How can valuable retail real-estate stay vacant for an extended period of time?
Before applying irrationality to explain the phenomenon, consider the following simplistic model of a rational owner: assume there is the high rent $R^h$ and the low rent $R^{\ell}$. The owner faces the prospect of earning either

$$V(h) = \sum_{t=1}^{T_1} \beta^{t-1}R^h + \sum_{t=T_1+1}^{T_2} \beta^{t-1}\cdot 0+ \sum_{t=T_2+1}^{T_3} \beta^{t-1}R^h +...$$

or

$$V(\ell) = \sum_{t=1}^{\infty} \beta^{t-1}R^{\ell} = \frac{1}{1-\beta}R^{\ell}$$

Favor the "low-rent" scenario by ignoring all terms in $V(h)$ except the first sum (this reflects that the property may go unleased for "many years", so remote-future income gets fully discounted). Based on these considerations alone, if we observe the "high rent" scenario, it must be the case that

$$V(h) &gt; V(\ell) \implies \frac{1-\beta^{T_1}}{1-\beta}R^{h} &gt; \frac{1}{1-\beta}R^{\ell} \implies R^{h} &gt; \frac{1}{1-\beta^{T_1}} R^{\ell}$$

which can be re-arranged to give

$$\beta &lt; \left(\frac {R^h-R^{\ell}}{R^h}\right)^{1/T_1}$$

The right hand side can be estimated by real world data: obtain average magnitudes for the high and the low rent, as well as the average time a business under the higher rent pays it prior to fold (the $T_1$ parameter). These will lead to an estimation of the upper bound for $\beta$ in order for the above inequality to hold, and justify the "high rent" scenario observed.
Then one can examine this upper bound and contemplate whether it appears "reasonable".
As a numerical example, assume $R^h = 2R^{\ell}$ and $T_1=2$ (say years). Then it must be the case that 

$$\beta &lt; (1/2)^{1/2} \approx 0.71$$ 

"Too low" (i.e. too high discounting) one would tend to say. But don't look at benchmark values of $\beta$ that are used in macro-models. Try to think what the discount factor attempts to capture here.  And in any case, a person with very high discounting, is not "irrational" -this is how he experiences the world.

And then, there are other considerations: accepting low rents tends to drive the asset values down. Also, It may be the case that this is incremental income for land owners, above some comfortable level from other sources, meaning declining utility of wealth may kick in. Further, constant occupation physically wears the asset down faster. Etc.  

My point is, "people are just jerks" (i.e. arguing for irrationality) can explain everything - and so it really explains nothing.