Shops and companies going into administration

[RedKettle]

I really mean the ultimate landowners, not the same as the built property owners.

Technically it is, buildings are always legally owned by the person who owns the land. There may be somebody who has a lease over the buildings but they do not own them.

I would also dispute your contention that owning land is risk free. If you bought property in the last few years the value has properly fallen now. Value of commercial tends to be function of rent yield.

[MilleMiglia]

Technically it is, buildings are always legally owned by the person who owns the land. There may be somebody who has a lease over the buildings but they do not own them.

I would also dispute your contention that owning land is risk free. If you bought property in the last few years the value has properly fallen now. Value of commercial tends to be function of rent yield.

Always used to wonder why commercial property was allowed to stand empty. Surely it made sense to let it out at a reduced rate, so that some money was coming in? Then someone explained the above to me, and it all made sense (well, sort of).

[mh]

I would also dispute your contention that owning land is risk free. If you bought property in the last few years the value has properly fallen now.

Value of the land only matters if they have borrowed against that value where the whole merry go round starts again!

Always used to wonder why commercial property was allowed to stand empty. Surely it made sense to let it out at a reduced rate, so that some money was coming in? Then someone explained the above to me, and it all made sense (well, sort of).

Yes, RK is quite right, if the lessor reduces the rent it devalues the property and that can be devastating to a balance sheet based on borrowing against asset values. The sham value remains on the BS until a (say) 5 year property revaluation or earlier if there's a company sale event or auditor enforced revaluation.

I accept that with our complex economy few entities are any longer pure "rent sinks" because the temptation to borrow against land and property value to get more cash right now is sooooooo tempting with rents paying back the loan (until there's a 1 in 100 year financial crash).

[Adoniron]

Commercial property has long been considered a safe investment compared to say equities. Lots of pension funds have part of their portfolio in property to balance the risk of shares and provide a steady income.  Now we are seeing not only contraction of the retail sector (which started long before covid) but also other businesses seeing more of a role for home working which has undoubtedly been a success during the pandemic. Only yesterday Fujitsu announced all staff would work from home permanently. Professional firms can see there are huge savings to be made on property costs (their biggest expense after salaries) and I think big shiny offices will become a thing of the past. Businesses will plan to accommodate maybe half of their workforce at any one time.

[advent2016]

All these companies going bust will sadly lead to an increase in crime by previously law abiding people who feel trapped. Some women may find that prostitution is the only way they can make money to feed their kids. Will there be a large influx? I don't know. I've never been a fan of coercion.

I'm just hoping things can somehow get back to normal and feel that a lot of companies have used CV as an excuse and there will be a lot of people in retail and hospitality that will have to retrain and/or expect a lower standard of living moving forward.

[lostandfound]

It will be interesting to see if covid precipitates structural changes to the economy. Not only working from home, but also, for example, if it will be an inflection point for many companies to introduce increased automation.

[RedKettle]

Value of the land only matters if they have borrowed against that value where the whole merry go round starts again!

I think it matters if you have paid say £10m for a building that is now worth £6m!!

[Chorley]

All these companies going bust will sadly lead to an increase in crime by previously law abiding people who feel trapped. Some women may find that prostitution is the only way they can make money to feed their kids. Will there be a large influx? I don't know. I've never been a fan of coercion.

I'm just hoping things can somehow get back to normal and feel that a lot of companies have used CV as an excuse and there will be a lot of people in retail and hospitality that will have to retrain and/or expect a lower standard of living moving forward.

This. I'm no tin foil hat conspiracy theorist, but I've no doubt that the callous cunts at board / CEO level have been rubbing their hands with glee at the chance to streamline their operations ( code for fuck off, your redundant) without the moral outrage.
And as usual, they and all the other people at the top will come out of this smelling of rides and probably considerably richer.
Meanwhile you and I and will be fucked for years to  come

[GreyDave]

This. I'm no tin foil hat conspiracy theorist, but I've no doubt that the callous cunts at board / CEO level have been rubbing their hands with glee at the chance to streamline their operations ( code for fuck off, your redundant) without the moral outrage.
And as usual, they and all the other people at the top will come out of this smelling of rides and probably considerably richer.
Meanwhile you and I and will be fucked for years to  come

Chorley     Nail Hit Spot On Head     

[mh]

I think it matters if you have paid say £10m for a building that is now worth £6m!!

Yes, if that balance sheet value is critical to your survival.