San Francisco office values fall
hoover.org
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That seems like it's going to have two major consequences - when the values on those buildings fall, SF is going to lose a lot if income at a time when the quality of life is already greatly suffering there. On top of that, a lot of those buildings have large loans against them that may well become greater than the value of the buildings. The latter certainly feels like the sort of thing that could ripple through the economy as building owners have to sell off assets to make loan payments.
But regardless of that, whether the values were inflated because of a market flush with cash or not, it doesn’t change the fact that crashes can and do have ripple effects.
People miscalculate a product's worth all the time. The "It’s worth what the market will pay for it" mantra is quasi-economic nonsense. It isn't true.
But that's not a particularly useful definition of worth. Worth measures a moment in time. We can only price something based on what we know about it today and what we predict about it in the future, and we're not perfect predictors of the future.
I think about "worth" using the only definition of worth that is particularly helpful (to me): the amount you could get for the asset if you were to sell it now. Part of that decision almost certainly a prediction of what you believe an asset will be worth in whatever time horizon you plan to sell it. You may be right or wrong about that prediction. But it doesn't change that in the moment at which your purchased the asset, it was "worth" that to you/the market. The reality is that many, many people were under the perception that the value of these assets would continue to appreciate as they were all collectively willing to pay what we now believe to be high prices for them.
In hindsight, we may all have been wrong. But in that moment, I could absolutely have sold the asset for the price I paid to purchase it. So it certainly was "worth" that when the transaction happened.
Right, but it's also fair to say that in retrospect that the "worth" at the time of the transaction was incorrect since it was based on an estimated prediction of the future (as you said), which ended up being wrong.
It is a more useful definition than the one you made up. The error in your argument here is that you are mistakenly conflating the words "worth" and "price". These have different meanings. Price is an objective measure at a specific moment in time. Worth is not.
If you choose to use your own personal definition of a word, then you can not have a good-faith discussion with other people who are applying that word's common usage. "Worth" is not the same thing as "price", not even in the field of economics. You just made that up.
My point in my original comment, which I believe still holds, is that there is no objective truth to this number. Multiple buyers can arrive at different definitions of worth depending on how they used the asset and when they ultimately sold it. And even if they both arrived at the same value, it can only be known in hindsight. For example, say I purchase a stock solely as a monetary investment for $10 today, in 1 year the price drops to $2, and in two years the price jumps to $50. The answer to whether the stock was "worth" what I paid depends on when I decided to sell it. If I had to sell that stock in a year to buy a house, it certainly was not. If I could hold the asset for 2 years, it was certainly worth it (and then some). Or, going back to your example before, if the cash flow was less than I expected - that's not great. But next year it could be more than I expected. The time horizon is a critical component here, as are the factors unique to the individual buyer.
Your statement that the property was not worth that much can only be said with the benefit of knowing what the market is today. In 6 months, the asset may be worth 25% more than was paid for it. It's likely that's not the case, but clearly many people thought it was likely the asset would generate more money than it did when it was bought and were wrong. We may also be wrong today.
So, when we're talking about the "worth" at the market level we almost have to be talking about willingness to pay. We assume that will price in estimated future value. There's not much else we can usefully measure here.
There are historical charts and indexes that compare the price of square foot to inflation, wages, etc. There may be no one single universal truth, but there is a baseline for what real estate should cost (relative to everything else).
It also sounds like there's a lot more value saved by not having an office downtown with more money to be spend on QoL improvements than renting office space
> more money to be spend on QoL improvements than renting office space
Who is going to spend money on QoL improvements? The corporations who would've spent it on office space will keep it as profits, not invest it in the city of San Francisco. The city will have much less money to spend on QoL because of greatly diminished tax revenue.
In theory you could go all Mad Max and give them permissions to just start throwing up walls, creating spaces with communal bathrooms, and just dealing with it, but the amount of regulatory work to do that is pretty substantial. Even if you could get the agencies to agree to it in principle, a massively uphill battle since you're basically asking them "Hey, will you agree that you and your mission are worthless and irrelevant inside my building and pretty please promise to not worry about whether other people will start asking questions about what exactly it is you do (including the legislative bodies that provide your budget) and why it is they have to conform but I don't?", they'd immediately start putting their fingers back in the pie anyhow.
To meet even the barest of code requirements you'd basically have to gut the building and redo almost all of it. And SF requirements are hilariously strict and complicated.
Of course it can be done, but if you think renting to businesses is hard, try renting at >$75/sq. ft. A 1200 sq. ft. apartment would be $7500/mo. The only people who can afford that are high-paid technology guys, and their job has already left SF for Texas or wherever.
The guy who turned the DNA Lounge from a Bar into a Bar has a tragicomic blog detailing the journey.
If he weren't a Mozilla multimillionaire it would have been ludicrous to even try.
If I was to nitpick, I would only say that load is unlikely to be a problem: walls are usually configurable in office spaces, and floors should be able to handle stuffing a data centre in the middle as well.
It's too bad this piece just takes the opportunity to launch into a list of generic conservative complaints about SF policy, which were equally applicable when rents were skyrocketing. They seem to have forgotten that it was all supposed to be Chesa Boudin's fault... Bring him back, he was better for the office market!
The statistic I read is about 50% of commercial buildings would have an impact on SF’s budget (ie they would drop below their initial purchase price).
As for the rippling out into the banking sector, it’s plausible because it’s not just SF that’s a problem. All major cities are likely affected by this phenomenon. Cities would have to start regulating employees to go into work but I think that would be politically challenging for any politicians who attempt that.
Its not actually helping, its just changing the route that the impact from the problem takes to hit city revenues. What Prop 13 does to revenues (both the very low nominal rate limit and the assessment increase limit, though people always talk about the second and ignore the first) means that San Francisco relies on other revenue streams than property taxes, such as income abd sales taxes (local and formulaic distribution of state revenues) but these streams respond to the same broad forces (and often with much higher volatility.)
Good! they were gouging for decades.
Also, why has nobody talked about all the tax incentives given to twitter to build their HQ where it is... what happened to all those tax incentives?
In the boom decades many American city governments have become incredibly, grotesquely inefficient. Voters should now prioritize basic competence over ideological purity so that they can get on a better footing.
You can drop the "may well". They are, right now, full stop. Massively underwater.
The so-called "Harvard Business School types" always advocate for businesses to take on a lot of debt to get that sweet sweet leverage, and a lot of real estate has been mortgaged for a long time. That's not really new.
But prolonged zero-percent interest rates made it both extremely appealing by making it seem like there was no downside: Don't get enough rents? It's OK, you can always roll over your debt for virtually free and try again later. 0% interest is deceptively close to real money if you get too far into "Harvard Business School" analysis and detach from reality too much... but it isn't real money. Enough people made this analysis that prices pushed up in the commercial space just like residential; in theory, at super low interest rates the value of the buildings would converge on the rents being able to cover only the interest, because someone would bid them higher until they reach that point. Don't have to worry about principal, can always roll that over.
But they don't get fixed-rate 30-year-mortgages in that space. Honestly, nobody does except homeowners in the United States. When the interest rates finally go up, you can't even come close to covering the interest on those rents. The cascade of all of that happening to the entire market at once is pretty severe.
So in this scenario, the businesses owning these buildings go bankrupt pretty quickly once rent has to come down at all. But that's not the real problem. Those businesses dissolve, but somebody else acquires the assets generally. The problem is that when they dissolve, they take their mortgage payments with them. Now the mortgage the bank is holding is worthless. They get to repossess a building in a rapidly deflating market. They are not particularly excited about this. As a result, the bonds for this sort of asset get marked down even more.
Fortunately, the American banking system is strong, sound, resilient, and well-capitalized, I am reliably assured. So it's not a problem that the $2.9 trillion in commercial real estate loans the banking system holds as of May 10th [1] are looking at pretty significant haircuts and massive loss of collateral. (Not necessarily as bad as SF, being the biggest bubble it'll see some of the biggest drops, but definitely large double-digit percentage drops are going to be the norm across the board.) The banks are doing strongly and soundly in all their other metrics so they'll be able to handle this just fine.
[1]: https://www.federalreserve.gov/releases/h8/current/ , Table 2, line 15, last column.
Banking should be a boring industry that charges a cost of carry for storing and transferring cash. No lending, no fiscal assets.
Reason being the property financing is a function of market rent. Short term balloon mortgages are commonly used. If the rent for the space falls, when it comes time to refinance, you won’t be able to get a loan to cover your previous balloon payment, making you insolvent. Solution: never lower the rent, even if it means leaving the building vacant. Slowly bleeding is better than instantaneous bankruptcy.
Last time the banks were selling the loans to other people. Is that happening again this time? This can't-lower-the-rent phenomenon is well documented at this point so I'm just having trouble figuring out why anyone with money is willing to continue taking on the large risk with limited upside (the value of the buildings).
The city governments of SF and NY (which seem to have the biggest problems here) have honestly just gotten too big and will need to deal with the pain. The people living in the cities will survive, and honestly may have better quality of life when rent gets cheaper.
His most recent video is on commercial real estate - https://youtu.be/5QtCC6eUn-k
https://missionlocal.org/2021/09/san-francisco-garbage-can-d...
I know it's only tangentially related, but Hudson Pacific is the largest commercial REIT for the San Francisco (and LA) area. They're down 80% on the year and still falling.
So, I don't find the 75% devaluation figure to be entirely unreasonable.
https://www.kastle.com/wp-content/uploads/2023/05/Kastle_das... Currently at 44% (down from 100%) workplace occupancy based off of Kastle badge swipe data from pre-pandemic.
Tech firms are "abandoning" San Francisco. Why?
The costs are not worth the benefits. Why?
The benefits off attracting investor money have decreased while costs have steadily increased as San Francisco continued to legislate ways of capitalizing on them. Why?
(To pick apart the investor half of that sentence)
Investors must no longer than See the benefit of San Francisco. Why?
This is the real question. Tech companies simply follow the money. Investors believed in San Francisco, so tech companies followed suit. Something must have changed the outlook of Angel investors in San Francisco.
Maybe the interest rate combined with San Francisco's high costs, together with lingering remote-centric investor workflows, have caused investors to seek a new center for tech and investment that isn't so costly. After all, more of their wealth is being captured by the fed than it used to, and they now can't afford to keep both the fed and the local San Francisco authorities in money. San Francisco's ordinances were written with low interest rate and cheap investor money in mind. Maybe a city with cheaper housing and friendlier board will now get a turn.
I believe that city might be Austin. Texas has always had a good story around cheap housing, and the tech scene is picking up there by several accounts.
San Francisco had momentum, and people wanted to be there because everyone else was there. The pandemic caused a reset. Now investors will converge on a new city, and the decision of which one will now be based on merit instead of momentum.
Having it not apply to commercial/industrial real estate would solve many of the issues.
The advantage of Austin is that the suburbs still have reasonably affordable homes (< $500K), while in the Bay Area you're looking at $1M+ even out to the Tri-Valley area. But high housing prices follow money, for pretty basic supply & demand reasons. If a place starts getting widespread prosperity housing prices will eventually catch up.
People who suddenly find themselves on property worth millions of dollars will need to sell or redevelop, which helps the housing market function properly in the long run.
why do they have to necessarily seek a center at all? Post-Covid, we've met our investors once or twice at a conference in Vegas, everything else was email and zoom. Not being a part of the daily grind like the employees, we really don't care where investors reside anymore.
Originally, office space was needed for secretaries, typewriters, meeting rooms, desk telephones that were hooked up to a central company number. Eventually office buildings were needed for mainframes, other servers, copy machines, fax machines, printers, desktop computers etc. Offices were truly needed until around 1998-2008 or so.
But after that - which is already some 15-25 years ago - most of us worked on a laptop that hooked up to whatever screen was available, and used email, chats and perhaps some collaboration software, and where data storage was in the cloud. Our cell phones were easily connected with office numbers. Lately, we don't need to sign anything physically anymore, and we don't need to write actual checks.
Nevertheless, going to the office kept being the preferred working mode, new office buildings kept being built, and rents kept increasing, long after the office wasn't strictly necessary. Only when the pandemic showed management that remote work works, did offices finally come out of fashion. Now, it's hard to imagine that companies will keep the office spaces when their leases expire without asking for large reductions.
Often it takes long for new tech and new habits to be adopted.
> The glut of downtown office space, combined with San Francisco’s high housing costs, has led many to envision converting downtown commercial spaces into residential buildings, but not one residential development firm bid on this property. One residential development group that considered a bid was Emerald Fund… [that] ultimately viewed the prospect of a residential conversion as too risky due to the city’s high fees and its low-income housing requirement. Presently, the city requires 23 percent of the units in a large development be set aside for low-to-moderate-income tenants, but this means that developers would need to charge a substantial premium on the market-rate units for the project to pencil out.
> …
> Developer Eric Tao noted that permitting and other city fees, together with the city’s affordable housing requirements, are so costly that the purchase price of the building would need to drop to less than $100 per square foot… to economically justify a residential conversion.
So you really have a market that is “upside down”: Employment (represented by office space demand) is way down, and that in turn softens the market for residential space, and on top of that the numbers just don’t make sense.
Edit: I also feel compelled to point out that “low-to-moderate-income” is measured relative to average San Francisco incomes, not to state or national averages. They might still seem very high to outsiders.
And those have their own approval and NIMBY problems.
let's jack up the low-income housing requirement so that nobody builds any housing at all :facepalm:
Shoplifting, car break-ins, homelessness, drugs, public defecation, public intoxication, high costs of life. Used needles, empty bottles of alcohol.
There is no reason to be in SF anymore. If you think otherwise is because you've lived there so long that you've lost perspective of what you can acquire with whatever you are paying there.
The authorities in SF are the encyclopedic definition of learned helplessness.
Move to a cheaper place, buy the same books you were interested in borrowing brand new, plus bookshelves, plus a high end reading sofa, and perhaps even pay an actual human to read you the books and you will still would have spent less money. And if the book is not for sale, pay for a plane ticket, visit the library in SF and go back. Again, you would have spent less money.
Regarding the museum, you could move to a cheaper place, and each time you wanted to visit the museum, simply pay for a plane ticket, visit the museum, go back and still spend less money than living in SF.
Regarding the music stuff: move to a cheaper place, hire a musician full time, brand new instruments, a recording studio, and you will still have more money at the end.
Do the math. Living in SF is throwing money down the toilet.
Have fun drinking $50 fruit juice at "Joe & the juice".
New York’s Empty Office Buildings Lure Rich Families Hunting Bargains - https://www.bloomberg.com/news/articles/2023-05-09/new-york-...
Family offices are buying out institutions in NYC.
Personally I think a mixed use skyscraper with residences, offices, shops, restaurants, etc would be totally cool.
Do they exist anywhere else?
Surely the push is towards moving industry into dedicated areas (outside town) though.
The results were mixed haha.
Atlas Obscura has a really good piece on it.
No longer exists but: https://en.wikipedia.org/wiki/Kowloon_Walled_City
It’s a massive building in the north of Quebec that contains essentially everything you’d need to avoid going out in the cold Canadian winter: apartments, stores, a school, even a strip club and a prison. It also serves as a wind block for the rest of the town that grew up around it.
https://en.m.wikipedia.org/wiki/Fermont
https://www.amusingplanet.com/2018/02/fermonts-inhabitable-w...
It’s been done somewhat time and time again depending on what you define a city as having.
They selected 12 buildings with occupancy rates from 0 to 50%. Yes there are large office buildings that are completely empty.
Oil and gas is a notoriously boom and bust as an industry. The knock on effect is that some management companies will hold back some vacancy at extremely high rates for the next boom. When you are dealing with 10 and 20 year leases, it can make sense to sit on an empty building through a few years of bust until a big tenant flush with cash shows up.
None of this adds up to me, appreciate if anyone has hard numbers for this.
See "Average Construction Costs of Single-Family and Multi-Family Residential Buildings Per Square Foot in the U.S." on [1] for costs within major cities, you will see that costs are much higher than that, even if not 1k psf.
[1] https://www.togal.ai/blog/the-average-cost-to-build-a-house-...
The easy one: $100/sqft isn't $100/sqft for each apartment, it's $100/sqft of building. That means that you have to count hallways, lobbies, elevator shafts, mechanical spaces, internal walls, etc. All that adds up.
The hard one: The $1000/sqft conversion cost. This comes down to the fact that residential and commercial buildings have very different floorplans. Commercial buildings keep the plumbing near the elevator shafts because it's more efficient, but residential buildings need much more extensive plumbing on each floor to give everyone a bathroom and a kitchen. Electrical metering and wiring also becomes a lot more complicated. You also have to do things like putting up walls and light fixtures (usually commercial tenants pay for that in the spaces they rent) and installing residential appliances. All of that adds up to a quite significant cost in a place like San Francisco, notwithstanding the costs for permits.
So you need to be able to acquire it for cheap because the costs and risk to convert are estimated at $1000. These aren’t just construction costs, but things like hiring an army of bureaucrats to get the approvals from the city, and the possibility that you might have to wait several years to get started while the paperwork gets moving.
Think of it this way: you have the opportunity to buy a house, except you can’t live in it for an indeterminate amount of time, it needs some renovations, you might have to rent the basement out at below market rates, and you still have to maintain it and pay the mortgage for however long it takes to sort all this out.
So how cheap does that house have to be before you’re interested (and can talk a bank into backing you).
"...I note that the cost of housing per square foot in Biloxi, Mississippi, one of the poorest cities in the country, with a median household income that is 60 percent below that of San Francisco, is $139 per square foot. And this is for a city that is not only poor but is chronically at risk of major flooding, which raises insurance costs and reduces home values. "
So, San Fran residential real estate needs to be 28% cheaper than Biloxi?
Still even if it was closer to 40% it is pretty massive in terms of Real Estate.
San Francisco, or Silicon Valley / Tech is also the most vocal proponent to everything could be remote should be remote. Along with all the layoffs this could be a perfect storm for office values.
Huh? Tech companies have been some of the hardest pushers of returning to the office.
Because there is even a debate to be had.
Yes some bigger tech companies are pushing back, but others are going all in. This industry is the prime example of remote working, even if some are going back
Google, Meta, Amazon, Netflix, Apple, Salesforce, Twitter, Lyft, Spotify, Doordash, Snap, Uber and Ebay are hybrid or in-office.
Shopify, Dropbox, Coinbase and Airbnb are remote. Slack is as well but it's own by Salesforce so probably not for long.
So I think it's safe to say that overall tech is pushing for return to office. It's probably even more stark if you take the number of employees in these companies into account.
I believe there is space for both working modes. You take your pick. I'll take remote working for startups in the EU.
Companies that spread their employee office visits evenly through the week could achieve a reduction in office space of 20% / 40% by moving from full time office to 1 / 2 days a week remote.
In NYC, it seems that tech is the only industry that allows remote work. Finance in particular is requiring employees to show up.
Other industries don’t cater to the demands of labor. Everyone is replaceable, but not so much in Silicon Valley.
Very accomplished, productive people have been let go in the recent layoffs. Being "productive" was always a paper shield, but it's not even that anymore; I think they're trying to disabuse the tech set of the notion that they aren't labor to bring wages down.
We never had much of a boom, and I don't think conditions have deteriorated nearly as much. In part because they were never great to begin with :)
So I think that's been "priced in" for a long time.
My part of Oakland is quite safe, though we have some minor homeless camps.
Too much crime, poor quality of life, and remote work.
No one wants to live there except sycophants.
And the homeless population keeps going up.
Example a $10m building, you put $1m down on. You go to refinance the loan and they are only willing to float you $7m now because you arent able to charge as much rent to tenants. Thus requiring you to come up with $2m or lose your $1m investment and the building.
Do you actually reason about the world this way? Kinda odd.
But what about things that are factual? If they don't fit your standards do you discard them?
Example: It was a fact that Germany was left in an impossible political and economic situation after WWI, and it was a fact that the leftist government at the time accepted the agreements that led to that impossible situation. But simply saying that leaves out context about who was truly to blame, something that a young war veteran took advantage of in short order. So to avoid being tricked by people telling easy truths, it’s important to be critical of all sources of truths, especially ones with an ideological bent. And during that process it is acceptable to discard partial truths in favor of a search for the complete story.
Until cities solve the rent crisis, I believe this will happen more and more. I think the only way to solve that is to build and build, but NIMBY people and Companies who love high rent prices seem to do all they can to stop the building of Apartments.
But, in SF case, it may be a good thing. Having a city like that in a severe earthquake zone is rather foolish. I can hope people wake up and move to more environmentally stable areas of the US. By that I mean places with low risk of earthquakes, flooding and droughts. They do exist, but no one wants to live in those areas.
What is this based on? Tokyo, Jakarta, Manila and Los Angeles are more or similarly seismically active as San Francisco [1].
> They do exist, but no one wants to live in those areas
Because they’re fundamentally less productive. Natural harbours, fertile soil, striking vistas—each is related to geography, geology and economic potential. Landlocked, sterile, featureless terrain is less productive, less appealing and less valuable than natural port near volcanic soil and new mountains.
[1] https://www.worldatlas.com/amp/articles/cities-most-likely-t...
Definitely not landlocked, or sterile. Seats of millennial civilizations for a reason
I'm drawing a blank. Pretty much all of the mid-west is susceptible to tornadoes. The east and southeast to hurricanes. The west to earthquakes. The northeast to those crazy blizzards they sometimes get.
Because it doesn’t exist. You don’t build a city where you fortress. The oceans that give rise to natural harbours and ports also bring risk of floods and tsunami. Similarly for fertile riparian. The same seismology that raises the mountains which squeeze rain from clouds and provide stunning vistas also level badly-built homes.
The risks can be mitigated, but never eliminated. Look at the list of natural-disaster safe cities in America, and find a sea of low GDP per capita [1]. In an unexpected place we find the old adage reaffirmed: risk and reward come together.
[1] https://www.rockethomes.com/blog/housing-market/safest-place...
And some good sized earthquakes too.
https://www.usgs.gov/programs/earthquake-hazards/new-madrid-... // https://news.ycombinator.com/item?id=34701813
And from https://www.usgs.gov/programs/earthquake-hazards/cool-earthq...
> Earthquakes occur in the central portion of the United States too! Some very powerful earthquakes occurred along the New Madrid fault in the Mississippi Valley in 1811-1812. Because of the crustal structure in the Central US which efficiently propagates seismic energy, shaking from earthquakes in this part of the country are felt at a much greater distance from the epicenters than similar size quakes in the Western US.
And yes, while the entire west coast is red in the risk category... there is a good sized blob in the midwest.
Volcanic activity has occurred in the past 600 years on all the Canary Islands except La Gomera, Gran Canaria and Fuerteventura
Weather there is perfect if you want eternal June :)
https://phys.org/news/2022-09-planet-volcano-visitors-spanis...
The weather is nice, I'll grant you that. Any Atlantic climate place with volcanoes has nice weather. I'll take the volcanoes over The Nederlands, thank you.
https://www.rwcpulse.com/blogs/portal-to-our-past/climate-be...
https://www.kqed.org/news/11889712/can-redwood-city-really-b...
> "Henry C. Finkler was a bicyclist. And he became, I have to say, fanatically interested in weather. And he recorded, every day he rode down the hill, what the air temperature was, what the winds were, the number of days of rain," Svanevik said.
> It’s Finkler who first claimed there were only three parts of the world that had perfect weather: the Canary Islands off the coast of northwestern Africa, North Africa's Mediterranean Coast, and anything within a 20-mile radius of Redwood City.
I love Nova Scotia but I don’t think it’s the perfectly safe and livable paradise people should apparently move to.
Western European cities flood, most recently in 2021. The short list of low-risk high-GDP countries is limited to city states and the likes of Hungary, Czechia, Qatar, Denmark, Switzerland, Austria, Finland and Iceland [1]. Worldwide.
[1] https://en.m.wikipedia.org/wiki/List_of_countries_by_natural...
From that list:
4 Luxembourg 0.52%
13 Switzerland 1.03%
88 Germany 3.92%
110 United Kingdom 5.78%
131 Spain 9.68%
168 United States 22.73%
Though this does definitely tell me I was wrong about Australia, and that it only looks safe from a distance because the news isn't reporting on it:
164 Australia 21.36%
https://economy-finance.ec.europa.eu/economic-surveillance-e...
Hungary is quite nice though. Also, I'll take the Balkans over Western Europe any day. Not Bosnia or Kosovo, but the other EU countries, maybe even North Macedonia or Serbia. Or Southern Italy if you also want to be sophisticated.
There's evidence that the current is already slowing [1], and the midpoint of estimates for when it might collapse is at 1.8C warming, something we seem pretty likely to blow past within a decade or two.
It'd be bad for Australia and the Southwest US as well, since collapse of the AMOC would bring permanent La Nina conditions.
[1] https://www.technologyreview.com/2021/12/14/1041321/climate-...
But I have never had to deal with an earthquake or wildfire (other than staying inside for a few days). And I have been through multiple power outages due to rainstorms or ice bringing down power lines.
Yes [1]. It also floods and freezes from its proximity to the lakes and rivers that make it a logistical hub.
[1] Has Chicago ever had a tornado
https://slate.com/business/2019/01/chicagos-deep-tunnel-is-i...
https://earthquaketrack.com/us-il-chicago/recent
And for blizzards: https://en.wikipedia.org/wiki/2011_Groundhog_Day_blizzard https://abc7chicago.com/chicago-blizzard-2011-snowmageddon-b... (it's just that in the midwest people know how to prepare for blizzards and the city services have the tools) and yet...
> At least 36 deaths were reported to be related to the storm, many of them in shoveling or auto-related incidents, and the total damages were US $1.8 billion.
For your tornado question: https://www.weather.gov/lot/sigchitorn
> There were 92 significant tornadoes in the 8 county Chicago metro area between 1855 and 2008.
> The deadliest tornado occurred on April 21, 1967 during an outbreak of 5 significant tornadoes. A violent F4 tornado formed in Palos Hills in Cook County and traveled through Oak Lawn and the south side of Chicago. 33 people died and 500 people were injured by this 200 yard wide tornado that traveled 16 miles and caused over $50 million in damage.
> The most recent significant tornadoes occurred on June 7, 2008 over Will and Cook Counties.
> The only F5 tornado to ever strike the Chicago area was on August 28 1990. This tornado formed near Oswego and passed through Plainfield, Crest Hill, and Joliet. The tornado killed 29, injured 350, and caused $165 million in damage along a 16 mile path.
But Chicago is in an area that gets tornadoes - https://m.youtube.com/watch?v=LnkMSmLc6mM
I would also dispute “no natural disasters”. There are serious winter events in those regions (and crazy floods depending on where you are in the Midwest) that happen basically yearly.
I don’t think any part of the world is without significant tradeoffs, you just have to find the ones that matter to you.
None of these have the climate of San Francisco, but certainly livable.
Phoenix (and Albuquerque but I'm less familiar with the specifics) is in the desert; both the water it gets and the ambient temperature are getting worse due to climate change. There are already legal fights over water rights in the greater Phoenix area, and it's just going to get worse. That is not a place to be building up.
One recent example: https://kjzz.org/content/1847190/scottsdale-wants-governor-v...
> Scottsdale cut off Rio Verde Foothills from water sales in January due to worsening drought conditions. That left hundreds of homes in the unincorporated community without a reliable water source.
> Arizona lawmakers earlier this week sent a bill to the governor’s desk that would force Scottsdale to resume sales, for at least a few years while the community works out a long-term solution. But in a letter to the governor, Scottsdale’s mayor and City Council say the bill penalizes their city for sensible water management.
https://www.azcentral.com/story/opinion/op-ed/joannaallhands...
> The bill requires the city to deliver at least 150 acre-feet to its standpipe each year, through 2025, unless outside circumstances reduce whatever source they use for it. And Scottsdale can’t charge Rio Verde Foothills residents more than $20 per 1,000 gallons for that water.
And the letter from the City of Scottsdale to the governor: https://www.scottsdaleaz.gov/Assets/ScottsdaleAZ/News/News+I...
How many people died? How many billions of damage occurred?
Of course stuff happens, there are also minor earthquakes. But I think the point upstream is to avoid massive events. A tornado downtown every decade that does a few million in damage is very different than a 1% chance the city is destroyed.
HN confirmed for Hyperboreans.