“they’re going to find any way they can to share that cost with someone else, most logical person being the tenant.”
I think my point is getting missed here. For your argument to be true, it requires the landlord to be charging less than what the market can bear.
That can certainly happen in the short term. But long term, rents are determined by supply and demand. Prop 15 does not change either one of those.
As for NNN, a tenant’s willingness to pay more rent should not be affected by what you call it. “Hi, I am raising your rent by $100” and “Hi, I am raising your NNN by $100” makes no difference to the tenant.
Basic economics says Prop 15 is entirely on landlords.
The only way that isn’t true is when you relax the assumptions of basic economics, which are generally true, especially in the long run, but not ironclad like the laws of physics.
The main assumptions that are not true in the short run are (1) no transaction costs/perfect information (2) economic rationality.
Ultimately, a small and rapidly decreasing bit of the tax increase will be passed on, but in general it won’t, because in general the laws of economics do apply to the commercial rental market.
Another point nobody opposing Prop 15 has addressed: if the tax increase is just going to be “passed on” to tenants, why are the huge commercial landlords like the Irving Company spending tens of millions of dollars opposing it?
Likewise, imagine two identical buildings next door to each other. One is taxed at 1% because it just changed owners. The other is taxed at 0.05% of its actual market value because it was purchased in 1970. Does this actually effect what the IDENTICAL units will rent out for?
Of course not. The market sets the rent, not costs. “Hey, you MUST pay more for my unit, because NNN!!!” doesn’t mean the first owner can charge more. If his NNN is higher, he’ll have to lower his base rent.
