More Vacants

M.B. writes in, with regard to vacant property lock-in:

Matt — just thought I would point out that DC does have a policy mechanism to deal with vacant real estate. They tax vacant property at a much higher rate. The place I recently bought was listed as vacant and the property tax rate was almost five times higher than non-vacant property (its like $5 for every $100 of assessed value, compared to $0.85 per $100). Not sure what the property tax rate is for commercial real estate, but the vacant tax policy is definitely a deterrent to just hanging on to property. Still it is curious why these properties stay vacant for so long.

Well, that sounds like a pretty good idea to me, but looking around the city it doesn’t actually seem to work especially well. I think part of the issue for commercial property is that commercial leases are typically pretty long — someone opening a business wants that kind of security — which makes people extra-hesitant to lease something out if they think the price will be higher in twelve months.