This is completely wrong, city zoning does not allow commercial buildings to be used for housing. Local government literally has direct control of the allowed uses for buildings. Additionally, even if you completely got rid of zoning it is very risky to be a landlord in CA now because of government eviction policies.
As a tenant in CA you can just stop paying your rent and it can take over a year to be evicted. See the show Silicon Valley, where Jared sublets his apartment and it is basically stolen from him because the tenants just stops paying rent. It's so well known that it's become a joke.
The problems here are created by zoning and eviction regulation (i.e. government regulation), not the free market.
> landlords either want to bet on a recovery or agreed to credit terms that would cascade a single write-down
and instead substituted two theories of your own, one of which has nothing to do with commercial real estate and the other of which has zero explanatory power for "why now." We can get to those, but first could you explain why you think the explanations I've been hearing are wrong?