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Comment by VirusNewbie | Hacker News Reader

I don’t really buy the argument. If commercial RE crashes, that means what, people take a 20% haircut on converting the buildings to condos and/or just selling for the value of the land?

We are still seeing unprecedented housing shortages, which puts a pretty high floor on how much l “downtown” land values will crash.

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Office space is very expensive to convert to residential, you have large rectangle with windows on the perimeter only, weird elevator/stair layout, insufficient plumbing for many individual bathrooms, and poor ventilation for kitchens.

Furthermore, I'm skeptical that if commercial real estate crashes (because far fewer people are working in cities) that there will be continued demand to live in those cities. There seems to be an underlying assumption that the only reason people wouldn't want to live in a city is the cost--and that's not true for a lot of folks.

Idk how realistic it is to convert those buildings, nor how much value it would take off (from the buildings themselves, but also from the rest of the real-estate market).

But it's not unreasonable to assume fear of loss as a motivation, at all. However, what's the link between the people that can actually re-implement work-from-office and those holding all those office buildings?

> people take a 20% haircut on converting the buildings to condos and/or just selling for the value of the land?

Leverage and derivatives completely turn this assumption on its head.

Good reply and argument. Will reconsider my thoughts on this.

SF office buildings are selling at 60-70% off in some cases. I don't think anywhere else is as bad, but still probably worse than 20%.

https://www.sfgate.com/bayarea/article/downtown-sf-office-bu... https://www.globest.com/2023/06/07/wells-fargo-sells-san-fra...

Why are all the capitalists crying, "it's just the market, supply and demand, dude!" . I'm sure less urban areas are getting that capital so it all balances out in the end. I'm not going to cry for someone who is rich enough to own a skyscraper in downtown San Francisco.

Converting offices to condos is for practical purposes illegal due to the very different regulations.

You can tear the buildings down and build new ones, but that will take a decade to get permitted, if you're in a construction permissive city.

lol it doesn't take 10 years to get a new building built, 3-5 years tops if you have the capital.

The construction work is not the problem.

I'm talking about getting all needed permits.

A lot of investments, including pension funds and 401ks, have money tied into commercial real estate through ETFs if not outright ownership.

I’m not justifying the for-back-to-work, but to point out the vested interests fighting against remote workers.

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