That might help a little, but you won't notice. Beating such taxes is done with low value businesses. A mattress store is a typical case, good for holding larger spaces with almost no capital cost: a low overhead business used to hold a retail property until values appreciate. Smaller spaces are held with little clothing stores nobody shops at, or wire transfer shops and such. There is a plethora of such operations holding real estate everywhere, barely breaking even or losing modest amounts of money.
It's compelling to imagine there is some brilliant tax fix for every ill, but investors are a lot more agile than tax authorities; they make their living solving these impediments. Handling food is one the costliest ways to hold a commercial property, so that's rarely how its done.
I don't disagree, but even a low overhead business is still going to be better than an empty storefront (since it means creating some business and employment than none) and a reasonable % of said vacant businesses will be turned into decent value for the community. It's something especially apparent because even the local mattress stores have closed and left said space vacant.
Ok, but you're not going to get a nifty $4 lunch bowl shop. The properties are held until Starbucks or H&R Block or whatever wants to expand. Maybe said tax makes the mattress store reopen with its one minimum wage cashier poking at their phone all day, but you won't get more than that. The investors are holding out for the big money.
The business model works because when a buyer appears looking for numerous sites for expansion, they can deal with a professional investor group that can close deals in a cinch. This greatly lowers costs, because otherwise said buyer has to employ a small army of expensive people and take years to acquire or develop properties themselves. The buyer pays a premium for the value of foregoing all that. The price covers all the years of expenses; minimum wage labor, taxes, upkeep, and a good deal of profit, after years or even decades of squatting.
Nowhere in any of this is there someone with dreams of $4 lunch bowl shops.
> so why would they need to rent to a business with low operating costs
If you're asking why the landlord doesn't just leave the site vacant? They're offsetting costs or obviating vacancy taxes or both. There are a lot of reasons why it's beneficial to keep the lights on and babysit a place.
If you're asking why the landlord minds having a real tenant instead? The landlord doesn't want a real lessor that actually values the location, holds a 10+ year lease, invests money for improvements, makes weird modifications, etc. They want a junk business they can kick to the curb when the time comes.
Often the landlord and the placeholder business are the same, behind the scenes, renting from themselves. No hassle when it's time for the deep pocketed tenant/buyer to move in. All you need is a low cost property manager to look in on the place once a week, make sure the "staff" are actually showing up, and keep the plumbing/heat/electrical working.
> If you're asking why the landlord minds having a real tenant instead?
This
> 10+ year lease
I haven’t had a ton of experience with commercial property, but I have enough to know that at least where I live 10+ year leases aren’t common.
5 is much more common even for businesses spending significant money on buildout.
But also the kind of businesses the article is talking about wouldn’t require extensive buildout, so they would be much more amenable to shorter terms.
There are other reasons $4 lunch bowls are never going to happen in the us. Much higher labor costs (despite what the article said about similar minimum wage) is the biggest one.
> All you need is a low cost property manager to look in on the place once a week, make sure the "staff" are actually showing up, and keep the plumbing/heat/electrical working.
They could do that. Or they could actually make some income by renting it out instead of spending $50-100k on a fake business waiting for a payday that may never come.
There are many locations that are never going to attract a renter with deep pockets. And even in locations that will, it doesn’t take many years running a fake business to erase any eventual profits.
That might help a little, but you won't notice. Beating such taxes is done with low value businesses. A mattress store is a typical case, good for holding larger spaces with almost no capital cost: a low overhead business used to hold a retail property until values appreciate. Smaller spaces are held with little clothing stores nobody shops at, or wire transfer shops and such. There is a plethora of such operations holding real estate everywhere, barely breaking even or losing modest amounts of money.
It's compelling to imagine there is some brilliant tax fix for every ill, but investors are a lot more agile than tax authorities; they make their living solving these impediments. Handling food is one the costliest ways to hold a commercial property, so that's rarely how its done.