Occupancy rates appear to be less of a worry for investors, as a notable shift had taken place in the commercial property market in the downtown area of Seattle. This was according to Alan Harvey, manager and local economist of IDEAeconomics, a website promoting the post-Keynesian views.
Before, the commercial property value was regarded as a capitalized value of the outflow of rents from such property. Hence, occupancy rates, or content, is relevant. Yet today, commercial properties no longer sell value and content, but only value. This means, according to Metro Times, that the a predicted rise in price is what is being sold. In other words, downtown Seattle is currently in the period of Ponzi financing.
Occupancy rate decline, according to Harvey, may be the result of people trying to shift their money into the US. Citing the CBRE Group as his source, Harvey said that behind the transition is an international surplus capital, since it is a lot more profitable to build or purchase at an inflated value instead of an actual profit.
Nonetheless, none of this had to do with the law of supply and demand, which means accelerated development is not going to be a factor in the increase of property values. Finance does not work within those laws. Like in the case of the recent decision of the European Central Bank to widen the quantitative easing from €60 billion every month to €80 billion, it has less to do with what happens in the actual economy. However, with wide credit spreads, it produces little or even no revenue for the investors.
Occupancy rate transition, therefore, had nothing to do with economics, but politics. The help was extended by the ECB to the investors is due to the fact that they have the political powers. According to The Stranger, the issue of inflated asset values was not going to be resolved by creating more and more, but rather through increased construction and direct political action, or in other words, through political economy.
