Commercial property deals in the US are starting to pick up at deep discounts
bloomberg.com
bloomberg.com
Only in this case, the stakeholders are other residents in the neighborhood...not prospective buyers.
The purpose of a system is what it does. The supposed opposition of planners, a completely ineffectual and meaningless opposition that has zero effect on any policy outcome, does not change the fact that planning as a profession ends up being this means to an end.
The entire system is set up to produce worse outcomes, and the planners are the ones constructing and enabling the system.
No, they aren't. The worst outcomes would happen regardless of whether or not planners were involved. The ones to blame are the vested stakeholders (homeowners and developers), not the planners working for the city trying to fix things.
You can see the whole thing play out (comedically) on the show Parks and Rec. Real life is just a drier, more cynical version of that story.
Also, the existence of Kowloon is a good thing. The people who live there would have worse lives if Kowloon was never allowed to build like that. They would be forced to live further away from their work, subjecting them to an hour a day on a cramped train, for example.
The wrong question: "Is X bad?". The right question: "Is X worse than the alternative if X wasn't allowed?".
So as a society we've skipped right past bad to horrid while clapping ourselves on the back as if we're doing the 'undesirables' a favor. Abhorrent.
For example, let’s say the worst homes in your area legally allowed to be occupied are currently renting for $500/mo. Now capsule housing suddenly becomes legal. They’re not going to magically cost less. Landlords already know the poorest people will at least pay $500/mo, so the capsules will cost that, and the previous worst housing would rise to $750/mo or something.
A small number of people who have the lowest incomes will probably downgrade to capsule homes, instead of the status quo of living far away from their work. So they'll make a conscious decision to trade-off living space for a shorter commute, and who are you to tell them that's not in their best interest? Forced hour-long commutes is bad for people's wellbeing, which is what's happening in the status quo.
This discussion is a bit of a tangent because most housing proponents don't care if capsule homes are illegal. All they want is for normal units to not be illegal. That will get you 95% of the way there, capsule homes is nothing more than a theoretical curiosity outside of extremely dense countries like HK.
1) safety: obviously people would not be safe in capsule hotels. This cannot be changed, and would fundamentally alter society if it became popular
2) It applies to other forms of safety. Collapse safety? Why? It's cheaper without (and the state will have to pay most damages anyway). Medical safety (e.g. anti-mold regulation)? Why?
Such a policy will not drop prices, except the sticker price and will cause untold misery in society. We can discuss individual measures, perhaps, but not that a lot of these price increasing really contribute to society.
As a matter of policy, I am in favor of safety regulations. If that makes capsule dwellings illegal then so be it. We can solve the housing crisis without resorting to capsule dwellings.
While you're not wrong in many cases, you do have to be careful with making this sort of rubric your universal rule. It can trap you in a local maximum that is vastly inferior to what things could be if you acknowledged that and were willing and able to accept the temporary reduction in quality to move to what is, objectively a better situation.
It all looks like some cheap developer got away with something when in fact they know that old-style main streets are highly desirable and would build like that if the regulations allowed.
Planners can claim none of this. They have complete control over the developers, but tend to make the outcomes worse both for the people buying homes. No matter the intention of the developer or the planner, the planner has made things worse and the developer better.
Well, no, this is just straight-up not true, that's just a description of recent american history.
Who built all the brownstones in New York, for example? Today, they'd be called developers. What is your definition?
People needs homes. If somebody is "antagonized" because somebody else now has a home, the problem lies solely, fully, and 100% with the person that feels "antagonized." Its not an appropriate or socially acceptable response.
No setbacks, sidewalk encroachment (building or parking), restaurants on the ground floor of houses (i remember going into one huge restaurant and seeing the family in a separate room watching TV). Bizarre road layout, etc,etc
Not all bad, but man is it chaotic.
If you go to similar shopping centers like San Antonio in MV, you can see those first floor units are pretty consistently occupied by businesses.
- Ground floor: Shops,
- 1st and sometimes 2nd floor: Offices, lawyers, doctors, companies,
- 3-6th: Housing.
It was environmentally friendly because the density allows people to drop the car and go shopping and work with 15 minutes of their home.
Only the street facing side. A lot of the buildings in Paris have an inner yard where the ground floor has apartments.
A very dumb one: windows are required for houses, where offices can get away with huge open spaces holding a central hub of indoor areas. It's still possible to convert to houses, but that makes for ridiculously small liveable areas compared to the whole floor surface.
Then plumbing, evacuation paths etc. can all be solved by throwing money at the problem, but that significantly raises the profitability line.
One idea would be to convert spaces to something competing with airbnb, with the added value of being near offices.
Hong Kong also isn’t comparable to Tokyo, and is much more expensive.
I can’t comment on Seoul.
So no, Tokyo and Seoul are not "just as expensive". HK is at $52 though so that was a bad choice on my part.
And monthly prices are always lower than hotel-style nightly rates, so that isn’t really relevant either.
This is only a problem if it's prohibited by zoning. Otherwise it just gets reflected in the price.
Houses in the suburbs often contain a large amount of space with no windows, i.e. a basement the size of the entire first floor, and no one objects because it can be used for storage or a media room that doesn't want windows because of glare. In a multi-tenant building you also have the option to put shared facilities there, or rent the interior section of the floor to small shops while still converting the exterior to housing. But only if you don't have bad laws prohibiting such things.
This is one of my nightmares. What if we allowed people to live in basically confinment cells and they have no choice as they're broke af or the gov or their companies assigns them one in a relocation program.
My gut feeling is that the social consequences would be subtle and easily overlooked by officials but widespread and long lasting.
> Houses in the suburbs often contain a large amount of space with no windows
Yes, it's on top of the wide livable areas though.
But they'd still have the same choice they have now. Pay more for something better. Right now their choice is to pay more, potentially sacrificing something even worse, or to be homeless. Presumably the small living space is better than homelessness, right? And if it somehow wasn't, the latter would still be available, which is what happens now.
> My gut feeling is that the social consequences would be subtle and easily overlooked by officials but widespread and long lasting.
It has the potential to do the opposite. It makes low cost housing available (even if it sucks), which provides a backstop against high rents because people won't pay an extra $3000/month just for access to a window. But then the high rents go away and with them the incentive to constrain new construction, and then we can build more apartments that actually have windows.
Then the windowless space gets converted back into storage or something as long as better housing isn't forced into scarcity, but if it is then that space goes back into service suppressing high rents.
> Yes, it's on top of the wide livable areas though.
And so is the part of the office building on the exterior where there is a window.
It doesn't work like that. With cheap cells the low wages will adjust since some people are prepared to live in those, underbidding people that want to be able to see the sun in a race to the bottom.
That isn't how wages work. They're set by the local supply and demand of labor.
By your logic there would be no point in making housing more affordable at all because employers would just lower wages.
That logic doesn't work when the resident isn't paying the house, or not in full. A locality mandating housing is one example: if they go for the bare and cheapest minimum to fullfil an obligation for a specified number of houses, allowing for basement closets will result in more basement closets, without anyone being less homeless than they were before.
An employer providing rooms for employees is another. And there's so many more cases.
I see it the same way as minimum wages. Putting the bar too high is penalizing for everyone, but lowering it to the ground only breeds a hellscape.
> It has the potential to do the opposite.
But it's only a potential. And the other side is not hypothetical, it's what we had before the regulations, and it was bad enough that people agreed to put rules in place.
The root problem here is that you're trying to mandate housing rather than adopting policies that allow market rate housing to be affordable. When there is demand for housing and no law prohibiting it, people build housing. You shouldn't have to mandate it unless you're already screwing it up to begin with.
But even if you were to mandate some specific construction, you could set minimum requirements for that without prohibiting someone else who is under no obligation to build anything from building something inexpensive without those requirements.
> An employer providing rooms for employees is another.
Which doesn't even happen in urban environments unless it's some kind of tax dodge and then it's being supplied to affluent employees who aren't going to live in a closet.
Can you name a single company that actually does this for low wage employees in e.g. New York City?
> I see it the same way as minimum wages. Putting the bar too high is penalizing for everyone, but lowering it to the ground only breeds a hellscape.
I see it the same way as minimum wages. A worthless policy that doesn't even solve the problem it's supposed to solve, often makes it worse, and would have no purpose or effect in the event that we solved it properly.
It's also not really even that debatable that we've set the bar too high for housing. Never mind requirements for windows, we have requirements for parking and, in many areas lawns that consume the majority of the lot which in itself can only have a building of a low maximum height.
> But it's only a potential.
It's not a hypothetical, it's a thing that happens in particular circumstances -- namely the undersupply of housing. If you can fix that then it wouldn't happen but you wouldn't need it to.
> And the other side is not hypothetical, it's what we had before the regulations, and it was bad enough that people agreed to put rules in place.
People put the rules in place to price the "undesirables" out of the area, not to help them out.
If you were trying to help them out you wouldn't prohibit the only housing they can afford, you would adopt policies that result in the creation of lots of new housing that causes the market price of a quality unit with lots of natural light to fall to the price they can afford.
> My gut feeling is that the social consequences would be subtle and easily overlooked by officials but widespread and long lasting.
The social consequences of getting rid of tenements have been people sleeping in tents by the overpass. 7,000 of them in my town of 730,000. (Up from 5,000 three years ago.)
Maybe we should give tenements a try again? It's not like the overpass option is going to go anywhere.
People who's lives are otherwise OK apart from an inability to afford housing tend to have support networks which provide them a better fallback option than living on the street, be that living with family, couch surfing, etc. Consequently, they tend not to get included in official homeless figures. The people who do get included in official homeless figures are going to have issues providing landlord the reassurances they need to rent to them, such as prior references, proof of employment, etc. etc. This is going to be true no matter how substandard the housing on the market is.
Instead, allowing tenement-tier housing is likely to lead to a reduction in supply of what is now the bottom tier, as landlords of that tier of property reorganise existing properties to cram more people in, reducing standards of living.
It's not the shock which is the problem. The set of people who could afford the tenements but can't afford larger units are not going to become able to afford them just because some time has passed.
> People who's lives are otherwise OK apart from an inability to afford housing tend to have support networks which provide them a better fallback option than living on the street, be that living with family, couch surfing, etc.
That just means the problem is bigger than the official numbers suggest. And mooching off your friends and family often creates resentment and friction, which leaves those people at risk of falling into the other group as soon as they have a falling out unless you can get them into their own stable housing.
> The people who do get included in official homeless figures are going to have issues providing landlord the reassurances they need to rent to them, such as prior references, proof of employment, etc. etc. This is going to be true no matter how substandard the housing on the market is.
That's not true. Lower cost units require less in the way of references because the landlord has less at risk when the value of the unit is lower, and has more trouble finding someone who wants to live in it.
You can also reduce the prevalence of these requirements by not making it arduous for landlords to evict non-paying tenants, which is the primary reason they care about any of those things now.
> Instead, allowing tenement-tier housing is likely to lead to a reduction in supply of what is now the bottom tier, as landlords of that tier of property reorganize existing properties to cram more people in, reducing standards of living.
This is not a reduction in standard of living for the people who were previously homeless or the people who choose to live in those new units in exchange for lower rent. Having a smaller apartment in exchange for lower rent is not inherently a reduction in standard of living, and generally wouldn't be what someone chooses unless it isn't.
The people who want to pay the existing rents for the type of units they're in now would be free to do so, if not get those units at a lower rent because the tenements have increased the number of available housing units and relieved some of the demand pressure on existing units.
Easily overlooked? Hell no. That would be part of the plan from the start: punish the undesirables for being poor, remind them of their low status in society every single day.
The requirement that rooms designated for living need adequate access to sunlight came out of the desire to eliminate such discrimination.
As opposed to now, when they have to live under an overpass because they can't afford rent?
> The requirement that rooms designated for living need adequate access to sunlight came out of the desire to eliminate such discrimination.
It came out of a desire to force "undesirables" out of the area by preventing them from being able to afford any of the housing there, along with all of the other requirements that amount to "housing the poorest can afford is not allowed here."
The exception would be people who don't care, e.g. someone who works nights and doesn't want daylight in the place where they sleep while they're trying to sleep, and then all you're doing is depriving them of an opportunity to save money through their own circumstances.
The only reason a poor person in ordinary circumstances would choose lower quality housing is if we fail to provide affordable, quality housing, which is currently happening, and in that case if we also prohibit lower quality housing they end up under the overpass. So there is never any reason to prohibit it. Because you can't improve peoples' lives by removing alternatives, you have to create them -- they can themselves eliminate bad options by choosing better ones, but only if they're allowed to exist.
Roller shutters, nothing easier than that. These things are standard in Germany.
> The only reason a poor person in ordinary circumstances would choose lower quality housing is if we fail to provide affordable, quality housing, which is currently happening, and in that case if we also prohibit lower quality housing they end up under the overpass. So there is never any reason to prohibit it. Because you can't improve peoples' lives by removing alternatives, you have to create them -- they can themselves eliminate bad options by choosing better ones, but only if they're allowed to exist.
The problem is slumlords. Allowing usage of unfit rooms (i.e. no/small windows, basement rooms) for permanent living once makes it very hard to force landlords to upgrade these rooms or condemn them later on, and in 40 years society will still be dealing with that fallout. Rooms without windows to escape are deadly fire traps, and basement rooms can be just as deadly (or at least destructive) in floods.
Whatever we create now will most likely outlive us, so we better do it right now instead of just kicking the can down the road for the next decades!
The problem is not that they can't figure out how to cover the window, the problem is that you're forcing them to pay extra for the window they're only going to cover up.
> The problem is slumlords.
Slumlords exist because housing supply is constrained. If good housing was affordable, nobody would take a trivial discount to live in a slum.
> Allowing usage of unfit rooms (i.e. no/small windows, basement rooms) for permanent living once makes it very hard to force landlords to upgrade these rooms or condemn them later on
The key is to force them through competition rather than zoning. Nobody wants to live in a crappy apartment but they will if it's the only thing available to them. Make something better affordable and the owner of the crappy apartment would have to improve it to find a tenant.
> Rooms without windows to escape are deadly fire traps, and basement rooms can be just as deadly (or at least destructive) in floods.
Rooms don't have to have windows to have fire exits. "Floods can destroy your stuff" hasn't prevented every suburban homeowner from keeping stuff in their basement, and it's not obvious how that's even relevant to residential tenants keeping their stuff in the interior section of an above-ground floor of a formerly commercial building.
> Whatever we create now will most likely outlive us, so we better do it right now instead of just kicking the can down the road for the next decades!
Buildings last a long time. What you use them for can change in a week. If you turn a commercial building into low-cost apartments during a housing shortage and then you later resolve the housing shortage by building higher quality apartments, you can turn it back into a commercial building, or whatever else is needed at the time.
The problem is when you're prohibited from converting it to the use which is currently in demand, and then rents are high and people are screwed because you took away a bad option and only left a worse one.
"Welcome. Welcome, to City 17. You have chosen--or been chosen--to relocate to one of our finest remaining urban centers. I thought so much of City 17, that I elected to establish my administration, here, in the citadel, so thoughtfully provided by our benefactors. I am proud to call City 17 my home. And so, whether you are here to stay, or passing through to parts unknown, welcome, to City 17. It's safer here."
'Course, that particular dystopia was terrible for a whole bunch of reasons where population density was not one of them.
Have some housing in the "good" parts, but use the rest another way.
This is the road to hell. Anyone can always come up with an excuse for why something shouldn't be done and if you accept them all then nothing ever gets built and people can't afford to live.
Construction requirements should be for things that are profoundly dangerous and not obvious, like having circuit breakers on electrical circuits or constructing buildings that are structurally sound or having fire exits.
Anybody can see how many windows or bathrooms a place has and you don't die if you get your natural light from going outside or occasionally have to wait in line for the facilities.
Depending on HOW the building was constructed (read: a large majority of office space), you will be unable to deal with the plumbing issues.
Total volume of water to every floor + distribution of the bathrooms (where they need to be moved in an updated floor plan) makes these sorts of change overs prohibitively expensive.
We have seen these sorts of transitions before! Large industrial spaces became "artists lofts". These were large spaces with single bathrooms (repurposed from the original plumbing installs). When these neighborhoods gentrified the very expensive conversions came in and made them into more "acceptable" living spaces. There was profit associated with that cost.
Rezoning wont result in gentrified apartments, or affordable housing any time soon!
You say "prohibitively expensive" while ignoring both of the alternatives where it isn't.
The first is dorm-style housing with shared bathrooms, and then you put the bathrooms where they are right now.
The second is upscale housing, and then you invest in the conversion because you're targeting tenants who can pay.
Either of these at scale increases the housing supply and thereby lowers rents for everybody.
No one wants to live like this.
> The second is upscale housing, and then you invest in the conversion because you're targeting tenants who can pay.
But they have to want to live there. Creating high end housing can be a challenge.
> Either of these at scale increases the housing supply and thereby lowers rents for everybody.
Supply isnt at issue. The demographics of Air BnB and empty investments in the US is appalling. We have more than enough housing for people its just empty or unlivable (see NYC real estate not getting updates due to rent control)
People (often recent graduates) pay a lot of money to live like this in NYC. The right price makes up for a lot of other deficiencies.
There is generally not a law requiring college students to live in dorms. They can go and rent an apartment off campus. Why do they choose to do it?
> But they have to want to live there. Creating high end housing can be a challenge.
That doesn't require you to prohibit someone from trying.
> Supply isnt at issue.
The measure of whether supply is an issue is the size of rents. If rents are high, supply is low relative to demand.
> The demographics of Air BnB and empty investments in the US is appalling.
There is nothing wrong with Air BnB if you don't have artificial constrains on increasing supply. And the reason speculators hold empty units is the expectation that prices will increase, which is due to the expectation that supply will remain constrained as the population increases, which would be alleviated in short order through the adoption of policies that can reasonably be expected to relieve supply constraints by allowing new construction.
> see NYC real estate not getting updates due to rent control
In other words rent control is a terrible policy that constrains supply, which is one of the rare issues where there is broad consensus among economists.
Historically, these regulations were created to exclude the poor from areas. They do line up with most peoples preferences, but many would rather save in rent vs have a window.
Yes, this does make apartments more expensive but so does every rule that sets a minimum construction standard.
My apartment is fitted with multiple sprinklers, which I assume gets it up to code.
On the sister comment about windows on the 33th floor, those will still have a ton of benefit from an health perspective as a source of natural light (full spectrum), open view (can focus to infinity instead of a few meters away) and overall mental relief if there's no fear of height.
There's actually the same debate on access to sun, where construction code usually prohibit a taller building from 100% occulting the sun from surrounding houses.
Those could be compensated by some artificial mechanism, but would not be guaranted to work. Windows FTW.
And I've lived in them and they're fine. Forever no. For a few weeks or months on a budget sure.
"Must" have windows is simply a preference people have.
Just need an automatic light set to sunlight temperature that comes on when I want to get up.
A partially troglodyte nerd emerged, it worked out okay.
Also, outside curtains are pretty good at blocking light. To the point I had to hack mine to open on sunset to ensure I wake up.
Rather, the increase in interest rates necessitate a general reduction in price on both commercial and other property. WFH means that commercial property will be affected more, but it's something general.
Interest rates have gone from <1% to 5.5%, and if that's sustained there must either be such an increase in rents, which people would not be able to pay, or there must be a reduction in the price of commercial and rental property corresponding to the remainder.
Office buildings floor plates and residential floor plates aren't really compatable.
Office buildings have most of their floor plates not around windows, where are residential needs some light.
Also water, and sewer need to be retrofitted.
The one building that was a successful conversion that I know of cut out the center of the building to create a light corridor down the center of the building.
The Odd lots podcast had a recent episode on this and the guest said that converting office to residential is often more expensive than rebuilding.
So you've got a good though but its rarely practical in the larger city style office buildings.
Perhaps smaller density 6 story buildings would be easier to do?
Make the whole building mixed-use. Ring the outside with apartments, and keep the inside commercial. Make the whole thing a little community in itself.
Just fill the whole center of it with cafés, bodegas, computer repair shops—the kinds of small, locally-owned shops you get in a (healthy) small town or a pre-modern-zoning city area.
The biggest challenge I see is in how to segregate commercial and residential traffic. Residents will not mostly want to live somewhere that they encounter random strangers walking through their hallways all the time. A purpose-built residential tower can limit access per floor fairly easily. In low-rise buildings with living area above retail, you segregate at the door to the upper floors.
The plumbing remains a major problem, however. Restrooms and other plumbing are very centrally located in an office tower and the newer and more modern that office tower is the more central and consolidated they are.
Anything is possible, of course, but solving the light issue is just one item… The plumbing issue is at least as complicated.
Cyberpunk 2077, here we come!
You would have to design these weird apartments though that are like a thinly sliced pizza with no central area. Just a long hall of connecting rooms.
Or to retro fit all you have is the foundation and sides, everything else is basically wrong and cost wise you have less than nothing. It is just cheaper to start over and not have to undo all the wrong aspects.
We are mostly in denial in the US that there is going to be a ton of empty, useless buildings along with many regional banks going out of business.
Those used to be called "shotgun houses" (or, less euphemistically, "shotgun shacks") though they were rectangular, not pizza-shaped.
https://en.wikipedia.org/wiki/Shotgun_house
Of course, people did live in them because they were cheap.
In overpriced urban areas, the "pizza slice" configuration might be tolerable to some, if it were cheap enough.
That’s not the case everywhere. In ‘Europe’ (I don’t know what set of countries this applies to), workers must be able to get sufficient natural daylight.
https://www.kingspan.com/ie/en/knowledge-articles/what-is-en...:
“To comply with the minimum recommendations for indoor spaces lit with windows or curtain walling, over 50% of the space must achieve 300 lux for more than half the daylight hours in the year. In addition, to prevent particularly gloomy areas being created within a room, a backstop value of 100 lux has to be met across the entire space for the same period.
If rooflights are used to provide daylight into the space, then the requirements are more demanding with a value of 300 lux required for the whole of the relevant space for at least half of the daylight hours.”
Now, I do have an appreciation for Japan's mixed use zoning but I suspect that has as much to do with the culture of honor/not being a dick as it does with mixed use zoning. I do think things can be relaxed in the US.
Yes true, and many people gloss over the issue of lawsuits - the US has a "lawsuit happy" culture that make many things very expensive.
In the US there is generally a large desire to have a garage and some space away from your neighbors.
On top of cultural differences, I think itsj ust really hard to change existing cities without massive forces pushing it. You almost have to start fresh and even then you need a level of collaboration that is hard to get. I do think there is some change happening, I have seen new communities in Texas being build where there is central playgrounds and coffee shops being built as part of the development.
The only city in the US without zoning laws, and historically known as a bastion of livability.
... If you're a car.
Industrial -> Commercial -> Residential.
Industrial equipment is heavy and needs much more reinforcement of the floor plates and columns. You can convert an old factory to lofts but not the other way around (lofts to factory is basically rebuilding the building inside the existing shell... much cheaper to knock it down and start over).
Commercial has vastly different plumbing, electrical, and ventilation requirements. Residential wants more natural light so you tend not to get the kind of profitable open floor plates you need in commercial. And generally commercial is over-supplied with electric but vastly under-supplied with water/sewer for residential needs. Once a commercial building is converted to apartments it doesn't go back - with the exception of very small commercial like a doctor's office taking over a house or similar.
Would "US Commercial property market plummets" be accurate? And obviously avoided by Bloomberg? I guess the question is what percentage of the properties currently changing hands are forced sales due to financing issues?
Edit: And I've just realised that actually the Bloomberg article has a title: "The Brutal Reality of Plunging Office Values Is Here" And a url slug, "real-estate-lenders-confront-falling-us-commercial-property-prices". So apologies to Bloomberg
As it is, there's a lack of residential supply, and an over supply of commercial.
That said, the Fed's addiction to cheap money and other tricks to keep the economy propped up didn't help either.And now we're in a muck and paying for their missteps.
They hide the ugly in those 50k ft aggregate metrics.
Put another way...Trump in some polls is beating Biden. So suddenly it's not the economy, stupid? As it's said, perception is reality.
Healthcare... up.
Cost of automobiles... up.
Cost of food...still up.
Cost of clothing... up.
Wages have not and still don't keep up with inflation.
I trust you see where this is really going.
No, in fact the left is quite clear that inflation is the result of corporate greed.
Might be worth inspecting why you'd rather throw out bs strawmen than engage with the actual dialog on the ground. Might force you to confront who the actual selfish villains are. But I don't have my hopes up.
The only thing "they" want is to keep screwing you while keeping you too scared and batshit to see that CLASS WARFARE IS IN THE ROOM WITH US.
https://news.ycombinator.com/item?id=39410725
And then read the article there. There's a nice quote from someone at Citi (which confirms *exactly* what I said about jobs).
And class warfare is *not* in the room, simply because the class that should be pissed off is too stupid, too distracted, and half of it too Left to reach lukewarm, let alone of boiling point.
Clown? Nah. But it is fun sometimes to laugh *at* the blindly objective everything-at-face-value crowd on HN. Too book smart for their own good. Wouldn't know a lie if the media shoved it up their arse. Again.
For example, it was said in the one article:
"One place the economy is showing a weakness is the labor market. January had a blowout jobs report, adding 353,000 jobs to the economy. But Hollenhorst noted that if you scratch beneath the surface, the number of hours worked is falling, the number of full-time workers has decreased, and sectors such as the restaurant industry have stalled on hiring."
Let's presume that's true, or at least 80% true. That changes all the hype around "adding jobs".
We all know, it's easy to lie and deceive with data and stats. The gov and the economy is no exception.
> One place the economy is showing a weakness is the labor market. January had a blowout jobs report, adding 353,000 jobs to the economy. But Hollenhorst noted that if you scratch beneath the surface, the number of hours worked is falling, the number of full-time workers has decreased, and sectors such as the restaurant industry have stalled on hiring.
The clamouring for "return to the office" was always a minority voice, and it seemed to be two major classes of people doing the clamouring - old fashioned managers who didn't believe staff could produce while at home, and those who made their living from forced commutes - a broad class of building owners and ancillary business owners such as meal providers.
The ancillary businesses I have sympathy for, but that activity is at least partly displaced to more local businesses, which I see as a net gain. More vibrant communities vs declining city centres - yes please!
But the building owners are screwed because it's not just the wage slave that's realised they don't need to commute (they may have always known), but the business owner too. A business owner who can look at the huge amount of cash leaking out of the business for their office lease and realise that line item can be crossed out completely, or markedly reduced to a headquarters with much smaller facilities. Sure, it's not 100% of them, but enough to make a big difference.
So I'm not surprised we're seeing a crash in the office-provision sector. I haven't set foot in one since 2020 and I don't intend that to change!
Most of "car infested suburbia" is void of "ancillary business owners" because it's just miles and miles of tract homes
This is a planning and zoning decision really. It sounds like you're describing the US.
In the UK for instance, things are often a lot more mixed up. There are lots of small towns and small cities which have acted as feeder or dormitory towns for London. These all have their town centres which are likely seeing a boost from workers who are in the town a lot more of the week now.
And here in Perth (Australia) where I'm not really even in a suburb (we went a bit rural), it's only a mile to my nearest cafe, very easy to do on a bike or scooter. Each of the suburbs proper tend to have one or two areas set aside for retail and food service, small malls or strip-malls or even just a cafe and a pharmacist tucked away somewhere. Plus a decent(ish) network of bike paths. It's very car friendly here compared to the UK but there is still stuff accessible without 100% needing a car.
By the way - I'm all for the 15 minute city idea, it sounds great. Seems to me that implies more local centres, more dispersion of ancillary businesses and services out into the suburbs etc. High-density doesn't have to be the only option for that sort of plan if people are actually spending their days in their suburbs, IMHO.
What about the rest of us?
The problem in the USA is that there's very little of this style of living. It's all tract housing and suburban style apartment complexes and almost no walkable cities. I'd be nice to have more of them since we already have plenty of suburbs and traffic.
I know in Asian, many (but not all) of the people I know in apartments would love a house but can’t afford it.
Humans are incredibly adaptive and resilient. I have met happy families living in a garbage dump.
It seems like the average American agrees because the average house built in 2023 was about 240 sqm.
If people prefer smaller houses, it is surprising that someone doesnt built smaller and sell it for more.
It also seems that understanding the preference in isolation is fundamental to understanding any system that includes cost and scarcity. for example, difference in preference can drive cost differences. For example, Fillet minion and cow hoofs are more scarce than flank steak, but one sells for more and the other for less due to preference.
They love visiting me when I travel. They whine there's nothing to do, no food, no culture near them. They're too cheap to heat or cool the place and again, Kansas, so it's straight up miserable 8 months of the year. It takes an army to clean it. My dad "loves" mowing 7 acres but I know he just views it as a task to get done.
Idk, the older I get the more I realize most people have never seriously sat down and tried to elavulate what they really want, versus what they think they want based on someone else's measure of success.
Well because until recently, you couldn't work there in suburbia.
It feels like the "suburban office campus" fell out of vogue in like the 60s-70s
The issue in general with RE is that you would be marking your books based on comps and the mark downs will lag the market. Not investment advice but sometime in the past year to now is when you would want to be investing in publicly traded REITs if you thought there was going to be a rebound.
Private funds like a Fundrise are the ones where their marks are going to be lagging the market as its purely on book value.
For ETFs, market makers are liaising with the issuer to issue and redeem as the demand fluctuates. But that only works for liquid underlying assets.
The REIT has a float that is going to be similar to any other publicly listed company. The market is setting the price and underlying value of the REIT. The ETF which has a basket of those REITS, will include authorized participants that are creating and redeeming shares based on the underlying REITS. Are there any REIT ETFs with basket holdings including non-traded assets? I am not sure but I don't know of any.
So the ETF is indeed redeeming/creating based on market supply/demand but its of an underlying public traded REIT.
If I understand correctly, they mostly invest directly in commercial real estate, and they keep their LTV ratio quite low (20%). I'm curious about how it might perform during a plummeting market for office space... perhaps it'll drop but not as badly as REITs?
[1] https://www.tiaa.org/public/retire/financial-products/annuit...
If the former, switch to a DNS provider other than Cloudflare, if at all possible.
Fuck man. Another ‘08 situation is building up.
- As the commercial market is a large investment arm for financial institutions, a collapse in the commercial market can cause a credit crunch (banks don't have enough money to provide loans like they used to). Making it more difficult for people to get mortgages or loans for residential property.
- As the commercial market falls, investors and developers will begin looking toward the residential market for their investments. This could lead to an increase in residential housing availability. However, I believe this would exacerbate the trend of "build-to-rent" communities as it would provide the developer/investors with consistent, predictable, monthly income.
Ultimately, a "collapse" of the commercial real estate market would severely negatively impact the residential housing market due to consolidation. If renting out office towers is no longer profitable, why not rent out entire housing communities? And since banks are crunched and may have to further restrict their mortgage and lending practices, low and middle-class people could be further locked out of homeownership.
Have they been selling synthetic REIT stock?
And, it's not just the total magnitude of the losses. Who takes them and how they take them makes a big difference. Hopefully there's nothing pseudo-bank-like waiting in the weeds (like the repo market or reverse repo or whatever it was) that can make this blow up into a bank-panic-like situation...
From what I understand banks are loaning money to commercial real estate firms and those firms are using those loans to make payments, just so they don't default - because a default would mean that banks would have to recognize those losses.
I'm not directly plugged in anymore, so obviously take that with a huge pitcher of salt.
The bank loses were put on the taxpayer for the most part.
https://www.foxnews.com/us/trendy-boston-waterfront-district...
So first the buildings have to lose so much value that the math works.
It is possible in some though, this is an example from London - https://en.wikipedia.org/wiki/Centre_Point
I worked for one of the last companies out in ... I think it was 2014. Three years to refurb and now it's one of London's ghost towers - full of apartments bought by overseas investors, standing largely empty.
(Or in this case, from reports in about 2018, standing empty because it turns out that very few people actually want to pay 1.8 million pounds for a one bedroom flat, even in London. It's quite fitting as apparently the block spent nearly a decade empty after construction too.)
Once foreclosures start happening and building owners default, the debt holders end up taking ownership of property that just isn't worth as much has housing real estate anymore. It then becomes a problem for them because empty offices still cost money. They can sell the building at a steep discount or do something else with it.
It's the the price difference between office and housing prices that might make it economical to convert buildings. The issue with that of course is that housing real estate prices are also under pressure as people are no longer as eager to live close to their now empty office buildings. So, it's still a risky investment and whoever ends up owning the building would need to finance that somehow. And there are those pesky zoning rules that outright prevent this in a lot of places.
Those rules are no accident of course. Banks have an interest in keeping housing prices artificially high as well. If those prices come down, they have another debt bubble to worry about.
Here we go again.
The invisible hands pulling the strings behind these MBA flunkies installed at many companies are whispering in their ears. “We need to offload bad debt. Help us keep the con going just a bit longer so we can offload the toxic assets from the books to another firm or government”
The idea that RTO is driven by real estate values is so detached and uninformed it's borderline juvenile conspiracy.
Idk about anyone else but the story told is far more convincing that corp real estate is being propped up and your denigrating dismissal has done nothing to change that.