This happens on the personal side as well, where property tax rates are artificially depressed - or more accurately, subsidized - until the property changes hands. When we bought our nearly 30 year old house that had had zero improvements, additions, or renovations since initial construction, our property tax bill increased 300% and has since "stabilized" to +10% a year.
What is truly insidious about this is that it's impossible to guess or estimate until you've already purchased the home, and by then it's too late to do anything about it except complain at the courthouse, which might get you a year's abatement if you're lucky.
If we let property taxes just be whatever they "should" be without penalizing home-buying in the process you could at least know what you'd be paying rather than having to factor in a 3-5x increase.
I wouldn't be surprised to hear this varies by jurisdiction. In CA, which has large property tax jumps on sales thanks to Prop 13, it seems like you can know the annual property taxes in advance. The sale price is the taxable valuation* and you can find what the local tax rate is (or you can infer it pretty closely from another recently sold home's public municipal taxes paid).
So solves one problem, but is still problematic :)
*I assume this is the general case, anyways; maybe there's details I'm forgetting about separate tax rates on the land and the improvements; the split of the overall proper value between those two categories was mystifying when I bought...
> landlord which has done literally nothing
This isn't really accurate. It actually takes a decent amount of work and capital input to get a set of retail buildings into usable shape and keep them that way. The internet caricature of landlords is that the buildings just popped into existence one day and the landlords rent them out, but there's obviously more to it. I know several attempts at retail real estate development that flopped and lost investors a lot of money.
There's also a risk involved in renting out the properties. Not all tenants will pay the rent, and when they stop paying for long enough you have to evict. It takes a long time to get someone's business out and turn the property over so a new business can move in. The rents have to be adjusted to compensate for some of that loss, but in a downturn (e.g. COVID) the losses can all sync up at once and torpedo the financial model used by the landlord.
Retail spaces also need to be kept up. It's common in my area for groups to buy out blocks of spaces and overhaul the old parking lots, landscaping, lighting, traffic patterns, and security so that they go from being sketchy run-down locations to something safe and inviting.
I'll probably get downvoted for trying to add some balance to the conversation because this is an internet comment section and my comment wasn't "landlords bad", but retail property investment isn't really a magical safe investment like everyone assumes. Keep that in mind if anyone hits you up for an investment opportunity related to one.
For various reasons it’s extremely rare for retail businesses to own the buildings they operate out of.
Just like saving a (healthy) life is a good thing, even if you can spin some stories about the dignity of death or whatever.
$100k of money sitting on shelves depreciating. Narrow hours when most of your business comes, but need to hang around all those other hours for the trickle of other customers. Dealing with theft. Dealing with bottom tier workers. Dealing with the general public
It's really best when you are already retired and just want something to do for fun.
https://shoppingcenterbusiness.com/retail-condominiums-break...
But in general most US cities have an excess of retail space. Eliminating a lot of it would probably be a net positive.
As a bit of a "cute downtown" junkie, I can assure you that those quaint town stores have crazy prices, but people pay them.
If you have a great retail idea, then you need to get investors behind you so that your company can outright own the stores. Otherwise you will be leeched on endlessly. It's incredibly hard to get on top if you're depending on the good will of landlords.
Solution: Online shopping until the bubble collapses.
Spitballing solution: In addition to LVT, rental tax? Nah, that just drives the purchase price to a higher level. Hmm. Also it drives up the cost of the minimal viable business (hence the coffee sheds in parking lots).
Allowing more supply is the only good answer.
You might say: but what abou the owners? Many such small businesses are just jobs you buy. Many don't survive when the owners don't move on or the business sells for what's a relatively low price given the turnover.
I'll give you another real world example of this distortion: NYC"s so-called "zombie stores" [1].
I keep thinking about a statement made by Xi Jinping in 2016: houses are for living, not for speculation [2]. Many China critics liked to point to the Evergrand collapse as some gotcha but what really happened is that the CCP intentionally just popped the real estate bubble, taking the position that affordable housing was more important than inventor returns.
Why do I bring up housing? Because as intentional policy decisions increase the cost of construction, it also makes commercial real estate more expensive. Even if you ignore the increased construction cost, every commercial space becomes more expensive because it's an opportunity cost to not build housing there in a speculative market.
Increased rent and increased property costs are an input into everything you buy and are killing the businesses people seem to like and the so-called "third spaces" a lot of people talk about.
And why? Because a plurality of Americans (if not an outright majority) see themselves as "temporarily embarrassed millionaires" [3] and future real estate moguls.
[1]: https://www.nytimes.com/2024/08/06/nyregion/pharmacies-vacan...
[2]: https://en.wikipedia.org/wiki/Houses_are_for_living,_not_for...
[3]: https://www.goodreads.com/quotes/328134-john-steinbeck-once-...
Using all kinds of regulations to ignore the market signals usually points out that you're doing something wrong (not _always_).
For example zoning keeps industry away from residential, preventing disasters like the West Texas Fertilizer explosion.
Reformulate the question: why do people tolerate living in dense tiny apartments, without easy access to necessities like childcare and grocery stores?