Posted on 04/14/2023 6:03:55 AM PDT by Kaiser8408a
Office vacancy rate in the US has climbed to 20.2% in 2023 Financing for residential building is tepid despite demand The Covid economic shutdowns have a disastrous effect on small businesses as we know. But office space is really getting crushed in terms of vacancy rates. In fact, it is so bad the investor Kyle Bass is suggesting that office space be torn down across the US much in the same way that FDR’s Agriculture Secretary Henry Wallace ordered the mass execution of hogs in order to drive up prices in a deflationary economy.
(Bloomberg) Kyle Bass has some advice for real estate investors: Tear it down.
The founder of Dallas-based Hayman Capital Management says office buildings in cities need to be demolished because demand isn’t returning and it’s impractical to turn most towers into apartments.
“It’s one asset class that just has to get redone, and redone meaning demolished,” said Bass.
NCREIF’s office index is starting to decline, but Bloomberg’s Office REIT index (orange line) is really showing the pain being felt in the office market. But just wait to see what happens IF the market takes Bass’ advice and starts removing supply to help increase values. Unfortunately, my chart is only up through December 2022 and office vacancies have worsened in 2023 to a mind-boggling 20.2%.
In a classic Bill Lumbergh move (he was the office manager of Initech in Dallas Texas), JPMorgan now requires managing directors return to office 5 days a week and ‘be visible on the floor’ or else face ‘corrective action’.
An additional non-Bill Lumbergh issue is the rising crime in American cities causing companies like Whole Foods to leave their San Francisco (tenderloin district) location because 1) workers feel unsafe and 2) shop lifting is out of control.
(Excerpt) Read more at confoundedinterest.net ...
I suspect Fauci is proud of what his power caused.
Construction costs are up, but that’s okay! Tear it all down if you can’t fill your space at the old rates. Let’s not let demand dictate price. Lets cull the supply!
I know that article wasn’t directed at me, but crap like this is irritating to see.
SOHO
In New York City, factory lofts were converted into housing about six decades ago.
But housing costs are still rising in many areas.
Why is it impractical to turn these spaces into housing? Because it doesn’t make money for him or his clients? What does it leave when they’re torn down? a pile of rubble that needs to be disposed of and an empty lot or parking.
“Build back better” means first tear it all down.
I have lived in 4 converted lofts and, frankly, that's my preference. I just don't live in a city at the moment.
Bankrupt cities losing their power base may be a good thing for America.
Buildings can be mixed use - offices & upscale residential for key office workers.
Some guy will get the right formula and others will follow.
“Bankrupt cities losing their power base may be a good thing for America.”
Much of the truly upscale housing is in the name brand cities. More upscale housing is in their rail commuter towns. For Chicago, this means Evanston to Lake Forest.
Redoing plumbing is hugely expensive - unless residents don't mind using the existing office restrooms as shared facilities. :)
Already, former office spaces are expected to make up a quarter of converted apartments in 2022, which will add roughly 12,300 rental units to the market.
Office buildings offer another crucial benefit that make it attractive for a housing conversion: location. Cities with big office markets tend to have less housing nearby, Loh explains; meanwhile, business districts are centrally located and highly accessible by design, making it lucrative real estate. Developers could be highly incentivized to turn expensive and unused office space into expensive and in-demand housing.
Cash for Clunkers worked well...../s.
Fundamental Transformation!
In Washington, DC apartments in the late 1960s were cheap. Some people bought an adjacent unit and merged it with their already owned unit. These have lots of space and are quite nice.
“redoing plumbing is hugely expensive”
Offices often have drop-down ceilings.
Why not condos? They would make great work live spaces.
There is a large office building in San Francisco, at 100 Van Ness Avenue, that was turned into housing about ten years ago.
100 Van Ness
San Francisco, CA
Originally constructed in 1974, 100 Van Ness was a 28-story, Class B office building situated two blocks from City Hall.
In 2012, National Development staff and its local partner began the design of an adaptive re-use of the building into a 418-unit apartment tower.
I’m still not having a problem getting contracts that are 100% remote. I’ve turned down I don’t know how many in the last 3 weeks that want me to work a hybrid schedule.
A building might have had one worker per 120 square foot, or it could have three people in 1000 square feet.
The water volume in and out is fairly comparable. Most fixtures are now very low flow. Toilets that used 7 gallons can be replaced with 1.6 gallon units.
My fairly new washer uses only about a third of the water the old one did.
Yes, one will have to add bathrooms and lines.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.