The research firm’s top property economist likens the decline in office demand to what malls have experienced over the last six years—and sees a similar outcome.
There is a captive market for residential real estate, and a glut of commercial properties…
Everyone MUST live in a home while offices and other commercial spaces are a “nice to have” - so the businesses and individuals with extra capital have gobbled up the residential property to further push us into the “own nothing and be happy” economy.
I like the idea of transforming the old commercial properties to condos, but there’s a ton of issues with retrofitting - which is the result of zoning and differences in building codes. Then there’s the zoning issues themselves.
So… as usual… we are beholden to politicians doing the right thing for their constituents, and not their donors. These commercial properties are going to sit idle, and decay until it becomes a “true” crisis (buildings collapsing, mass squatting causing major health and safety issues) - causing untold costs to fix them to accrue in the meantime.
It’ll never happen, but my grandiose solution is to deliberately crash the housing market via legislation limiting ownership of single family homes. This would boost the “velocity” of cash (lowering inflation), allows taxpayers to own (solves housing crisis), and would renew interest in the commerical real estate.
Mass squatting. Hmm. That’s an interesting idea. I wonder if local governments will turn a blind eye, sort.of how they did in Brooklyn warehouses that rented out space to artists (which the artists used as live work spaces, unofficially).
Some of these offices are extremely small and don’t have bathrooms (there was an article in Curbed IIRC about psychiatrist offices that were empty because most patients are now doing Zoom sessions). But they would make good SROs (they just need to retrofit the bathrooms to have showers). They are about the size of a studio.
Some countries have actually legalized squatting in certain situations (like if a building is long term empty) to put some fire under the landlord’s ass to either find a paying tenant or sell. And honestly I think it’s an inelegant but effective solution.
It’s not productive to have real estate units sitting empty in the middle of the city and we simply shouldn’t allow it.
I worked for an engineering company that had “secret” projects. So when you were assigned to a secret project, you’d move all your desk stuff into that project area where everyone coming and going had to enter a security code to get through the door. But the size of projects would vary over the weeks. I remember one Friday I finished my work on a secret project along with several other people in the desks and drafting tables near me. The next Monday, we found that our desks were in the same place, but they’d moved the wall; so we were outside the project area - or actually we had been absorbed into a different project area with a different door code. So in those big buildings, there may be small offices, but they are easily reconfigured.
I wonder if squatting in high-rise office space might give rise to sort of communal life - something more social than single-family units of today. It will be an interesting social experiment
Just wanted to chime in and say that ive been seeing a lot of great comments, often great stories, from you and wanted to thank you! I love them!
One of the first places I lived when I moved out of my parents house was a converted hotel in a really old part of Los Angeles. My studio unit had a bathroom, but no kitchen. I lived off of microwave Trader Joe’s meals and stuff I could cook on a foreman grill. Cheaper units were basically just bedrooms that shared communal restrooms. We may be seeing more of this setup in the future.
Hopefully many offices will be converted into permanent living spaces instead of temporary ones.
While coverting offices to living spaces would be good for cities, there’s no lack of living spaces.
There’s just a glut of dragons hoarding them.
No idea if this is a common turn of phrase or your invention, but I love the “dragon” reference. People get so upset when I tell them we should “eat the rich”, but not even Gaston is against killing dragons that are hoarding the village’s wealth and killing our children!
People get so upset when I tell them we should “eat the rich”
And then they vote for genocidal fascists without feeling the slightest pang of conscience. Honest libertarian pacifists, they ain’t.
It is possible to retrofit but as u/dismalnow points out zoning is a big issue but there is also issue of economics. These building need to be sold at a steep discount for redevelopment to be economically viable. This requires that current owners book their losses and sell but they won’t until they can’t refinance, first wave is due 2024-2025. Many bagholders will have to face the music, let’s see what they will do. I am sure smart developers are already stacking cash for deep value shopping. With that being said many Class B/C office towers are utter trash to a point where it is more economical to just level them. I don’t know why local governments allowed them to be built…
meanwhile average folks can’t afford modest homes. When I was young condos were cheap alternatives to free standing houses (ok except for luxury ones). Now they all claim to be luxury and I have no idea who manages to buy these things. Single family freee standing homes in an area you won’t be shot is beyond anyone who works for a living.
parents buy them for children who help pay off the mortgage with their 100K job.
generational weatlh is a thing the popular media refuses to acknowledge. that is the reason most of these places get snapped up.
I live in Boston. Vast majority of people who even making 200K can’t afford a home. So their parents give them a nice 250K or more gift, and boom suddenly that million dollar condo/home is affordable for the couple. these people also never had student loans or medical debt like the average person would. they also often inherit cars and other large ticket items from family, further reducing their cost of living.
my salary has gone up 50% in the past few years. but housing has gone up 100%. There is no ‘getting ahead’ in this market via salary alone. you need family money. i paid for my own education, and had loans and etc. I’ll never own property unless i win the lottery or move to a rural bumfuck area.
This isn’t surprising given the enormous social shift to working from home. I’m just surprised how slowly corporate valuations are sliding. I think we’re going to see some major moves soon as leases and mortgages come up for renewal.
Great. Now do residential real estate!
Given the high rates of immigration and uncontrolled overseas capital flows to Western countries, demand will continue to rise indefinitely. There will be crashes along the way, but I only see one direction unless migration significantly slows or nations face major long term economic hardship.
Those are all good things for economies! They offset demographic declines.
Well, immigration is good for the GDP, but the GDP is a terrible measure of outcomes for citizens. For example, almost all the GDP gains of the last 40 years in the US have gone to the top 10%. So for the 90%, they’ve had to endure all the costs of high migration, such as high house prices, but none of the benefits.