Tech's Retrenchment Hammers Landlords With Glut of Empty Offices (bloomberg.com) 165
US tech giants, grappling with a post-pandemic slowdown, have already laid off tens of thousands of workers. Now they're dumping millions of square feet of office space, pushing vacancies in city centers to record highs and ratcheting up pressure on the commercial real estate industry. From a report:No sector is looking to sublease more office space than Big Tech, according to Jones Lang LaSalle Inc. Alphabet, Meta Platforms, Microsoft and Amazon.com have all announced plans to reduce their office footprint. Amazon has paused construction at a new campus near Washington, DC, and Microsoft is reevaluating plans for a project in Atlanta.
Some 174 million square feet of office space -- double San Francisco's entire inventory -- is available for sublease across the US, according to real estate brokerage firm Savills. That's almost twice what was available pre-pandemic, Savills said. Companies looking to sublease space are still on the hook for rent for the entirety of the lease. But the retrenchment shows how the tech downturn, which contributed to the collapse of Silicon Valley Bank and turmoil in financial markets, is spilling into the broader economy. San Francisco, Seattle and New York are bearing the brunt of the pullback. While New York can count on office demand from financial services and legal firms, tech-centric San Francisco has no such cushion. Seattle business groups, meanwhile, are calling for a tax holiday to keep tenants downtown.
Some 174 million square feet of office space -- double San Francisco's entire inventory -- is available for sublease across the US, according to real estate brokerage firm Savills. That's almost twice what was available pre-pandemic, Savills said. Companies looking to sublease space are still on the hook for rent for the entirety of the lease. But the retrenchment shows how the tech downturn, which contributed to the collapse of Silicon Valley Bank and turmoil in financial markets, is spilling into the broader economy. San Francisco, Seattle and New York are bearing the brunt of the pullback. While New York can count on office demand from financial services and legal firms, tech-centric San Francisco has no such cushion. Seattle business groups, meanwhile, are calling for a tax holiday to keep tenants downtown.
Sounds Like More Profit (Score:2)
For the bottom line to me. No office space to pay for is money in the pocket. I guess we need the hammer slant to make us feel sorry for the landlord.
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Indeed. I do not think I feel sorry for the landlords at all though. Adapt or die. Also, stopping or reducing this incredible waste (including the travel times) is definitely a good thing.
Re:Sounds Like More Profit (Score:5, Insightful)
We've been talking about telecommuting for over forty years now. My aunt worked for an accounting firm in the early 1980s and was given a Kaypro and a modem and did a lot of her work from home. Ten years ago, the government manager that oversaw one of our contracts was given a laptop and sent home to work something like three days a week as an experiment in how well it could work.
As with so many things, the Pandemic simply accelerated trends that were already in motion. Factor in the cyclical tech downturn, and the work-from-home and layoffs together mean a lot of companies, tech or otherwise, simply don't need the square footage. If the owners of these buildings didn't see it coming after three years, then they clearly have been playing the part of ostriches. And honestly, seeing as how housing is such a huge issue in many larger cities in North America, the solution in many cases seems to be pretty obvious; turn them into condos and apartments. A big up front cost, to be sure, but likely in the long term a more reliable form of income than relying on large companies renting vast amounts of commercial space.
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Indeed. This is not new and it was clear it would become a trend. The only reason for offices was lack of communication tech. That is now over. And of course, a lot of "managers" that fear it may become obvious they are obsolete when they cannot torture people with useless in-person meetings anymore.
Re:Sounds Like More Profit (Score:5, Insightful)
Whole generations of management have basically been raised on a diet of "busy-ness=productivity", with no real project management skills beyond setting deadlines and trying to herd employees into cubicles to meet what amounts to a time clock metric. Now they're faced with a world that requires different levers, but since every problem looks like a nail to them, they can't conceive of picking any tool up other than a hammer.
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Yes. Very much so. It also becomes more and more obvious that "herding employees" is bad for business and negatively affects the bottom-line. Of course there are also a lot of employees that basically have really bad productivity and would lose a lot without that "time clock" metric. Hence there are quite a few employees that also want back into the office, quite often with bogus arguments.
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Indeed. This is not new and it was clear it would become a trend. The only reason for offices was lack of communication tech. That is now over. And of course, a lot of "managers" that fear it may become obvious they are obsolete when they cannot torture people with useless in-person meetings anymore.
I don't see why remote staff would need less managing the in-office staff. If anything, the opposite is true for less skilled jobs.
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. And honestly, seeing as how housing is such a huge issue in many larger cities in North America, the solution in many cases seems to be pretty obvious; turn them into condos and apartments. A big up front cost, to be sure, but likely in the long term a more reliable form of income than relying on large companies renting vast amounts of commercial space.
While that is a solution,I see two issues to overcome:
The high conversion costs for buildings not designed for housing units means high rents; so you are likely targeting the very workers working remotely in lower cost areas
Tenents will have political power to get laws like rent control passed, limiting the return .
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Tenents will have political power to get laws like rent control passed, limiting the return .
Empty offices return $0.
In fact they return $0 minus taxes and maintenance costs. If you've got an asset that's bleeding cash, you sell it, taking a bath if necessary to be rid of it. This would lower the project costs for new owners, who would *necessarily* be looking to convert the property to other uses, presuming those uses are even allowed.
On the rent control question, if increasing the housing stock works the way it is *supposed to*, then you don't need rent control laws because market forces will re
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Re:But but but... (Score:5, Insightful)
I think there's more interest in society supporting education than landlords, but that's just my perspective. And this is a big difference between a 17 year old and a large developer corporation. Also, landlords have a physical asset they can obviously modify or sell if they screw up.
I don't think they're actually comparable that much.
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I think there's more interest in society supporting education than landlords
Really? You'd prefer we had more homelessness grad students and fewer housed blue-collar workers? Odd choice but OK.
Personally, I'd prefer we let people decide for themselves what they want to do with their talents and resources. You and I should just get out of the way and let people choose whether to build buildings or study fine art. It's not our business to nudge them either way.
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Or, and maybe this is crazy talk, we should ask people to accept that choices have consequences they'll have to live with, and they should consider that when making choices?
Naa, cannot have that. That would be an _adult_ thing to do! In an increasingly infantilized society, of course you are not responsible for your choices! At least when you have money or are important in some way.
Re:But but but... (Score:5, Informative)
There are many other ways the government props up landlords - infrastructure, eviction processes (which are supported by public employees), tax advantages for investments, and on and on.
So your contention that we shouldn't support those trying to payoff student debt because the government does hand out cash to landlords doesn't hold up.
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The government already hands over piles of cash to landlords...So your contention that we shouldn't support those trying to payoff student debt because the government does hand out cash to landlords doesn't hold up.
Or...maybe we shouldn't do some of those other things either? For example, I think we should scrap the mortgage interest deduction. People have plenty of incentive to take out mortgages, we don't need to give them more and as you say, it disproportionally benefits people who are already wealthy.
We should scrap most or all zoning restrictions too, an idea most real estate owners hate.
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Landlords are actually toxic to capitalism.
Why?
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Because landlords sell something of value that already exists and collects capital that could be producing new value instead wasting an opportunity for growth.
Right. Because buildings are free once they're built. They don't require maintenance or upkeep. And a landlord who builds apartments instead of factories absolutely has no reason expect any return on that investment. Got it.
Sheesh. Renting a home is a commercial transaction like any other. I don't see why people keep special casing it.
I haven't read TWoN so I'll refrain from commenting, other than to mention that by "rent seeking", modern economists mean extracting value from consumers above the market clea
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Having graduated students is beneficial to the country and employers. Landlords are actually toxic to capitalism.
"Can be in some cases", not "is". I assert the value is already accounted for in the student's productivity, some of which the student gets by selling their work product, most of which is captured by customers in as consumer surplus. As such, we're better off letting students decide which degrees are valuable enough to pay for.
The more we subsidize degrees which don't produce any definite value, the more people will waste time and resources on degrees with little purpose. Poetry is a fine endeavor but I've
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According to the next story on the main page, this isn't profit for the startups, it's just money for them to pay their R&D taxes. Or something.
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Just wait till they start defaulting on their loans. It'll make Silicon Valley Bank look like a profitable bank.
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Ah no, you don't understand how this works.
This is why all the politicans have decided that homeless is *now* a problem that needs to be dealt with, using billions of taxpayer money, to buy up (or rent) vacant offices.. just why didn't we think of this earlier!
I'm certain this "solution" is not one of fixing homelessness, but of subsidising tech giants.
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Office space to affordable housing? (Score:2)
Will we see significant investments in repurposing office buildings to (affordable) housing? That would be A Good Thing. But of course, that will require multi-year investments, and I note that office buildings are often located in locations without local services (e.g. access to grocery markets, etc), so they're probably 'vehicle dependent'.
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Will we see significant investments in repurposing office buildings to (affordable) housing? That would be A Good Thing. But of course, that will require multi-year investments, and I note that office buildings are often located in locations without local services (e.g. access to grocery markets, etc), so they're probably 'vehicle dependent'.
No city... not New York, not San Francisco, not Chicago... is going to allow Section 8 housing in the middle of their prime business districts. Expensive condos and apartments? Sure.
Stuffing poor people 20 stories high has never turned out well. You see "affordable housing". City leaders see "Cabrini-Green".
Re: Office space to affordable housing? (Score:5, Insightful)
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The issue with making prime office space into affordable housing is that the area isn't priced for it. I don't mean the real estate, I mean the actual services in the area. In more expensive areas, everything from grocery stores to barbershops to clothing stores charge more. In order to convert that into an area that can support affordable housing, a lot more work needs to be done.
Re: Office space to affordable housing? (Score:4, Interesting)
A lot of that shit is expensive because of landlords. I used to live in a particularly expensive neighborhood ($18 six packs of PBR tallboys!) and everything in my local bodega had really weird pricing.
One day it dawned on me: The pricing was all influenced by how much time and space it took up on the shelves with an additional premium on addictive vices. The actual cost to the vendor was not a major factor in pricing.
Re: Office space to affordable housing? (Score:5, Interesting)
Re:Office space to affordable housing? (Score:4, Insightful)
I don't think city governments are going to have much of a choice. Gambling on a return to the old days of four years ago, or on tens of thousands of rich people wanting to buy condos is likely going to mean those business districts continue to decay. This is a classic supply and demand problem. There's far less demand for commercial space in business districts, but a helluva lot of demand for mixed-use. Refusing to amend zoning just means those business districts end up looking more like an episode of the Walking Dead, meaning city revenues collapse as investors pull out of empty buildings business districts become battlegrounds for bankruptcy courts
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I can think of major cities with section 8 in some of the most expensive districts too. I can think of one entire building in particular that’s in the 3rd most expensive neighborhood in a HCoL city.
Dude hasn’t left banjo territory ever.
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Because personal OPSEC but whatever Seattle, Belltown.
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Yep. When we were house hunting, we found a house that was in a good neighborhood and was decently priced. Right past the fence was an apartment complex that looked runned down.
I lived in apartments for 10 years rebuilding my credit. The problem with living next to an apartment is people have no real stake there and there are hundreds of people and just a few can change the entire safety of the area.
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That can all be done. As soon as you have tons of people living in a former office park, shops are soon to follow. In fact, if this gets coordinated a bit, the shops can already be there when people move in.
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In fact, since converting these buildings to residential is such a problem, you'd think the owners would be happy to leave the first few floors for the lighter conversion from office to commercial space.
The top of the building fills with people, the bottom with stores.
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That is one of the options, indeed.
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That might work for some cities that don't have rules separating residential areas from commercial. I can see the convivence of that - especially for older communities.
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Then tear them down and build new buildings. Or simply lose _all_ value, not just a part of it. Seriously.
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A lot of mid- to high-rise office buildings have relatively small footprints. Plus our local codes have changed to allow mechanical ventilation in spaces without operable windows, for interior spaces and some of those high-rise glass boxes. I've worked on the conversion of an old 37+ story office building to residential and on the conversion of 17 floors of a r
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I think commercial properties have a hard time adjusting to the residential sector. I cannot afford to pay the same amount as a business.
Convert to Residential? (Score:4, Interesting)
I've heard several times that it's relatively hard to convert a large commercial property like an office tower, to a residential or meixed used building. But I haven't really seen why.
So I suppose I would like to know:
1. what are the technical/engineering problems with converting an office tower to a residential property, a hotel, or some kind of mixed use property?
2. what are the political problems with converting an office tower to a residential property, a hotel, or some kind of mixed use property?
Re:Convert to Residential? (Score:5, Informative)
I can't speak to the second point, but I know that converting a modern office tower to residential space is difficult because apartments need to have windows. Modern office buildings, designed after artificial lighting and HVAC reduced the need to use windows for light and ventilation, have large square footprints, so there is a lot of "dark" interior space without access to windows that is difficult to develop into functional residential units. Older office buildings that were designed with narrower or "L"-shaped footprints are easier to convert.
This New York Times article has a nice discussion of the challenges: https://www.nytimes.com/intera... [nytimes.com]
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Ah, an US problem then. Because in Europe, Office space also needs to have windows. Are "windowless bunker" type offices common in the US?
Still, this is usually doable. It requires the will to do it though. Of course, prime office space can be rented for more money that somewhat adapted living space. My take is all this resistance is just owners trying to protect their investment, no actual factual problems. Well, investing in real-estate is a risk. They need to deal with it.
Re:Convert to Residential? (Score:4, Informative)
Are "windowless bunker" type offices common in the US?
Most of the ones I've worked in are larger buildings with windows around the outside, and open office cubicle farms. Good for natural light, bad for privacy.
Re:Convert to Residential? (Score:4, Informative)
Office buildings are not windowless. They have more window coverage than residential buildings.
They are also "thicker" meaning the inside is much farther from the walls and windows.
Not a problem for open / cubicle office space.
A problem with residential where you have full height inside walls blocking the middle from the windows.
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So this requires some creativity. So what?
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Are "windowless bunker" type offices common
The interior organization can be like that yes. Most offices have windows, but often manager offices get those, while the peons are relegated to the cubeland bullpen towards the center of the building, and buildings have a lower perimeter to area than a residential building might, which would be designed so that all units are facing "outside" with hallways being the only truly internal space in them.
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Office buildings in the US have lots of windows. Windows that don't open.
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None of that is hard.
Need more HVAC? Our office created an HVAC room that took one of the outside windows and used it for source air, so we could get extra cooling that also drew fresh air in. It only took up about 20 square feet or so and a window to draw in fresh air. It was wildly good too - it would literally bring down the office temperatures in a few minutes so everyone went from the mid 80s to the low 70s within a half hour of turning it on. And this was in addition to the building HVAC which was ins
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I can't speak to the second point, but I know that converting a modern office tower to residential space is difficult because apartments need to have windows. Modern office buildings, designed after artificial lighting and HVAC reduced the need to use windows for light and ventilation, have large square footprints, so there is a lot of "dark" interior space without access to windows that is difficult to develop into functional residential units.
You don't need windows in your stairwell or elevator shaft. You don't need windows in your closets. You don't need windows in your bathrooms. You don't necessarily need windows in your kitchen, nor your TV room. Some people may or may not even want them in their bedrooms. Don't think about creating entire apartments without windows. Think about creating a central hall with no windows that serves two sets of units, with closets, kitchen, bathrooms, and maybe a multipurpose room on the interior end of t
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Re:Convert to Residential? (Score:5, Insightful)
All the excuses will rationalize the core truth: the property owners would rather let it sit idle in the hopes that they will get a commercial client and they would resist any move that might open up alternatives. They'll hide behind zoning regulations out loud while quietly making damn sure those regulations stay the same.
Commercial clients pay more per square foot, by 25% or so. Immediately that's a lot of incentive to wait around hoping for commercial client backfill rather than chasing residents.
If they did have to pivot, then of course they'll incur extra costs to remodel, with all sorts of different requirements to meet.
Part of that remodel would be carving up and losing much of that precious space. A commercial client gets big open workspace, but residential needs walls and separation that eat into the square footage.
Finally, having a commercial tenant is a breeze. When things go south finance wise, screw them, kick em out, no one cares. You want to raise rent? Sure, no one cares. A residential tenant? Eviction and rental rate changes become a huge pain comparatively speaking. Problem with the climate control is a health emergency for residents, not so with commercial residents. All sorts of things become harder when dealing with providing home rather than workspace.
So someone in a position to pick between *maybe* serving commercial client and *definitely* getting residential tenants is going to tend to want those sweet commercial clients.
Wishful thinking (Score:2)
So someone in a position to pick between *maybe* serving commercial client and *definitely* getting residential tenants is going to tend to want those sweet commercial clients.
I'd love to have the physical form of my fursona, be financially independent from employment but that's about as likely as finding new office tenants now that nongeeks have discovered working from home is possible for almost any job that doesn't require physically handling materiel and rediscovered the labor movement.
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Finally, having a commercial tenant is a breeze. When things go south finance wise, screw them, kick em out, no one cares. You want to raise rent?
You might think so, but commercial clients can afford expensive lawyers.
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We razed entire residential neighborhoods to make way for highways, but now we must preserve empty office towers? Why assume that these office towers must be kept? If they're not needed, then let's tear them down and replace them with apartments, retail, schools, parks. That's the best way to revive American down-towns. And let's tear down the empty parking garages that served the offices, and re-purpose surface parking lots.
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Re: Convert to Residential? (Score:2)
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These are all really solved problems because it has been done before countless times. Maybe not in the US, but there will be a ton of reference projects and people that know how to do it all over the world. My guess is this is all the owners wanting to keep the value up, nothing else. Office space is typically more expensive to rent than housing.
Re: Convert to Residential? (Score:2)
My guess is this is all the owners wanting to keep the value up
Yeah. Chasing the last nickel. In past times, I've seen a number of local businesses forced out of their leased space. Only to have the building left boarded up and empty (aside from the homeless who camp there) for a decade or more. Fsck the landlords. They had a paying tennant covering their mortgage and taxes. Now the property flips through a bunch of development companies, kept on the tax assesors at nearly zero value (because it's empty and acquired via bankruptcy) and not generating tax revenue.
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Yep, great contribution to society these people have.
Re:Convert to Residential? (Score:5, Informative)
Plumbing. HVAC. Window placements. Elevator and stair placement and density. Etc.
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Plumbing. HVAC. Window placements. Elevator and stair placement and density. Etc.
Truth but conversion will start at a point, and some have already started with smaller buildings. The problem being that we have too much office / uninhabitable space, and nowhere near enough tenants. What everyone forgets is that even idle you still have maintenance (HVAC, plumbing, roof, et al.) that doesn't go away... in fact one can argue that the maintenance costs on an empty building are higher. Why? Because people on-site can catch problems that will be far more costly in a short time at the beginni
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Plumbing and HVAC are just build-out costs. Window placements could be harder, but many office buildings have enough windows to go around. Many office buildings are relatively narrow so that more people can have windows in their offices. This would suit residences just fine.
Office buildings require MORE elevators per SF than residential, so that wouldn't be a problem. https://www.builderspace.com/h... [builderspace.com]
Many office buildings have already been converted. No, it's not cheap, but neither is letting buildings sta
Showers/Bathrooms/Kitchen - do you want to share? (Score:2)
A typical residential unit has a bathroom/kitchen/shower per unit. I don't think the high-paying customers will want to share...so you'd have to convert the unit from one major bathroom/kitchen to plumbing for each unit spread across the floor instead of centralized.
I can't imagine it's cheap...
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Plumbing, HVAC, electric come to mind.
ex. The office i'm sitting in right now has 8 toilets located in two rooms in the center of the building. All plumbing is routed up 7 floors directly through those two bathrooms. The floor is about 31ksqft, construction is steel and concrete slabs. An average apartment is under 900 sqft, so to make say 25 units, you'd have to do a lot of rip and replace on plumbing.
Electricity also is monolithic, but an apartment would need to provide separate service and meters to each
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While I was in college, and for several years afterwards, I could not afford to live alone in a house, so I moved in with a group of friends and we shared a house, adapting a single family home into a shared arrangement was not ideal but we made it work mostly.
Maybe there is an opportunity here to create a new style of housing that makes for a better inexpensive shared living space.
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Re: Convert to Residential? (Score:2, Flamebait)
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It used to work that way and it worked quite well. People that needed psychiatric help got it, whether they wanted it or not.
Except for the part that it didn't work, nor did it work quite well.
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that's not very progressive of you.
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Anyway, the towers cannot be simply converted into residential, there are water columns in the middle of the buildings normally, so there are few specific places for washrooms.
Any conversion would likely involve ripping out all of the interior walls and redesigning things anyway, so you can always add plumbing while you do this.
There are no kitchens really, not sure if their pipes can handle the grease.
See above. In the worst case, maybe you add some extra vertical sewer pipes in key locations by drilling through the slab, with appropriate consultation with structural engineers.
Cities (Score:2)
If these folks were the 'market', businesses would quickly adjust to treat them exactly how they wanted to be treated. As employees, these 'solutions' are going to be all about the business.
The writing is on the wall. The cities and spaces we've built in America are not comfortable to move around in. Large majorities of people clearly prefer to avoid them, the sprawl and congestion to get to them, and the generally terrible public transportation across the United States.
I think this would be a great po
what goes around (Score:5, Interesting)
Let's not weep too piteously for the building owners left holding the bag here.
We should remember that they have raked in VAST $$$ for multiple decades now.
The flip side of that is that if you're the guy buying/speculating on corporate properties, you are going to get fucked if that industry - or in this case, the boutique, high-dollar, performative, well-heeled bespoke part of that industry - suddenly radically changes their operations.
It's just like home-flippers.
This HAS to happen. These property owners HAVE TO SUFFER. They cannot be declared 'too big to fail' or bailed out by giant Federal programs.
It will be painful for many people, a lot of whom aren't these shiny-suit developers but are plain-old-normal businesses like the mom and pop coffee shop that sprang the big$ for that 'perfect spot' in the lobby of one of these high tech buildings.
That sucks, I'm sorry to say.
But the pain has to happen for people (from investors to the mom and pop shop) to be reminded that EVERY investment, EVERY choice carries risk.
The next time any of them or the following businesses then say "should we invest in that property?" just *maybe* there will be a teeny sting of a 'ah...but remember what happened back in 2023?' and they will then evaluate that risk slightly differently.
Evolution only succeeds if the failures actually die.
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Indeed. Any investment is a risk and any investment can be hit by changing circumstances. They reaped the profits, now they have to bleed. As it should be. People sticking to old, obsolete business models also need to go under or no progress happens.
Re: what goes around (Score:2)
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Let's not weep too piteously for the building owners left holding the bag here.
Those are tears of joy as I gleefully give the double bird salute.
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Evolution only succeeds if the failures actually die.
This is such a good quote. I keep saying we need to stop protecting stupid people from themselves or we'll legitimately end up with Idiocracy as reality.
Imagine how much cheaper healthcare could be for normal people if they had the "You drove your motorcycle into a bridge pylon at 120MPH, no, we're not covering your expenses" clause.
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"Evolution only succeeds if the failures actually die."
Very well spoken.
Yes, but who owns the commercial properties (Score:2)
Whilst some will be Trump or similar, many will be vehicles for small investors or pension funds. Therefore when they go under, the pain is going to be rather more widespread. Add in the damage to banks who've lent on these premises and get given the keys of buildings now worth very little when the mortgages are no longer being paid by tenants, and it's not going to be problem free.
Wonder how this will change as leases expire... (Score:4, Interesting)
I wonder how this will change as the long term, 5-20 year leases start expiring. Right now, it isn't a big deal, because even empty, there is likely a business paying for office space at pre-2020 rates, where they locked in their prices for a long time, because lease prices were just going up, up, up.
When those leases expire, it will be interesting, because that is when the real "fun" starts and we know what the real vacancy rate might be.
However, vacancy rates don't really matter anymore. We have monopolies and holding companies who really don't care if they are holding a building that is 100% vacant, because they know that the price of the property will go up, just because once they buy a property, it is off the market forever, and by having monopolistic control, they can dictate rents... and ensure rents do not go down.
The real long COVID (Score:2)
IMHO, this is the real effect of long COVID. When clueless bureaucrats yank the levers of the economy deluding themselves into thinking that business are just going to suck it up with or without some short-term government subsidy, nobody should be surprised when things break. Major corporations are going to trim the excess. Medium-sized companies who have to make payroll are going to try to con their customers into buying inventory under the threat of scarcity. Small companies who fall for it end up goi
Re: The real long COVID (Score:2)
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The pandemic did not force anything - government did - don't for get that. COVID was not dangerous in any real statistical sense to the vast majority of working age persons.
if later variants were more dangerous its probably because the pressure on our response allowed them to become so.
next up - yes - forced is the right word. Rather than slow trend to more remote work and better telecommunication options and companies gradually starting to leverage that, we accelerated the trend. So rather than giving ev
Nobody should be surprised. (Score:4, Insightful)
When you lay off tens of thousands of people, you don't need tens of thousands of desks, chairs, displays, laptops, or the square footage to hold all that stuff anymore either.
It's ripples in the pond after the management already threw in the giant rock.
Wonder how this affects residential housing? (Score:2)
Yeah, yeah, this is old news. We've been hearing variations of this story for three years, ever since the laptop class started working permanently from home. I'm glad I never invested in commercial office space 'cause they're getting kicked in the nuts.
I wonder how this affects the residential housing market. I'd expect two things. First, housing outside major business centers should be in more demand (which we see as people flee the Bay Area). Second, I'd expect to see a rise in demand for homes with home
Vacancy Tax (Score:2, Troll)
Solve the empty building problem with a vacancy tax.
There's no need to do literally anything else.
If politicians won't do this there are only two explanations.
1) Corruption, e.g. bribery
2) Corruption, in the form of politicians who serve their own interests over ours
Oh wait, that's only one explanation.
A pattern has emerged (Score:2)
When I say things that rich people wouldn't like, I get modded down. Reliably.
Is it paranoid to think it's being done by the cryptocuck owners of the site?
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Yes, a conspiracy against you and your ideas is the most likely explanation.
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Yes, a conspiracy against you and your ideas is the most likely explanation.
It doesn't take a conspiracy, just one pathetic fucko.
Since there's zero transparency here, it's as reasonable an explanation as any. Think I'm wrong? Prove it.
I might have a solution... (Score:3)
I have an idea for a solution for these landlords and property owners that might just fill their spaces. Now this is radical but hear me out:
Charge. Less.
If you keep plowing ahead like nothing has changed, charging the same or more than you did in 2020, and then whine about "But now I don't have full offices and my income is dropping"... I have no sympathy. Everyone's income is dropping. Yours, the people who used to rent your space, their employees, everyone is making less.
So either charge less and fill the spaces to make SOME amount of income from your property, or shut up and take the losses while you sit on overpriced empty office space wistfully longing for the days when businesses would tolerate your gouging because you bought "prime real estate" and think it's worth that much.
Capital valuations (Score:2)
As long as a property is empty, the owner can, at least as far as the auditors are concerned, claim that it is still worth the capital value associated with it being rented out at what it was last rented out at. However once they accept a lower rent, the new capital value reflecting this lower rent has to be booked. This generates a large loss to the company - as well as possibly triggering bank loan covenants. So - nice idea, but the crassitudes of the law as is act against it.
Of course eventually the stoc
Was probably overpriced to start with .... (Score:2)
I'm just thinking to myself here as I type, I guess. But I've worked for several Midwestern companies involved in things like manufacturing or logistics, and they've always owned pretty BIG spaces ... both with plenty of office space for workers AND warehouse and lot space. The thing is, those industries don't care about projecting any particular image of wealth or status. They just want a lot of cheap, usable space. So they typically locate themselves in low-income and under-utilized areas where the proper
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Will rents come down? (Score:3)
With all this empty office space that no-one wants, will landlords reduce the rents they are asking to try and secure tenants? Or will they be greedy and continue to sit on empty space asking ridiculous rents for it?
It's not about greed, it's about capital values (Score:2)
For as long as a property is empty, the owner can, at least as far as the auditors are concerned, claim that it is still worth the capital value associated with it being rented out at what it was last rented out at. However once they accept a lower rent, the new capital value reflecting this lower rent has to be booked. This generates a large loss to the company - as well as possibly triggering bank loan covenants. So - nice idea, but the crassitudes of the law as is act against it.
Of course eventually the
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Rents NEVER go down. The building will sit empty as long as it has to.
It's going to get rough. (Score:3)
Whilst some will be Trump or similar, many of the landlords will be vehicles for small investors or pension funds. Therefore when they go under, the pain is going to be rather more widespread. Add in the damage to banks who've lent on these premises and get given the keys of buildings now worth very little when the mortgages are no longer being paid by tenants, and it's not going to be problem free.