Good luck renting out urban high rise apartments at high market rates when one step out the door means high crime, homeless on the streets, needles and excrement.
Imagine if we had all the money we have sent to Ukraine. Use that as a federal program to make conversions viable now rather than after a 50% drop. But no, we had to help Zelensky instead of Americans.
Just think of all the tax revenue the cities are losing, San Francisco should be in all out crisis mode. Expect police and fire services to be cut back while illegal immigrates continue to receive benefits.
There were a lot of downtown conversions in Dallas a decade or two after the Ag/Oil/S&L crisis there cleared out a bunch of the downtown office towers. First National Bank, Republic Bank, Mercantile Bank (old one, not the new one that Comerica moved into) the old LTV tower, Tower Petroleum, Magnolia Oil, Fidelity Union insurance that had been empty even longer. A couple of old department stores.
I live near one of the cities with very high vacancy rates.
The traffic in the city is off 25% since covid.
Yet there are cranes still building more and more.
I asked an informed friend.
He told me that these deals are done years in advance.
So they are knowingly increasing supply in an already saturated market.
The results are the B stuff is half full, the C stuff is mostly empty while the A stuff is full of the formerly B and C businesses.
Once prices drop further I could see converting commercial to a combination of retail and residential…. Say every 5 floors would be a retail floor with restaurants and retail stores the 5 floors of residential and another floor of retail/food, and so on…. I could easily see people never leaving their building at all…. Reminds me of something almost out of Bladerunner
btt
One of the reasons they want folks back in the office.