West Coast Cities Turn to Vacancy Taxes to Grapple with Housing Crisis
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Housing<br>Economics<br>Commentary
West Coast Cities Turn to Vacancy Taxes to Grapple with Housing Crisis
By<br>Collin Thrower<br>May 23, 2026
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Aerial view of downtown Vancouver, British Columbia, Canada, one of the pioneering cities in implementing vacancy taxes. Their data has a lot to tell policymakers. (Quintin Soloviev)
If you walked through Portland, Tacoma, or Seattle today, you would no doubt note the vacant, seemingly abandoned parcels of land sitting collecting weeds and litter. You might also note the empty storefronts and “For Lease” signs that have become permanent fixtures of the streetscape. This leads one to wonder: who owns these properties, why are they empty, and what could they be better used for?<br>By Q4 2025, Colliers reported Portland, Oregon reached another post-pandemic high of downtown office vacancies – 27%. Consequently, the City of Portland has been considering implementing fees on vacant commercial properties in an effort to drive prices down since 2025.<br>Further north, Seattle saw its highest commercial vacancy rate since the pandemic, with reported rates falling between 25% and 34.7%. As part of her campaign, Seattle Mayor Katie Wilson pledged to consider a “well-designed vacancy tax or fine” as a means to drive small businesses back to the downtown core. As major cities in the Pacific Northwest consider commercial vacancy taxes, there is a question about the results and what it would look like for cities like Tacoma.<br>Taxes as a Means of Development<br>The economic model of vacancy taxes works in theory: property owners are taxed for their vacant properties and therefore incentivized to sell or rent the vacant property at a market occupying rate. In reality, properties are still vacant for a number of reasons including, high rents or high costs to convert the property to housing. Policymakers want to lower commercial rents and increase focus on adding housing downtown. A vacancy tax could help further those aims.<br>By taxing a property with a long-running vacancy, the property owner is incentivized to lower their asking rent or sell the property to a new owner who may put it to a better use. The cost to keep the property vacant and off the market altogether as a speculative asset becomes too great.<br>The idea is not new, and it has been implemented in several municipalities across North America. In 2018, Washington, D.C. implemented a tax on vacant residential and commercial properties at a rate of $5.00 for every $100 of assessed value, and increases to $10.00 for every $100 of assessed value for properties identified as blighted. As goes the economic theory, the intention for the tax by the D.C. Department of Buildings is to “bring vacant and blighted properties back into productive use.”<br>In 2020, voters in San Francisco passed Proposition D which applies a tax on ground floor, street facing commercial properties vacant for six months out of the year. San Francisco’s commercial vacancy tax is $250 per linear foot of frontage in the first tax year the vacancy occurs.<br>Taxes on the land and property are the tools of many municipalities, and one of the few progressive revenue generating options available to cities in Washington. Leaving that tool on the table could put at risk a municipality’s ability to raise the required revenue they need to encourage small business growth and housing development.<br>Vancouver’s Gold Standard<br>When looking at vacancy tax case studies, the most regionally famous would have to be Vancouver, B.C. In 2017, Vancouver implemented an “Empty Home Tax” (EHT) – a tax on vacant homes of 3% of a property’s assessed value. The province of British Columbia followed suit, implementing a Speculation and Vacancy Tax (SVT). With both taxes in place, the Vancouver model is one of the most studied cases for North American cities. The implementation of both taxes discouraged speculation and the removal of residential properties from the long-term rental markets.<br>The province of British Columbia has its capitol in Victoria. The province passed a Speculation and Vacancy Tax shortly after Vancouver paved the way in 2017. (Doug Trumm)With the combination of Vancouver’s EHT combined with the province’s SVT, the taxes are credited with reducing the residential vacancy rate to 0.49% by the end of 2024, according to the city’s annual assessments. By comparison, Seattle’s vacancy rate by the end of 2024 was 6.6% for apartment buildings according to data from Kidder Mathews and Simon Anderson Team.<br>Vancouver’s problem was that would-be domiciles were kept off market for speculation, rather than housing. The intention of both the EHT and SVT in Vancouver is not to raise funds, but to address and disincentivize vacancy. However, that does not mean the revenue was nothing. By 2024, Vancouver collected over 202 million Canadian dollars (~US$150 million) in tax revenues from the...