Essays by John McNellis
Retail Vacancy Taxes: Empty Stores, Empty Logic
Palo Alto’s city council is considering a “vacancy tax” on empty shop space in its downtown, penalizing owners stuck with vacant buildings. Not widely heralded for its common sense, the Council reasons that landlords are behind our beleaguered downtown’s hollowing out. One council member crowed that greedy landlords are intentionally...
The Pacaso of Time Shares
More often than not, the movie bad guy is a drug lord or a nature-paving developer. While these two villains seemingly have little in common, one species of real estate promoter makes its money in precisely the same manner as infamous narcotraficantes. The business model for drugs is fairly straightforward....
“Resuscitation Hardware?”
I shorted a stock once. As a Kmart landlord 20 years ago, I saw firsthand how badly that discounter was run. Its stores were filthy, its cheap inventory spotty and its employees disheartened. Had it been a race horse, the vets would have put it down. But Kmart’s stock soared...
San Francisco: Another Wrong Left Turn?
San Francisco Supervisors Preston and Peskin have proposed the “Neighborhood Grocery Protection Act” (NGPA). If enacted, this law would require any supermarket desiring to permanently shut down to give six months’ notice to the city and public. Once given, the grocer would then be required to meet and “work in...
AI: It’s Here Now
When ChatGPT hit the street in late 2022, a close friend began amusing himself—and occasionally, me—by having it rewrite my essays. Sometimes, Bob would ask Chat to rework the piece in my voice (it acquires this capability by scraping one’s writings off the net), sometimes in its own disembodied style....
Retail's Back
“But is retail OK?” Visibly distressed by his passel of non-performing assets, the banker lit up at last and exclaimed, “Retail is the golden child of our entire portfolio. Shopping center loans are our best assets.” The banker was speaking of bread-and-butter shopping centers, real estate Wall Street had largely...
Empty Offices: A Life Science Solution?
These are the times that try landlords’ souls. Office building owners are scrambling, some tossing the keys to their lenders, others gilding their buildings to attract the few tenants left in the market, still others eager to convert their towers into uses not beset by the wasting disease of work-from-home.…
Commercial RE: Firetrucked… but not forever
Henslowe: …Strangely enough, it all turns out well. Fennyman: How? Henslowe: I don't know. It's a mystery. – Shakespeare in Love Real estate industry conferences this season have been so downcast that one could sum up their conclusions about our business with a single unprintable word. As to that, here’s…
Lies, Damned Lies, and Financial Statements
Bankers know that developers’ financial statements are rife with dubious valuations based on hopeful assumptions and guesswork. So why do they insist on them? Franklin Delano Roosevelt’s first vice president, “Cactus Jack” Garner, is fondly remembered for having observed, “The vice presidency isn’t…
Hard Money for Hard Times
To everything turn, turn, turn There is a season turn, turn, turn And a time to every purpose under heaven A time to borrow, a time to lend* Some pundit proclaimed that commercial real estate skipped the recession and went straight to the depression. Like most blanket statements, that one is full of…