Last year on the way back to Oz I stayed in downtown Manhattan to catch up with a few subscribers, which I enjoy doing.
The above photo is the first thing I saw upon exiting the hotel.
This is old, but new. Note the use of stacking the cars now. This means the car park owner (running the business) can get more cars onto the site than previously. More cash for parking. But once the owner of the site (the landlord) sees this, what’s he going to do? Of course, lift the rent. Wouldn’t you?
Once the landowner charges higher contract rent, it capitalises straight into the price of the site. (The price is merely the yearly earnings, capitalised.) It means he (or she, or the corporation) can sell it for more.
Or they can lift the price at which the property rests on the balance sheet and then make higher payouts to the corporate owner. This is the economic renttaking all the productivity gains. It simply cannot be otherwise.
This is what nature—or God, if you are religious— intends to happen. It is the natural law.
The land belongs to nature. No human created it.
So, if you are running the parking business, double or triple stacking will initially earn you more. But eventually it will be same as always; you will spend your entire working life worried about the rent. Better to own the site than run the business, no?
By the way, every time I visit New York, it never ceases to amaze me how so many corner blocks are vacant sites; just car parks. Actually, more than one-fifth of the entire city, excluding roads, is vacant land.
This will get worse. The New York councils now offer new start-up businesses no sales taxes, no company tax and no property tax. See www.startup.ny.gov and hit ‘find a tax free zone’.
If there is no property tax, that means the holding cost for New York landlords is lower. The result is more land will stay vacant. And simply rise in price.
This is the cause of the cycle right in front of you. Or, perhaps better put, right under your feet. Almost no one else on the planet can see this. We then assist our subscribers with forecasting the next move of the cycle and timing it all to their best advantage. You can find out more here.
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