#THECLOSERSDAILY : EPISODE 167: BOARDED UP WINDOWS

So we've got another audience member question for you guys, and they were asking why is it when they're walking down sidewalks, they see commercial properties that have had for lease signs for months and months and months and some commercial properties, literally for years? Well, you gotta realize that when a commercial property owner is buying a property, a lot of times they're valuing it based off the cap rate, meaning they're taking the income minus the expenses, dividing it by the purchase price, and then buying it at a cap market value. The challenge is if they decide to just discount some units to get somebody in there to have some rent coming in, that's gonna set the bar for the average rent across the plaza, and it's gonna devalue it from, say, a macro perspective. Now, there's creative ways of structuring leases so that everybody can get what they want, but large in part, a lot of times, they'll write those losses off against their taxes rather than taking an actual loss on a lease. It's pretty complicated, but if you ever have any leasing questions, let us know and we'd be happy to answer them for you.

Disclaimer: "Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, we assume all information is subject to change and should be verified independently by the buyer and their agents.”