This is a vexing problem I was made aware of by friends that are in the retail business, renting their stores from landlords. It's really brutal. Retailers take on all the risk, put in the work to revitalize a neighbourhood, and their reward is that when lease renewal comes up in 10 years, it spikes and they're faced with a choice of being displaced or handing over an enormously increased part of their margins to the landlord which has done literally nothing.

The others that benefit are the nearby condo developers, that take photos of cool retail in the area to put into their brochures in order to help sell their product. They benefit from the land speculation and the work from others.

I don't really have a solution except that I can see that the landlords benefit from scarcity, and their leverage and ability to raise rents would be lessened if there was more viable retail spaces to take advantage of.

So the city could help retailers by dramatically liberalizing retail zoning and allowing more competitive high streets to develop. This could take the edge off being forced to move by a landlord jacking up rent.

Interesting article, though I'm biased since:

- I like to shop IRL, and the opportunities to do this pleasurably are going extinct

- I live right by Hayes valley, which they start out with.

- I'm also a member of "The Commons" which they mention at the end. I love what it's trying to do: creating a new social 3rd space in SF.

Always in agreement to such initiatives. I do think a barrier to adoption is the space of possibilities is quite large and generally not well organized around a specific proposal or mandate, so opposition to these initiatives can pick them apart of details. Especially since opposition is usually much more engaged in local governance.

It's somewhat complicated to understand, but I think this is an opportunity for strong communicators to present to a public that is much more receptive toward these ideas.

This is Exhibit A for why land value tax is a good idea.

I never considered how a street with lots of cool shops could create value for homeowners and commercial real estate owners without necessarily creating value for the businesses that were responsible for making it cool.

I don't think that any of the suggested solutions would work, as they all involve the government and taxation - which can only destroy value, IMHO.

Creating a cool vibe certainly has value and can contribute to price appreciation in the community, but ultimately capitalism is not based upon creating vibe but upon selling products and services.

>But homeowners would likely be willing to share value too

No, they wouldn't. That is why property tax rates (and hence land value tax rates) have so many laws capping them and otherwise limiting them for all the important voting blocs (old people, military, big business, etc).

See California prop 13, that voters passed. See Oregon measure 5 and 50, also passed by voters. And politicians wouldn't dare touch these.

>In American cities, there is an issue with value capture. One party creates the value (in this case retailers), another party (landowners or homeowners) captures it.

This phenomenon is not restricted to American cities. It will broadly exist in all human societies with flattened or top heavy population age histograms. The old are the most populous and knowledgeable (and motivated) to structure society so that the non working (themselves) can capture the most value. Hence, the popularity of earned income tax instead of marginal land value tax rates. The goals of the wealthy and the old (and the ones with aspirations to be wealthy) align to support rent seeking policy.

How does this survive contact with the triple net lease? You pass the bond and the property tax is immediately due from the tenant. Congratulations, you destroyed all the businesses.