Major projects take a couple of decades to get out of the ground. What was the demand like for housing ten years ago? What is the demand for office space like today? What was the demand for retail twenty years ago? (Low, low, and low) [1].

I agree there are only so many stores a mall can support. At that point the economically sound strategy is to stop building. It's not to layer on incidental complexity that provides lower returns at increased risks. It will only create problems syndicating investors for the project.

[1] Retail was still recovering from over-supply from the S&L pre-crisis and under-demand from the dot.com crash. At the low point of the cycle it could have been perfectly sensible to start planning a retail project on the prediction that retail could only come back and in the hope of timing the up-cycle correctly. But you would not have been building a mall. You would have been planning a power center.

Yes, real estate is a very regional thing, and places not affected by the S&L crisis and the dot.com crash would have different economics, for example in other countries. The place I had in my mind when replying to your comment was South Korea, where there are many mixed-use high rises with business or even malls on the first few floors, and residential above. I don't know the impact of S&L and dot.com on the economics of these buildings back when they were being planned and built, but seeing as how they are not an uncommon sight, and are sought after as residences, likely they had a different view than your analysis.

The article was about the US. The economics and politics of the Korean Peninsula are rather different.

You really captured the real driver of a lot of real estate policy — the cash.

Money people need things as simple as possible to package risk.

People think there are ways for the market to produce non-market outcomes. And don’t realize the scale at which market makers operate is qualitatively different from normal experience with real-estate. For big money quick profits are a problem.

As a layman, it almost seems like a either “quick profit” or “zero risk”.

A family friend opened a bakery. Finding a storefront was an insane process, in some cases it’s apparent that the landlord doesn’t want to rent out the space, it’s been vacant for 4 years and rent is... aspirational.

Four years is nothing on a multi-generational investment horizon.

Any real-estate pro forma will include a vacancy rate.

If a person owns ten storefronts on a block, discounting one lease sets a lower rate for the nine other leases.

If a business can't afford the lease, that is a problem with its cashflow and/or access to capital relative to its aspirations. Often the landlord can simply take depreciation and meet its IRR targets. Particularly if the landlord is unleveraged. The building and land aren't going anywhere. That's the nature of real property as an asset class.