the answer is no.

I would strongly be infavor of abolishing the rules that allow businesses to write off losses from vacant properties. They should be taxed at the full value of the last paying tenant until it is rented out again.

 

[David A]

I think your two reasons are the larger portion. However, I do not think these large companies see a vacant space as losing money. They (using your example) see saving $450 in taxes as making $450, and renting the place out as making $1000 dollars. Yes, you could make $550 more but is it worth the effort? Seems like for many landlords the answer is no.

I would strongly be infavor of abolishing the rules that allow businesses to write off losses from vacant properties. They should be taxed at the full value of the last paying tenant until it is rented out again.

It must be nice not to worry about losing money, but I do agree about the not worth the effort part.

Sometimes it seems any effort is too much for absentee landlords. Years ago, I knew someone who had a small commercial space downtown and was a good tenant. He wanted to expand and rent part of the space next to him that had been vacant for a while (and by the way still is vacant now over 10 years later). He tried several times to contact the absentee owners in another city to deal with it, but I guess he was too small for them to deal with so they never got back to him. In the end he moved elsewhere and expanded, actually renting from a local landlord who was more responsive.

I have no problem with businesses writing off their losses, that is Federal and Provincial tax money which the city does not see. However, there is an argument to be made for a municipal tax on long time vacant space (say over a year) as it seems to be more of a problem here.