Office real estate crash will be so sharp, values unlikely to recover by 2040
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Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. Banks need higher prices as they are highly leveraged and will be on the hook for billions. Same for most landlords they cant decrease the rent too much as that would decrease the value of the property and make the bank come after them to top up as they are also leveraged. Then we have got black money parked in real estate of western countries where such owners do not care much about rental income they are okay with their money being safe so dont care about renting. Then we got the countries themselves they turn a blind eye to this black money parked in their countries as it helps their economies. Plus if the black money/corruption money is from a politically exposed person they are able to be controlled/blackmailed by the 3 letter agencies of these countries.
A ponzi scheme is fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
Where is the nonexistent enterprise? How is money from later investors used to hoodwink the first investors by pretending there's quick returns?
I think you are looking for a different characterization of commercial real estate for it isn't a ponzi scheme.
If you’re going to copy/paste a dictionary definition, you should probably cite the dictionary you are using (Oxford, it looks like).
I think the correct term here is “speculative bubble”, but there are deep similarities between a speculative bubble and a Ponzi scheme. The similarities run deep enough that I do not think it is worth fighting over the difference between a Ponzi scheme and a speculative bubble. In both a speculative bubble and a Ponzi scheme, early investors are paid out with funds taken from later investors, for an asset which does not have enough utility to justify those payouts.
In a Ponzi scheme, it’s one person or entity running it, and in a speculative bubble, it’s just “the market”. But the market is just a bunch of people. And I don’t think the bad faith component of Ponzi schemes should be considered a necessary component.
There are deep differences, too, most obviously the one highlighted by the “scheme” in ponzi scheme.
> In both a speculative bubble and a Ponzi scheme, early investors are paid out with funds taken from later investors, for an asset which does not have enough utility to justify those payouts.
In a ponzi scheme, money is deliberately directed to early entrants to cover the conscious absence of any mechanism to produce actual value.
That's not true of speculative bubble; yes, the usual market mechanisms involve movers out of market get money from those moving in, but outside of fraud (which can make usual market action ponzi-like) its not conscious cover for an absence of a return-generating mechanism. Yes, a ponzi-operator produces deliberately a conditions similar to that which is retrospectively observed when the market misperceives value for a time, but that's the same as saying fatal accidents produce the same results as murder plots. We call them different things for good reason, and it is worth distinguishing them.
> And I don’t think the bad faith component of Ponzi schemes should be considered a necessary component.
Someone having advance and certain knowledge of the absence of return mechanism is quite relevant and distinct from a market misperception, especially when looking at a prospective bubble that hasn’t popped (so its the differences between “there is specific concrete evidence someone engineered this fraudulently” and “my perception of the future differs from the consensus”.)
Redefining terms so you can use terms that communicate greater certainty and have higher emotional valence than is warranted by what you are actually describing is bad, in much the same way as an (actual, proper definition) ponzi is bad. Its an attempt to mislead and motivate action based on misleading people.
I don’t think the “deliberate” part is particularly important. It sounds like you disagree. There’s a whole discussion to be had here about mens rea, and that discussion is important in the context of criminal justice, but I think it’s less important when discussing systemic problems because you need a different toolset (besides intent) to discuss problems with economic systems.
It’s unimportant whether commercial property owners are fraudulently or not inflating their property values? That seems incredibly important to what kind of solution is appropriate.
Though it is one of the retroactive justifications for government from non-minarchist market ideologues.
What has happened is that demand for office space has dropped dramatically.
The proper market reaction is to spend the money to convert these office spaces to some other use, perhaps residential.
Then these properties will more likely find tenants.
E.g. you can't say a failed startup is a ponzi scheme because it loses a bunch of money. A ponzi scheme is a very specific type of fraud.
Like you would think the asset buyers would have an incentive to stop holding the loans and the whole thing would collapse, but because the buyer are investing with other peoples money they are also incentivized to keep the cycle going. The people whose money is eventually going to be lost have no way to stop this because the money is either in a pension fund or they aren’t knowledgeable enough to understand the issue
This is collective behaviour. If you discover you’re in a Ponzi scheme, it’s in your interest to get your money out first.
You can either cut your losses and not get your money back (if you're an ethical operator), of you can actively or passively allow other people topit in their money so you can get yours out first. There are similarities where rational vested actors want the charade to continue for a little while longer - the more money you put in, the longer your commitment to the mirage is.
I agree this isn't a scheme, as it wasn't done out of maliciousness, but it share so much property with it (including who will have to hold the bag) that I kinda like the image.
the Ponzi in Ponzi scheme refers to a specific person, and the scheme in Ponzi scheme refers to the specific scheme that specific person executed
That would be very expensive. To be able to afford that, the prices need to crash seriously hard.
But every other vested interest is aligned with the developer handouts. Eg, construction, government for more taxes, unions, office REITs that want less competition, big finance who want the CMBS problem to go away. Even the mortgage industry would profit more from selling tons of new condos vs fewer more expensive resales.
Because it’s credit built on credit. It’s not an intentional Ponzi scheme (maybe).
> The proper market reaction is to spend the money to convert these office spaces to some other use, perhaps residential.
It’ll be prohibitively expensive for most properties to convert them to residential. They might as well be demolished for their land value.
Lots of major players who really don't want the Ponzi pyramid to collapse? Yes.
But, long-term, no Ponzi pyramid can avoid collapse. Black money is not infinite, and can get skittish when the music starts fading. A central bank printing money can prop the pyramid up...for a while. But that only makes the collapse bigger, and takes more of the central bank's economy down with it when it finally does go.
> Ponzi scheme? Yes.
How in the world are these the top comment and top reply? Commercial real estate isn't a ponzi scheme. Like, at all. In any way, shape, or form.
There are disparate actors making separate, uncoordinated decisions. There are single transactions being made delivering real value. There's no long term holdings falsely being promised under the guise of stealing short term value by adding more customers.
The commercial real estate market changed. Money is going to be lost. There are bad contracts on the books. Correlated markets are going to suffer. Leveraged losses are going to exponentiate. None of this has anything to do with a ponzi scheme.
You sure about that?
https://www.propublica.org/article/yieldstar-rent-increase-r...
Would not completely write out the possibility of collusion, even if non-Ponzi in nature. DoJ has been sniffing around various actors that have been increasingly found to be acting in a cartel-like manner to keep rents high.
Dishonest people will always use hyperbole when describing the world. That hyperbole is not justification for honest people to abandon technical definitions. And that is what you are proposing. Having everyone "evolve" on the definition of 'ponzi scheme' means that the current definition is erased. But the current definition is still in use!
At that point did it stop being a speculative bubble?
The reality is, reality doesn't have such distinct boundaries as you are trying to enforce.
At the end of the day, what is the point of a word's definition? To help communicate an idea to other people and society. The US financial and legal systems are intentionally designed to segregate the less educated. Confusion is their primary strategy to make more money! You can either choose to help them continue the segregation, or you can chose to liberate financial and legal concepts to everyone.
How can you help? By understanding what parts of the concept were easy to understand, what colloquial language is most used to describe it, and then realizing the gaps between the coloquial and technical definitions.
Trying to resolve those gaps with "you're using ponzi wrong" continues the segregation and confusion. Trying to resolve the gaps with "Oh.. you think a ponzi scheme is any scam using obfuscated financial instruments. Ok fair enough lets start the conversation there." you would then continue and say "A typical ponzi schema has a single power structure with a single voice and name e.g. Bernie Madoff. However, in this case it is a ponzi scheme with a distributed set of actors i.e. no one is working together, but still there is large scale issue occurring - we typically call this a speculative bubble / coordinated pump and dump - its not always easy to know what exactly is going on".
You could even continue "Realestate in general has actually been a generational pump and dump scheme. Its not that grandma's everywhere meant to harm anyone, but the common advise to 'buy a hose at any cost' is in favor of the realestate owning elderly (i.e. most of them) and as such is difficult for them to say anything else. Additionally, because its been generational, it seems to have been working for quite some time giving it even more credence. At the end of the day tho, it is a distributed ponzi scheme - if you go to withdraw your money and no one is willing to add even more money (i.e. how much you want, and the "processing fees" around it) - you will not get your money."
> reality doesn't have such distinct boundaries as you are trying to enforce.
It really does, as defined by law and consequences. A ponzi scheme necessarily involves fraud and a speculative bubble does not necessarily involve fraud. The fact that some speculative bubbles do involve dishonesty and manipulation (a pump and dump, like you mentioned) does not change that!
This is a crypto phenomenon. Porting crypto’s corruptions of financial and economic terms, from Ponzi to inflation and market cap, given the benefit of hindsight, doesn’t make sense.
Here’s, mechanically, why it’s not a Ponzi scheme: there is no incentive to get your money out first.
Both politicians and industry leaders know it will inevitably pop at some point, but since they have short terms while they're in charge and won't be accountable for long term consequences of their actions, they just want to make sure it doesn't collapse while they're in power, so they keep kicking the can down the road as long as their short tenure last, then it becomes the next guy's problem, rinse and repeat. They're hopeful they can make the problem big enough that the government will have to bail them out when it crashes.
It's a result of chasing maximized short term returns at the expense of long term consequences in a zero accountability system. Basically, it's what our system rewards.
California is the only state facing this due to Prop 13. Most jurisdictions are able to adjust real estate tax rates in response to the drop in valuations and many did so when property values dropped in the Great Recession.
An owner may walk away from a Mortage and the bank will pay the taxes. If taxes are not paid you move into tax liens that trade and may be able to get the property just for the taxes on it. In the end property taxes get paid.
And the opposite of suicidal, the “carpe diem” idea, rather hedonist, is equivalent in that they believe in “no tomorrow”.
A lot of people suffer dissociation since Trump, which was crystallized in The Joker movie. Or perhaps it was due to social media. In any case, wanting to “see the world burn” is a recurrent idea, I’d like a study on how many people seriously adopt this attitude.
Dear God, English is the stupidest language ever.
No one uses "cause and effect" like "cease and desist".
A lot of people are so disenfranchised from the wealth that the world could crash and they could care less. They are already at the bottom with nothing to lose.
Such is the inequality in America these days.
If they have access to running water and a roof over their head, this is a wildly misinformed perspective. The people at the bottom typically feel the most pain during economic wipeouts.
Usually this sort of soft corruption is dealt with in real estate by incentives. For example the developer offers to pay your HOA fees for a year or two, or throw in some appliances, or whatever. The goal is always to artificially support a higher price through a back door discount that won’t devalue the whole building. There are commercial real estate equivalents to this like the developer paying for more customizations and improvements to the office space which are typically borne by tenants.
But my reckoning is this downturn is way too big and fundamental for those stunts to be enough. If it’s true office real estate values have not been written down then I suspect we are in for a shit show when everyone is forced to acknowledge reality.
(I am not in real estate but spoke regularly to industry folks and wrote reports during the last boom 2002-2008)
They don't have to increase rents as long as values kept increasing.
If office values go up x% per year, even if you're steeply cash-flow negative, as long as you're adequately leveraged and have low interest rates, you're still probably printing money.
It's almost as if artificially low interest rates manipulated the economy.
Rent is becoming a social tool for class stratification and it began in classically liberal cities when they started asking for First+Last+1Mo Dep which often equaled $5k+ in one shot. That used to be a down payment for a house and it's absolutely ridiculous given the amount of money rental income sucks out of the economy that would otherwise be used for production and consumption.
In the United States, the government holds hundreds of millions of acres of land in trust and it needs to be relinquished in part to help grow the actual base of humanity they hold stewardship over, even if it means reducing investment values for the rich and powerful who have amassed so much through manufactured crises. Blackrock and other hedge funds should have never been given the power to buy homes the way they did by the Fed; it was just another shell game to hide their incredible myopia.
So much so, they are now backtracking on a labor advancement which is remote work in order to stabilize their personal portfolios in real estate. That's a conflict of interest that can be tantamount to investor fraud considering the Board is not acting in the best interest of the shareholders, but in the market for which they are beholden through consolidated power at hedge funds and banks.
Real life example, Assembly Square near Boston: https://twitter.com/ScoutSomerville/status/12117083803913666...
Zoning is basically irrelevant - the problem is that the cost of converting an outmoded commercial building to residential is usually within the same order of magnitude as knocking it down and putting up something built for purpose. I would bet real money that there aren’t more than a handful of municipal governments that would die on the hill of maintaining existing zoning restrictions if they had viable proposals to convert vacant commercial buildings.
Those millions of acres owned by the government are mostly desert and national parks and in any event there’s no shortage of privately owned undeveloped land closer to existing cities (or hollowed out existing cities that are ripe for a renaissance).
Also, just nitpicks, but when was $5k a down payment for a house? 1955? And BlackRock isn’t a hedge fund. You might be thinking of Blackstone (also not a hedge fund, but they own portfolio companies that are buying up a lot of single-family housing and turning them into rental properties, which is evidently extremely lucrative but I find incredibly distasteful).
If you look at the urban core of many cities, they are full of old commercial buildings converted to lofts/residentia. The old bank district in LA was empty and in disrepair for decades, then a huge conversion boom in the 2000's. Soho in NYC. Many buildings south of Market in SF.
The question is why can't we accelerate the process so the buildings don't sit unused for decades before it becomes worth conversion. <- though maybe that is the crux, the prices need to decline enough to make it worth it.
More recent commercial buildings, particularly anything from the last decade, are generally fine in terms of valuation/viability - there’s been a very noticeable flight to quality in commercial real estate. Lots of tenants are giving up space in the slightly obsolete buildings and moving into new flagship towers.
So? LA is a desert and requires the rest of the region to support their needs; which is really just their real estate values through sustained population growth - which would otherwise not happen without sucking H2O from everywhere else. Knock down the buildings and repurpose the materials for other areas then; though people will claim that's not "profitable" either so it will just be melted, crushed and buried instead of repurposed.
Converting buildings creates jobs! Isn't that the point of much of this, job creation so we can keep all these devious little beings busy? Jobs means they can afford the new constructs. Even at increased costs, how many of these buildings are paid off? How many change hands as a means of transferring debt, buying out equity and essentially playing a Fastowian shell game? The idea that, "we can't profit off that" is absurd given how much the governments of this country subsidize profitability for the people who are wrecking so much.
Pray tell, where would you source the food required to support said new residents if you're going to convert farm land already dedicated to supporting people who are already there?
Not sure about California's import/export situation with Ag output.
But the point isn’t to get rid of the farms, just that LAs water usage as a city is tiny in comparison to California’s agricultural water usage in general.
The first house my parents bought in 1976 was $26,500. So I wager $5k down payment would have covered it. (And this was in Los Angeles County)
True.
> ... and it needs to be relinquished in part to help grow the actual base of humanity they hold stewardship over
Almost entirely false. See, the land they hold, they hold because nobody ever claimed it under the Homestead Act. Nobody could figure out how to grow enough to feed a family, even with 168 acres of it. This mostly means that there's no water there.
I'm pretty sure that the solution to the housing crisis is not a few square miles of waterless sagebrush in private hands. If you build a city there, where are the people in it going to work? (If they're currently homeless, they're probably not going to get hired for the kinds of jobs where work from home is possible.) How is it going to integrate into the surrounding economy? Where is the food going to come from? Where are the roads for the food going to come from? Where are the power and the water going to come from?
And even if that is the answer... what private hands? Mine? I don't have the money to develop it. Blackrock's? The banks? I don't think you're going to think that approach is the answer, either.
(True, some of that land is forest rather than just sagebrush. But if the federal government sells it, it will be bought by someone wanting to log it flat for the timber. That won't leave it with cities on it, either.)
As you say, a lot of that yellow land is basically desert or semidesert and uninhabitable. Although that understands the nature of the problem, since the US did manage to sell off a large swathe of uninhabitable land--the High Plains was sold off in the late 19th century, only for the Dust Bowl to happen and people to realize that in fact, no, this wasn't good farmland.
[1] https://commons.wikimedia.org/wiki/File:US_federal_land.agen...
The feds still try to sell it. Nobody buys it, because it's _still_ useless. It's a bad investment to buy shriveled land, build a residence on it that's incredibly far from basic necessities like gasoline and food, and then pay money to have water trucked out to your remote ass.
How would relinquishing that help, is access to land a real issue? You can probably already buy a lot for cheap right now, but it will be far from urban centers and won't be habitable without a ton of investment. Would have zero effect on housing.
- Autos - Airlines - Banks - Farming
They all require massive injections of liquidity for the purpose of subsidizing poor stewardship. "Costs" is not a feasible excuse for continued economic oppression.
And if it is a tension slab, you absolutely cannot cut into it.
Initial investment in locality based infrastructure creates the market; expansion through time with connected systems, if so desired, would then be an increased capital cost over time, not an upfront requirement. We can generate competition in building whole new cities, like corporations are attempting to do today, which can help stabilize and reduce the growing costs of rent and housing in major metropolitan areas. It absolutely would have an impact - just not when you construct a fallacious form for it to exist in as a failure by design; which is most of commercial and residential real estate given zoning requirements and the massive middle-man industry surrounding it.
The reason it's cheap is that no one wants to develop it.
I will note however, I'm somewhat sympathetic to states like Nevada, Arizona and Utah who would like some of the BLM land given over to state stewardship - but its a very regional issue, and fractious enough that its hard to get enough people nationally behind (people outside of these regions hear 'federal land' and think 'Yellowstone' when the reality is closer to a 640 acre square of semi-arid grassland, in a checkerboard pattern).
Federal land holdings are statistically non-existent east of the Mississippi - and even east of the rockies, less relevant.
I don't disagree that private equity gobbling up some sizable percentage of single family homes is a very bad thing - but it'll take some will by congress and the state legislatures to unwind. The one thing that should give people hope here, is while its not yet widely reflected in the political class, there is broad grassroots support for limiting concentration of land holding and other physical assets (think anti-trust). It's just gonna take some time for that consensus to filter up. The current intensity of energy being expended on the so-called 'culture wars' isn't helping speed this process along.
(The 'culture wars' is probably the largest impediment to us working together to solve the fundamental economic issues present in the nation - the consensus of what to do is largely present - but until you can get people in the room to hash out the details, we're basically blocked from making progress.)
Renting is a service, a productive economic activity that yields net positive value to the society. The building did not fall from the sky and someone "claimed" it. Someone actually had to put in work and time and take risks for it to exist and be rented. Those enjoying the building benefit from these previous efforts, which in turn are compensated by receiving rent.
Yes, government printing money inflates overall prices. More recently, this happened because governments needed to pay for covid. During inflationary cycles, money flocks to assets like real estate. Simply because they are good protection against inflation.
Property owners don't become richer because of that, since everything else became expensive as well.
There are economic systems where price-setting is controlled and/or centralized. To my knowledge, all of them failed in producing better outcomes than a free market for anyone in society.
But you'll be in the middle of nowhere, with no infrastructure, no services.
The "location" value of a property is tied to what's around it. Having lots of people deciding to develop useful things and services around it.
The risk is without the correction you end up like many EU countries whos main GDP growth is real estate which only takes you a few generations to fall apart.
Its an abberation. This is a failure of GDP as a measurement tool. Growth in realestate prices makes us poorer
This is like saying that economy has geown because food got more expensive, so people can lo longer save.
its like saying that when I give poor people mt used clothes, I am damaging the economy because they no longer have to buyt clothes, so gdp will go down.
> Here's another arresting thought. None of this really matters because GDP is in any case a perfectly useless measurement All that it is, literally, is a crude measure of national income - 'the dollar value of finished goods and services', as the textbooks put it - over a given period.
> Any kind of economic activity adds to the gross domestic product. It doesn't matter whether its a good activity or a had one It has been estimated, for instance that the O.J. Simpson trial added $200 million to America's GDP through lawyers' fees, court costs, hotel bills for the press and so on, but I don't think many people would argue that the whole costly spectacle made America a noticeably greater, nobler place.
> In fact, bad activities often generate more GDP than good activities. I was recently in Pennsylvania at the site of a zinc factory whose airborne wastes were formerly so laden with pollutants that they denuded an entire mountainside. From the factory fence to the top of the mountain there was not a single scrap of growing vegetation to be seen. From a GDP perspective however, this was wonderful. First there was the gain to the economy from all the zinc the factory had refined and sold over the years. Then there was the gain from the tens of millions of dollars the government must spend to clean up the site and restore the mountain. Finally, there will be a continuing gain from medical treatments for workers and townspeople made chronically ill by living amid all those contaminants.
> In terms of conventional economic measurement, all of this is gain, not loss. So too is overfishing of lakes and seas. So too is deforestation. In short, the more tirelessly we use up natural resources, the more the GDP grows.
> As the economist Herman Daly once put it, 'the current national accounting system treats the earth as a business in liquidation.' Or as three other leading economists dryly observed in an article in the Atlantic Monthly last year 'By the curious standard of the GDP, the nation's economic hero is a terminal cancer patient who is going through a costly divorce.'
> So why do we persist with this preposterous gauge of economic performance? Because it's the best thing that economists have come up with yet. Now you know why they call it the dismal science
Pure economics does not incentivize stability.
If existing home prices go up 4% - that should be discounted from REAL growth.
If land prices go up 4%, that should also be discounted from REAL growth.
We need a better measuring stick.
I disagree.
Periodic recessions and repricings would be good for the economy - just as periodic small fires are healthy for forests.
But we snuffed out all of the recessions in the same way we snuffed out all of the small fires - and now we have accumulated so much "fuel load" that the inevitable fire will be an uncontrollable catastrophe.
(I love this analogy, by the way)
So it will occur but it won't be good or healthy. A large number of otherwise healthy business firms and otherwise reasonably employed people will all get burned while they would have survived a series of smaller recessions.
What is an example country whose main GDP growth stems from real estate? The EU economy as a whole is driven mostly by the services sector, which accounted for 70% of value added in 2020. https://www.visualcapitalist.com/16-trillion-european-union-...
I've been looking for 1500-3000 sq ft for a light manufacturing space for around two years. In my area warehouse $/sqft is $5-7 a year. Office space is $13 for old and dated layouts. I have no use for that dotcom era conference room. I need 10 ft dock doors, tall ceilings, and reliable 3 phase power.
Buying land outside my metro area and building new is becoming the only option for me until this crash actually happens. Sprawling out of the metro would only bite me down the line because the labor market is even tighter in rural areas.
That’s from KASTLE Systems, an office access management company. The office occupancy rates across the US have stagnated and don’t seem to be increasing. I don’t see why occupancy rates would go back to pre-Covid levels ever again. The work from home transition is permanent.
Therefore, valuations of office space will eventually have to be marked down and given the leveraged nature of the market, the markdown’s impact on commercial real estate corporate valuations ought to be magnified considerably.
https://therealdeal.com/sanfrancisco/2023/05/31/veritas-to-b...
It seems to me that one big reason why companies want their employees to return from home office so badly is to secure their investments in real estate. The benefits of having leaner office spaces are in conflict with the investment made into these office spaces.
That's one issue with parking your capital into speculative assets, it ties down your freedom of action tremendously.
It's pretty unlikely it will actually crash though. Too many of the elite have too much money dumped into it. We will continue to see small closet sized shops with rents of $20,000 for the foreseeable future I suspect.
Too big to fail, etc.
For Wall Street & the billionaires? Reasonable.
But the crash will cause vastly more suffering for normal people than for the 0.1%.
Nah. I’m good. The world has changed. Adapt or die.
Frankly, between AI and remote work, I’m happy to watch our miserable current instance of the world burn to the ground.
Normalcy bias is a helluva drug.
In 2023, if Bank A comes to the Fed/FDIC/SEC/Treasury/Congress in the middle of night after a huge margin call, our institutions now have the processes in place to declare different accounting or collateral rules for that specific bank at the stroke of a pen.
"Ok Mr. Dimon, as of midnight tonight, you no longer have to mark all of your shit paper to market. Carry it at the valuation you think is cool, bro"
That's a different definition of "stable" than we had prior to the GFC.
that is the whole point. We had a top-10 bank fail, and you know what? our financial institutions did not cascade into failure.
There WILL always be failures, ups and downs, the question is how it is mitigated.
We have had multiple bank failures this year. And so many banks are holding large amounts of commercial real estate and also long term bonds they can't mark to market without suffering monster losses.
that is the whole point. We had a top-10 bank fail, and you know what? our financial institutions did not cascade into failure.
There WILL always be failures, ups and downs, the question is how it is mitigated.
Privatized profits, socialized losses.
Probably why the push for RTO is so strong in some business areas.
I'm confused.
If only politicians had an iota of strategy.
Maybe there’s a creative way to do low-income housing meaning only a window or two in the whole unit, no individual HVAC control (set by building) lots of artificial light, and someone more knowledgeable than me would need to explain the power & plumbing tradeoffs. Maybe you could basically replumb & wire on top of the floorplates, taking a few inches from ceiling height?
As for plumbing, like you I also speculate if they could not just do a raised floor, or possibly inside/along walls, to increase the reach. They already do this in some renovations of very old buildings where they want to create a large central kitchen (resulting in almost horizontal plumbing that clogs like nobody's business).
While the bathrooms can be fixed with effort, windows mean a lot of office spaces would have empty cores as only the square footage near the outer edge of the building would be used.
(This isn't my area of expertise. I'm leaning on there being someone closer to this topic here on HN to opine, but this is at least how I understood it from real estate developers who noted to me why they're avoiding office space conversions)
Many buildings are difficult to retrofit because they use a type of compressed concrete floor that cannot be safely drilled. Cheaper to demo.
We just need to reach the tipping point where the demo/rebuild cost is lower than the expected gain.
Just change the code.
Changing code here is unviable.
Also, if you need a window for a bedroom to be safe, why not an office? People spend 8 hours in an office without a window. Mitigating fire risk in tall buildings is a serious issue, but you have sprinkler systems, internal stair exits, etc.
I feel like the notion "the govt should turn empty offices into housing!!" comes up on places like reddit _all_ the time, it takes very little explanation to show why it's not that simple.
(archive: https://archive.ph/gQiQW but it's not as easy to read)
Takeway: old skyscrapers are easier to convert than new ones, because they tended toward home-like small offices.
A modern skyscraper had to have a hole punched in it.
https://12ft.io/proxy?q=https%3A%2F%2Ffortune.com%2F2023%2F0...
Step 1 -aquire land and property Step 2 - Build mass transit / metro and invest in the area, proterty price goes up 3x Step 3 - Rent out, or sell
If some one refuses to sell land ar step 1, buld transit where you actually do buy land
Instead of doing this, it would be far more logical to just charge for the services being provided in the form of a yearly fee proportional to the amount of land that is being occupied.
The whole point of a pyramid scheme is they don't create value.
Developing the undeveloped is a productive contibution to the economy. Solving the housing crisis is a productive activity
> this is already done in the form of suburban sprawl
You have to create high-density housing, apartments, and local amenities. Pulling expensive underground rail tlinto a group of suburban homes is a waste
> You generate a bounded one off income
keep them and rent them out
Governments want to help their friends and hurt their enemies. Doing this almost never involves making money - sometimes and only sometimes it involves helping their friends make money.
In your example step 1 and 2 are fine but 3 is awkward. Selling or renting things doesn't make anyone happy. It's better to just give it away - there's no profit to be made but again - the point isn't profit.
So, slimmer buildings basically.
I'd guess in a few decades people are going to be trying to come up with solutions for all the people who overpaid for their houses, and can't find an adequate buyer.
Low income housing comes with associated costs to the city and the people who inhabit them pay essentially no taxes so everyone else's taxes need to go up.
Please be as specific as possible, I'd be surprised if you'd be ignorant enough to make such an accusatory comment if you didn't have an example ready to go.
I wonder, does it have more kills in the air or on the ground?
The f16 is made to stay close to airbases and defend against intrusions. Kinda cheap - relatively.(60 M usd)
The f22 is the peak stealth air superiority fighter. It's made to go anywhere and murder anything. Much, much more expensive. Does not carry that much ordonance.(150M usd)
F18A are made to be do it alls on carriers.(66 M usd)
(I'd love to be corrected if i'm wrong)
There's a saying in systems engineering that comes to mind: "the purpose of a system is what it does".
It's why I've only become more and more convinced that we should leave the rest of the world alone.
https://www.youtube.com/watch?v=uhXFgKEkwbU
I'd be curious for your thoughts.
And though it scares the living heck out of me. That can be scaled up with AI.
Strategy requires a goal. Naively your goal might be to house more people.
NYC tried that with lots of projects built in the mid 20th century. True it provided apartments for a number of people during that time. However the projects were a terrible dangerous place to grown-up and many who grew up in them weren't able to enter mainstream society (and thus then subsequent generation requires even more such housing)
Meanwhile the areas near these projects are also dangerous and blighted - doing that at scale would condemn the entire downtown and send the city into a tax death spiral.
Pretty much all my coworkers also reckon they are much less productive in the office.
If your job is not face-to-face with a client/customer, then the only thing you are "serious" about at the office is socializing. That is great if you work with all your friends. If not, you and everyone else there is wasting time. It is simple to have meetings, get instant feedback, ask questions, share data, call, anything really from remote. At one time that was not true, but in 2023 people that are demanding office time are either trying to justify the cost of an office or are micromanagers with some sort of complex.
Come on, office attendance is not a sign of being "serious about their work."
Farting in an office chair all day is frequently a performance to feel busy or fill other needs in their lives.