The vacancy rate of offices looks low because the big tech companies are still "occupying" them, but if go into many of them and they still look like ghost towns. Much more that offices in other locations.
This feels unsustainable.
This feels unsustainable.
About 90% of every office and co-working space is empty now, all day, every day here. It’s only slightly busier than during Covid when it was 99%.
Light industrial and retail (strip mall type stuff) is doing well and super busy however.
Now it's 6 months later, and last time I drove by it still has our old sign up, and I can see online the entire space is still available to lease. Seems silly to risk it in the current market and take $0 instead of keep a quiet, established tenant.. but what do I know.
In many cases, it can make more sense (to some folks) having a vacant property at a nominally high rent (look, we could make this much from this property, hence it’s worth x multiple!) then admitting that is not likely for the foreseeable future (oh shit, this property is now only capable of producing 80% of x, write downs and angry investors incoming).
It sounds weird, but the wil-e-coyote analogy is remarkably apt - in the cartoons, as long as he doesn’t look down, he keeps going just fine!
Most tech companies do, but if reports of Twitter's finances are to be believed, they do not.
It would be great for cities if we had a massive influx of relatively affordable housing.
However you can't just blame it on demand. These are $16 million condos we are talking about. Functionally they are entirely different goods from apartments intended to be inhabited as a primary residence by people who are not extravagantly wealthy. Moreover, vacancy rates for luxury apartments were high before Covid, and remain high now, even while the rest of the city continues to deal with brutally low vacancy rates in all other housing categories.
So the situation is a little more subtle than "low supply, therefore high prices" and warrants further scrutiny.
Unfortunately the big modern office towers often aren't constructed in a way that supports apartment conversion. There are lots of offices in those buildings with no windows, and all the service(i.e bathrooms) are in the core. Retail space is often worse in this regard, especially in malls. The renovation costs often end up higher than demolishing and building anew.
I still think you're on the right track though, it's just that the obvious fix is harder than it looks. But I do believe cities are in for a great renaissance of mixed-use buildings.