When the rent went up 6-10 fold, they could refinance and borrow against the new inflated equity to secure more investments. Renting out at a substantially lower value would negatively impact this financing.
It's a better deal for them to sit empty at a potential rent of 35K/mo than it is to lower the rent and have to repay/refinance loans.
It's not about being stuck. If there's a reasonable chance to get multiples of what you can get immediately it's worth it to wait. Commercial real estate leases are generally ten years. Look at the math:
Lease ends Dec. 30, 2016 -> Immediately rent out for $10k/month to a mom and pop -> By Dec 30, 2024 total rent paid = $960,000
vs
Lease ends Dec. 30, 2016 -> Wait two years for an international fashion label that wants a vanity store -> rent out at $35k/month -> By Dec 30, 2024 total rent paid = $2,520,000
Are you sure that's how CRE lending works? It's definitely not how residential investment loans work. There's no mechanism for a lender to periodically check your leases and decide that they're going to call your loan because you're charging less. And if there was, why wouldn't they be terrified that you're charging $0?
I've heard a similar story in Ireland, when the bank had already repossessed a property. If they rented it out, they would have to mark down the asset value on their books. If they left it vacant, well, some vacancy rate is expected, so keep marking it to the last price it rented for.
When the rent went up 6-10 fold, they could refinance and borrow against the new inflated equity to secure more investments. Renting out at a substantially lower value would negatively impact this financing.
It's a better deal for them to sit empty at a potential rent of 35K/mo than it is to lower the rent and have to repay/refinance loans.