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Vacancy Issues- What Causes Them and What Can We Do About It.
by Casey Woods, Executive Director | March 6, 2024
| Across the nation we have an issue that impacts our communities: vacancies. Vacant homes, vacant commercial properties, vacant sections of buildings, and areas that aren’t utilized in our communities. Vacancies occur everywhere from our biggest cities down to our smallest towns. This week’s article will break down common reasons why vacancies occur, and what we as a community can collectively do to combat the problem. First, vacancies ARE a problem. Chronically vacant homes lead to neighborhood dilapidation, wasted infrastructure, and invite crime. Vacant commercial properties reduce jobs, sales tax collections, property tax, area traffic that impacts surrounding businesses, inter-business support sales, and can blight an area. Vacancies are not victimless issues. They cost taxpayers real dollars and have an impact on surrounding properties. Vacant housing is often in a lower price range that is more economical than building new, thus appealing to a broader local market. Vacant commercial property is a lost opportunity for local businesses to grow and improve the local area. Some common causes of vacancies include: Deferred maintenance- There are property owners who don’t reinvest in their structures. Buildings dilapidate with a consistent lack of investment. Eventually structures are in a state that requires substantial rehabilitation prior to usage. Finding buyers who are willing to both purchase and substantially rehab a building are rare. Those who purchase a building with deferred maintenance issues often have to engage in a longer development process to generate a quality structure. Inheritance/lack of value- When people have to work to purchase a building they often (but not always) want to see the building in productive use. When they inherit a building, or when they are an out-of-area buyer that sees a property as a minor investment, they may not care about the structure or the surrounding neighborhood. Emotional tie- This is really common and also hard for most logical people to understand; some people would rather see a structure unused and dilapidated than see a productive use. They simply can’t stand the thought of someone putting a successful business in “their” building, or someone changing any element of a residential property. It’s weird, and it happens a lot. Changing building uses- Business types change and residential expectations change. Some buildings are kept in good condition, but the consumer wants/needs have shifted to the point that buildings require a substantial rehabilitation. Some houses have two bedrooms, one bath, and no garage because at the time they were built that was the expectation. Now consumers may want something larger. Many business styles have significantly reduced their square footage needs, so larger spaces may be more difficult to rent or sell. Inappropriate usage- Some people will purchase a property for uses outside what is allowed by zoning or other community regulations. They will convert a residential space to something that is allowed in an industrial zone, or a commercial space to a uses that doesn’t fit the commercial usage pattern. Inappropriate building usage can cause consumer confusion, change residential traffic patterns, and often leads to dilapidation of structures. Lack of resources- Owning property isn’t free. It requires upkeep, utilities, taxes, and other expenses which can drain resources. For those who are inexperienced with development costs/timelines, incur unexpected expenses, or misread the market, a structure can sit undone because the resources to finish are unavailable. Lack of acumen- Owning a structure is like owning a business. You need a solid plan to keep the business (building) operating. If you jump in without a plan, the result often isn’t great. Going back to the drawing board, asking for help, and planning before compounding ownership actions is difficult for some people. Working with incentives, codes, zoning, financing and other related assistance can be difficult. Other people’s money requires adhering to other people’s rules. For those who struggle with a lack of acumen pertaining to development, a vacancy can occur. Good old fashioned stubbornness- Any parent who has ever experienced the “this is MY room, and you can’t tell me what to do” understands the stubborn ownership mentality. Some folks never grow out of it. The fact is that unless you have a house on a piece of completely undeveloped land with no roads, water, sewer, electrical, etc., you are part of a partnership. Tax pool funds to pay for infrastructure, subsidize supporting elements, and generate security/repair systems to enhance useability. In exchange, property owners utilize structures for their intended purposes. Most properties exist as part of an interconnected system, but “black and white” thought processes sometimes prevent development or rehabilitation due to that “you can’t tell me what to do” mentality. Supply outpacing demand- Many places in the United States (and other nations) are experiencing a population decline. Family units are smaller in many areas than they were fifty years ago. At the same time, some of those areas with declining populations continue to develop more previously unused land for housing and/or commercial purposes. You don’t have to be a genius to understand that more properties and few people equal more vacancies. Some common solutions include: Carrots that emphasize redevelopment- Incentives that focus on redeveloping existing properties can reduce net expenses and generate more developer interest. Again, using “other people’s money” means following “other people’s rules”, but quality incentives can decrease the amount of infrastructure required for a development, enhance the tax base, reduce sprawl, and create positive traffic for surrounding areas. Community focus on density- If the population in an area is declining, but the development incentivized by a community is on previously unused land (particularly on outskirts), you might lack a community density focus. Ensuring that plans in place prioritize infill and building rehabilitation can alleviate some vacancy pressure. Zoning enforcement- If an individual decides to change the use of a building for a purpose outside of it’s prescribed use, they often need to go through a community planning and zoning appeals process. That process is important because the building was often built to support a specific type of use (residential property was built to serve as a home, for example). Those that change the use of a building without going through an appeals process create a type of vacancy that can negatively impact a neighborhood. Through zoning enforcement, we can help encourage the use of a building for its intended purpose and discourage vacancies. Chronically vacant property ordinances- Even with carrots and assistance, some property owners need encouragement. Chronically vacant property registries can publish properties, their owners, and eventually (after a significant period of time) issue fines to encourage a property rental or sale. Engaged property owners- Out of town or disengaged property owners make it easy to ignore vacancies. Out of sight often means out of mind. Working as a community through organizations, real estate offices, and governmental institutions to generate more engaged property ownership can make options more evident. Local ownership/investment groups- Encouraging locals to invest in local properties (residential or commercial) typically leads to community centric decisions. When locals pool their expertise and resources through investment groups, they can tackle larger projects or multiple smaller projects. Locals owning local, and locals investing local typically results in less vacant property. Owner occupied incentives- Through Emporia Main Street loan programs and other incentives, we can help entrepreneurs own the space they occupy. First time home buyer programs through local financial institutions and other housing initiatives can help people own their own home. Obviously if you are occupying a space you own, the space is no longer vacant. Incubation and support- One of the goals of the Emporia Main Street incubator is to help businesses form a solid foundation. Once entrepreneurs refine their concept in a support rich environment, they either become a quality tenant or a property owner. Qualified support at a business formation can decrease vacancies over time by improving longevity. Support classes, loan programs, quality research, and other types of assistance can make occupancy a reality for more entrepreneurs. Advocacy- Promoting available properties (CLICK HERE for an example) can help connect renters or buyers with the property that is right for them. General citizens can point people to housing or commercial opportunities. Voters can talk to elected officials about vacancies. Community problems require community solutions, and we can all play a role in decreasing vacancies. Vacancies obviously have many different causes, and just as many solutions. By making quality occupancy that enhances a neighborhood a priority, communities can chip away at the vacancy issue and generate more opportunities for their town. |
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