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Comment by orange_joe | Hacker News Reader

In my opinion this isn’t a consequence of the pandemic, but rather an inevitable outcome from the uneven pattern of building that vastly favored commercial real estate and prevented new housing. Even without teleworking, it was likely that jobs shifted toward suburban office parks as they had in the 80s to 2000s. People want to live close to work, and without sufficient housing in cities, commercial real estate in big cities was very likely to suffer in the long term. These foreclosures are actually a good thing as they will allow big cities to rebalance the allocation of their scarcest resource — land.

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I worked in a suburban office park before the pandemic. My commute to the office park wasn't substantially shorter than when I commuted to a downtown office and the office park was a lot more depressing. When I worked downtown, my coworkers would regularly explore new restaurants during lunch, have 1-on-1s over ice cream etc. The other benefit was that downtown had better public transit. Getting from one random place in the suburbs to another via public transit is a much harder problem to solve than getting people to a central area.

I wish we could solve zoning and permitting and just build our cities up.

> I wish we could solve zoning and permitting and just build our cities up.

Lest people think that building up necessarily means skyscrapers, it doesn't. You can build a six-story building without any of the extreme engineering or exotic materials that skyscrapers require. Paris, Barcelona, and Amsterdam all manage high levels of density where the average resident will be living in a building of approximately six stories or less.

I don't get why people don't like skyscrapers. They're cool. I am from NYC, so maybe I'm used to it. My understanding is the major reason they aren't build as much outside of Manhattan is because the bedrock in Manhattan supports heavy structures.

As cool as skyscrapers are as achievements of engineering, they're only a good solution when land is so expensive that the cost of the land dominates the cost of the building. Skyscrapers just aren't materially cost-efficient and don't scale well; as they get taller, a larger and larger percentage of the floorspace must be sacrified in order to accommodate structural elements and elevators. And then you have other problems, like how they have to pump their own water rather than relying on ordinary water towers, or how wind and earthquake risk has to be accounted for as the height increases.

That is definitely true. On the other hand, we also aren't fully accounting for the cost of sprawl. All infrastructure gets much more expensive with sprawl and that cost is usually equalized over an entire metro area with the urban core incurring very little infrastructure cost per person while the suburbs frequently come out negative on contributing tax$ - infrastructure cost. Carbon emissions which are higher with low-density are another cost that's not priced in. It makes it really hard to find the equilibrium point if we aren't pricing everything in.

Yes, I'm not advocating for unchecked sprawl, all I'm saying is that there's a middle ground between suburban hell and Blade Runner dystopia, which brings me back around to my recommendation for six-ish-story buildings. European cities are the natural experiment that show how well even relatively "short" buildings can leverage the benefits of density.

I think we are pretty much in agreement.

For what it's worth, I thought blade runner was cool in that respect. Parts of Blade Runner were dystopian, but not the idea of having a big city (the advertising was dystopian iirc). My feeling is that if we have a strong urban core, we can rescue the countryside and nature from over-development. It's also nice to walk around cities. I have to drive everywhere outside of urban areas which sucks.

It also was surprising to me to learn that the Blade Runner city is considered dystopian. I had some of my greatest times in Asian mega cities like Shanghai and Tokyo. I think the key is to get away from subjective preferences in either direction, price in externalities, remove red tape, but also direct or indirect subsidies in either direction which right now benefits the suburbs by paying for their huge infrastructure needs. Maybe the result will still be that everyone wants to live in a SFH, but I think reality is gonna be a more diverse mix of options and in general more density because it's not economical. We also have a lot of people who right now cannot afford any home and I'm sure they'd prefer a shoebox between hundreds of other shoeboxes over a whole in the ground under a freeway bridge

That might have been true in the early 1900s when skyscrapers were new, but they can build skyscrapers on any kind of soil these days.

A good chunk of the tallest buildings in Boston are built on late 19th century landfill (Back Bay). Admittedly not an earthquake-prone area but still.

Another thing that seems to be missing from many people's mental model is that building up doesn't mean you need to destroy green spaces. In fact building up gives you more ability to create green spaces between the buildings.

Yes and these buildings are awful to live in. Paper mache boxes with no sound isolation. If you are going to live in an apartment in the US, it's very important to live in a tower, even on a low floor, and not a mid-rise, because extreme engineering and exotic materials (relative to US construction norms) are necessary to make multifamily living tolerable.

The exotic materials and construction required for a skyscraper are due to a need for massive strength:weight ratios, and are a separate consideration from sound insulation. A desire to use less material overall (and therefore need to support less weight) will naturally drive a skyscraper to have as little of this material as it can get away with, which means poor sound insulation is the default. Naturally, low buildings will also skimp on sound insulation because nothing's cheaper than nothing, but this is why you need regulation and building codes that take sound insulation into account.

Steel and concrete buildings are way quieter than wood in practice.

Yeah, but they make shorter buildings out of steel and masonry, too. Next time you're apartment hunting, you can call ahead and ask whether the building is lumber construction, if you're not sure.

I’m pretty familiar with the “luxury apartment” offerings in the Bay Area and they’re pretty much all steel towers or wood 5-over-1s. I’m told 5 stories is the standard because that’s what you can make out of wood; an extra story or three isn’t worth it with the shift to more expensive materials.

Some of the steel towers have their cheaper apartments in wood podiums; have to be careful.

I live in a 10-story condo. 9 or 10 stories seems about the lowest not to be made out of wood. Even these are very rare compared to <=5 or >=15.

Ok, so it seems like they're hard (or impossible) to find in your area, but that's not true everywhere.

That seems like an extraordinary claim that requires extraordinary evidence.

It seems intuitive to me that just because mid-rises are likely to be built using the cheapest materials that satisfy building codes doesn't mean it's impossible to build them with better sound isolation and other amenities that improve living there.

So can you provide some reason why mid-rises must be that way, as opposed to the Almighty Market just failing, as it usually does, to provide anything other than the cheapest least-common-denominator solution?

As I understand it, buildings don’t pencil out with more expensive materials until they are also much taller.

Insofar as people want to correct the Almighty Market on housing, they ban mid rises entirely. I don’t think there’s a political constituency for “apartments, but good” and supply is way too constrained for developers to care. Maybe we could at least get some kind of testing/disclosure of acoustic properties since it’s so hard to tell on a tour.

> I wish we could solve zoning and permitting ...

Perhaps we should learn from other places that have better solutions already? E.g: Japan? Singapore? etc.

Somehow many western countries have gotten stuck in red tape and the inability to learn from other cultures.

I think the problem isn't that we don't know what effective policies would look like, but a political one.

It's quite hard to turn modern office builds into housing. Recently-built offices have huge floors, so natural light can't penetrate into the interior. Those spaces are fine as meeting rooms, but won't suffice for living in.[1] It's possible to make apartments with no natural light, but most people don't want to live in those. If they're low in rent, maybe they'd be attractive enough. But then your rent/sqft number goes down, and so your valuation, and your building is in the red with the banks. "Just turn it to housing" isn't an easy answer.

There's still great demand for premium office space, but your average office building is going to suffer.[2]

[1] https://www.nytimes.com/interactive/2023/03/11/upshot/office...

[2] https://www.curbed.com/2023/04/270-park-avenue-jpmorgan-chas...

But this is good. It means no new office buildings need to be built. The existing ownership and debt will simply be juggled and fought over, numbers on a spreadsheet. The buildings will still exist and be available for office needs at reduced costs (after debt takes a haircut). New urban construction can now focus solely on residential needs, and with housing unit shortages, this natural reallocation of construction effort (due to demand destruction) should be welcomed.

I'm with you - there'll be a long term re-allocation. It might take decades, though. It's a larger scale version of the problem of empty storefronts. Store owners would keep buildings empty than reify the financial cost of reducing rents. There's large numbers of empty stores on Broadway in NYC, of all places - perhaps the most famous street in the country!

If people aren't working in cities, it remains to be seen what that does to housing demand. There are a bunch of cities that aren't great from an employment perspective and, in general, they're not a big draw for people to live there either.

Especially in cities which don't have "vibrant" downtowns; the downtowns full of Subways and McDonalds that close up at 5PM, leaving a desolate urban landscape reminiscent of zombie movies.

What's going to happen to cities with downtowns that are nothing more than a collection of office buildings and the businesses that support the people who work there?

Even if a given downtown becomes a ghost town, the benefits of proximity to pre-existing infrastructure mean that the nearby urban areas will still benefit, and activity will just shift around slightly. Pittsburgh, PA is a good example of a city where the collapse of the downtown just moved all the activity to the surrounding neighborhoods, and now that those are thriving (though some more than others, naturally) that's starting to result in increased reinvestment in revitalizing downtown.

I don't get your point. If there's no demand for office space anymore, who will have offices in these buildings? If nobody has offices in them (or if rent is not enough to maintain the buildings), what will happen to them?

> But then your rent/sqft number goes down

Yeah, that's the issue.

I'm sure there's plenty of demand for commercial space on a lower rent. Commercial space is much more than offices, but those things are priced so that only high-margin artificially high-density knowledge work can afford them.

Our modern cities are clearly not economically viable (proof of that is that people can't afford to live in them), so yeah, something will break sooner or later.

> Our modern cities are clearly not economically viable (proof of that is that people can't afford to live in them)

No, that's not sufficient proof. You'd need unaffordability, and high rates of rental vacancies to prove that. Most of the unaffordable cities have near-zero vacancy rates.

"That place is too crowded now, nobody goes there anymore."

Well, you can only have high rates of vacancies if you have plenty of housing.

If the cities were net-negative economically, there'd be a net outflow of people from them (As anyone who can't make ends meet on the margins would pack up, leave, and create those vacancies.)

Yet, that's not the case. There's an economic pull to cities, the are, on the net, more productive than the countryside (Because the proximity of people makes the cost of bringing goods and services to market very, very low.)

The cost of land, in the long-term, rises to meet the economical productivity of an area. The reason that cities are so damn expensive is because they are productive.

> "Just turn it to housing" isn't an easy answer.

Well, rent/sqft is dropping rapidly, like it or not. The housing crisis felt across north america has never had easy answers. But we're seeing a possibility for incentives to come into alignment with increasing the supply of housing. Even if that means tearing down buildings -- because if you don't, you get squatters.

Older-but-otherwise viable office stock, though, is a decent candidate to turn into housing. In a perfect world:

* Lots of companies still using office space migrate to new office towers.

* Older office towers get turned into housing.

Will that get us there? I'm not sure. Of course, banks will still not be so happy, because a lot of this newer stock that would have rented at premium commercial rates is going to have to go a fair bit cheaper.

(The other thing is-- if some of the older office stock gets turned into housing, the demand for commercial should go up, too, because it's easier for your work force to live close to work... but unfortunately, all of these corrections are on a timescale of 5+ years).

The other major issue is that commercial space has much different plumbing requirements than residential. Commercial plumbing is mostly centralized with low flow pipes for sprinkler systems. That's not sufficient for residential space and it would take significant construction to add in that plumbing.

Some commercial space will have similar issues with air conditioning and power.

I'm often amazed when Big Brains trot out the "turn offices into residential!" without for a second wondering where people will shit.

I highly encourage people to read that NYT link, the diagrams are excellent. That said, the article also shows how you address the problem of no natural light: you punch a hole through the center of the building (and in New York City's case, this permits the developer to "move" that lost floorspace into newly-built units on top of the building). Far from a trivial solution, but also far from impossible.

That "solution" is literally impossible for most office buildings where the core is structural and contains most of the building machinery. For those it's cheaper to demolish and rebuild.

The article shows an example of a building where one structural column had to be moved in order to accommodate the hole, and where the hole itself is off-center in order to disturb as few structural elements as possible. Indeed, every building converted in this way will probably need its own bespoke solution (e.g. if the elevator shaft is dead-center, you might cut two smaller holes on either side), but even then it seems like it would be hard for it to be more expensive than starting over from scratch.

I'd need to be convinced the punch a hole is actually a good solution. I've stayed in lower-floor hotel rooms on a light well and they weren't great. (Of course, a lot of Manhattan hotel rooms aren't great from a natural light perspective--but I'd almost certainly have higher standards for something I was going to live in full-time.)

You could also have mixed use of buildings, putting residential on the outside and commercial on the inside.

why is everyone dreaming of turning offices into 2 bedroom 2 bathroom family units? most of these buildings are in very dense, tourist heavy areas, usually with booming nightlives and social scenes

it's become a dirty word, but turning these buildings into SROs / low-cost rental units might bring back the artists and musicians that have been sorely missed from these areas, while providing people who don't have a credit history or first month + last month + security deposit a place to stay in a place that charges by the night instead of by the month

much easier to turn an office into a coliving space with communal bathrooms, dorm style accomodations, and large cafeteria kitchens anyway

Seems to me that we've speed run the story of why suburban sprawl exist in the first place.

A car is a machine to provide negotiating leverage in real estate markets.

Dense urban centers, while awesome in many ways, easily lend themselves to the development of grassroots real estate cartels made up of property owners who block new construction to profit from real estate appreciation. As this occurs people are forced further and further out to find affordable places to live. Eventually the jobs start to follow, leading to tax base collapse and urban decay. This leads to a death spiral of urban decay, crime, and population flight.

Then the city gets cheap and people start to move in again. Repeat cycle. Cities get cool -> people move in -> cities get expensive because you can't build -> people move out -> cities collapse.

There are places that seem able to avoid this cycle, such as Tokyo, but AFAIK that relies on a different kind of governance regime that takes zoning away from local bodies and enforces a uniform pro-density zoning code at the city or even larger scale. Basically you have to break the NIMBY cartel. It also involves very proactive transit policies that build out transit to match density.

Of course it could also be due in part to Japan's declining population, which makes it pretty hard to have real estate inflation.

Japan also has a radically different property ownership structure which has myriad effects.

The “NIMBY cartel” here is any and all real estate investors, who have turned both housing and office space in large cities into a speculative asset class from which they expect to receive returns far beyond sanity. I wouldn’t gamble on them being disrupted any time soon. California, where Democrats have the firmest lock on the levers of power, has some of the most regressive, distortionary laws in place to protect them.

> A car is a machine to provide negotiating leverage in real estate markets.

Now that's a good insight.

It's amusing to read the comments from commercial real estate owners. There's a huge sense of entitlement. If they're losing money, somebody else must do something to make them stop losing money. Immediately.

The commercial real estate business did this in 2006-2008, and in 1999-2000 in San Francisco. The mall industry has been shrinking for years. It's not the end of the world.

> It's amusing to read the comments from commercial real estate owners. There's a huge sense of entitlement. If they're losing money, somebody else must do something to make them stop losing money. Immediately.

Many homeowners have the same attitude toward their home value. If their home value is going down, politicians need to do something. It's part of why reform is so hard. It's political suicide to do anything that could reduce home prices for existing home owners.

Real estate appreciation is basically an entitlement. I fully expect a bailout for commercial real estate.

Maybe this is how we get to the stars. Warp drive will be invented once the final campaign to allow infill development on Mars falls to a NIMBY campaign to preserve the character of the planet. (Actually I think something like this is a plot point in Kim Stanley Robinson's Red Mars novels...)

Sprawl is also a technology for balancing public order and civil rights.

I don’t think there’s any way to square the circle of cities being nice places for middle class families to live while also having a right to camp on the sidewalk and urinate on the train.

I still have to see any super dense city that is actually a good place for families with small children. This is for the reasons you mentioned but also for others like like lack of living space, nature, transportation for the purpose of travel/vacation, etc.

How about any of the cites in The Netherlands?

You're talking US zoning laws? We don't have those in the UK.

The bellwether we have for the health of the UK, or at least London, is train and tube usage. It has, apparently, returned to almost 100% of pre-COVID.

That's not to say that London's commercial properties are fully reoccupied, they're not, but London is perhaps doing slightly better than US cities in this regard.

Having said that - HSBC is moving from Canary Wharf back to a smaller building in the City (of London) because of the change to WFH: https://www.bbc.co.uk/news/uk-england-66019180

Boston is still around half of pre-COVID transit use--though that's overlaid with some very disruptive long-deferred maintenance. Anecdotally, traffic seems worse than ever so I assume that a fair number of people switched to their cars and haven't come back to transit.

Worth noting that in the mid 2000s we had urbanist evangelism via works such as 'flight of the creative class' ( https://creativeclass.com/richard_florida/books/the-flight-o... ) which was later put into question by the same author ( https://jacobin.com/2017/08/new-urban-crisis-review-richard-... )

The problem with suburban office parks is that commuting to them is worse than downtown when you live in the wrong suburb - one on the other side of town from them.

Downtown is a central location that is equally bad to car-commute to for everyone. Suburbs make for okay car-commutes for some people, and utter hell for everyone else.

You can fix downtown commutes by building out good transit networks, but there's no real way to solve the suburb-to-suburb commute problem.

----

And no, 'Just move from your suburb to the one that has the office park' doesn't work. Moving costs 6% of realtor fees on <absolutely insane house prices> + a mountain of effort and stress and other money. All for a job that might lay you off/that you'll leave next year.

People are more worried about their downtowns for reasons like civic pride and concern for the other businesses there, but suburban office parks were in serious decline even before the pandemic. They’re just out of the way, so no one cares if they’re vacant.

> People want to live close to work, and without sufficient housing in cities, commercial real estate in big cities was very likely to suffer in the long term.

Your logic doesn't really follow.

Assume that you can't develop cities any more and growth is stifled - this isn't really happening nationally - it is in some cities - but let's assume it's happening nationally anyway.

Office values would still go up (nominally), as long as the city itself doesn't lose its ability to generate income in real terms.

Office values are going down because 1) interest rates went up, 2) the demand for office space went down (no indication this was going to happen before the pandemic). And that's really it.

The majority of high paid workers live near cities. In most cities, there isn't just one nice suburb where all the workers live. The workers are spread out all over the metro (including - mainly - in the city itself), and downtown is the only convenient place.

You can't easily just open small offices in the suburbs because its unlikely the entire team is in that suburb. They're probably spread out across the city.

You either go to the office (in the city) or you don't (less demand for office space). Or you work at a boutique company where everyone lives in some suburb randomly (outlier).

Karen From The Suburb has always wanted everyone in the company to commute to an office park in her suburb so its convenient for her. It's not going to happen now unless Karen From The Suburb becomes CEO.

We'll either RTO to offices in the city, or we'll keep working from home.

The future isn't more office parks in Calabasas and Marin and East Hampton.

A lot of technology companies are in suburbs/exurbs. Silicon Valley is a suburb. Boston/Cambridge basically didn't have a single tech company of note in the city by the mid90s and that mostly just changed when pharma/biotech moved in, the Seaport developed, and west coast tech companies opened up mostly Kendall Square satellites.

The whole era of Route 128 computer companies never had material real estate within the city limits.

Cambridge being a suburb is like calling Brooklyn a suburb of NYC.

It's just a technicality of Boston not eating all the surrounding small cities like most larger cities eventually did.

The peninsula in The Bay is decidedly suburban - but it is sandwiched between two of the biggest cities in the US.

I didn't mean to imply Cambridge was a suburb. (Hence Boston/Cambridge or really Boston/Cambridge/Somerville.) Cambridge also didn't have significant technology companies--as opposed to universities--in the late 90s.

The cities have always been allowed to rebalance land allocation. This might provide a bit more push but I'm skeptical.

> People want to live close to work

I think for most it is the other way around. They want to work close to where they live.

Do you see any indicators these bankrupt office towers are being converted to living spaces?

> actually a good thing

Those words in that word rarely give me confidence in an idea.

Same vibes as when someone describes anything as "perfectly good". It always sets off alarm bells.

It's simply an attempt to establish the baseline to the speaker's liking. For instance, someone who doesn't like skydiving: "why would you jump out of a perfectly good airplane?"

Let's start with the fact that there are no "perfectly good" airplanes, then we can debate the wisdom of free falling from 3Km.

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