Empty storefronts and vacant buildings are the drawing the ire of some Boston City Councilors, who have introduced a hearing to find solutions for “high-rent blight.” The aim is to reduce the number of long-term, vacant commercial storefronts and residential units that exist in some of the city’s prime neighborhoods.
There are many reasons why commercial space or residential units could be left vacant and off-market. Buy-and-hold investors may prefer to leave a property vacant, rather than expose themselves to the risks that come with tenant occupancy. Properties can also be intentionally left vacant for income tax reasons. Legal and financial matters involving the owner and/or property itself, could also be an issue.
Whatever the reason for vacancy, long-empty properties are often a source of blight for their neighborhoods. Such properties reduce the supply of available commercial space and residential units, and the truncated inventory keeps leasing costs high.
A proposed solution to chronically-vacant properties is to impose a “vacancy fee” upon the owners. Currently, there is no detail available about how Boston might calculate or apply such a fee. Early indications suggest that the fee would only target long-vacant storefronts, and vacant residential units in multifamily developments exceeding 50,000 square feet.
The challenge of perpetually vacant properties isn’t unique to Boston. New York City is considering vacancy fees as a way to address the blocks of empty storefronts that distress Manhattan. But the idea of vacancy fees may have began overseas; Paris enacted such a policy in 2014, in an effort to reduce an excessive volume of vacant office space.
We will continue to follow this emerging topic and keep you informed!
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