Nearly 12M Square Feet of Vacant Office Space in S.F • Hacker News Board

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#211

Post by api » Sun, Oct 25, 2020, 11:44 PM UTC

brian-armstrong wrote: post #161

api wrote: post #53

Earlier quoted context omitted.

There is a mass exodus of people from HCOL cities as jobs go virtual as well as a massive amount of office downsizing. Residential real estate may be okay in the cities receiving this exodus in the South, Midwest, Texas, Idaho, etc. but as for HCOL cities I’m just not sure. There may be enough demand to at least cushion it. Commercial will definitely be a bloodbath of epic proportions, especially in formerly hot mark…

Housing prices are actually already trending back upward in the bay area. I don't think there will really be that much of an exodus. Your company might let you retain most of your salary post-relocation but once you change jobs you'll have far fewer prospects. Also the internet doesn't help with timezone differences.

House prices are being buoyed by insanely low rates, but if offices are downsizing CRE is toast.

As for tech hubs, they are now only economically rational if you are high up at a large FAANG or similar company that is able and willing to pay huge salaries.

Startups, bootstrappers, and labors of love are not going to happen there unless they are lavishly funded or only comprised of straight out of college folks willing to live on couches.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#212

Post by jhgorrell » Sun, Oct 25, 2020, 11:45 PM UTC

chrismcb wrote: post #97

sjg007 wrote: post #86

Earlier quoted context omitted.

Pretty easy solution on November 3rd. Vote Democrat down ticket.

Democrats are part of the problem. The solution isn't to vote democrat or republican, it is to vote for people that care. Term limits would go a long way to solving that problem.

I would agree that "people who care" are a good thing; However, I dont agree term limits achieve that.

Better than term limits would be an informed electorate who would vote for a new person once the old one stopped caring or being effective. I think limits are a poor bandaid.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#213

Post by sokoloff » Sun, Oct 25, 2020, 11:45 PM UTC

dguaraglia wrote: post #188

bobbyi_settv wrote: post #64

Earlier quoted context omitted.

A 12 month lease for commercial real estate in SF?

That's not uncommon. Our office in North Beach was a 12-month deal. In fact, contracts tend to be longer (24 months or so).

I think that was GP’s point. We have a few one-year leases on small spaces, but most of ours are 5 year leases, usually with renewal options, sometimes with break options (for $$) at 3 years.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#214

Post by Moru » Sun, Oct 25, 2020, 11:46 PM UTC

ChuckMcM wrote: post #132

sebmellen wrote: post #2

A close relative of mine is a top real estate appraiser based in San Francisco, and she's terrified about what happens in Q2 2021, when leases will start terminating en masse. She's had a call with the St. Louis Fed, as they're trying to get an idea of what this will look like. She thinks it will be a bloodbath, and deal a death blow to corporate real estate (and other capital markets by extension).

This is a good point. I explained it to my mother with an analogy to a cruise ship heading toward shore at full speed. Everyone knows this means the ship will run aground, but few appreciate that given the mass (and thus momentum) the ship would travel far inland just scraping across the ground. The coming economic response to the pandemic has the potential to be like that, basically 10x the 2009 "great recession" an…

The analogy fails to account for the captains investment in wings that makes the ship fly over land (remake offices into appartments with dirt cheap labour).

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#215

Post by cure » Sun, Oct 25, 2020, 11:47 PM UTC

sebmellen wrote: post #16

antognini wrote: post #11

Earlier quoted context omitted.

Why will leases be terminating in Q2 2021 in particular?

This is mainly a concern for one year leases that were renewed this March/April/May, which won't be renewed in 2021. There are many companies which budgeted for a few weeks or months of work from home, now they're transitioning permanently and the office space they were using is no longer needed.

One year leases on commercial office real estate?!? That's unheard of around here (Boston). You'll be lucky if you find a commercial landlord who will rent to you for 5 years instead of the more usual 7, 10 or 20.

Subleases are a different story, of course.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#216

Post by greenyoda » Sun, Oct 25, 2020, 11:48 PM UTC

lumost wrote: post #159

hogFeast wrote: post #68

Earlier quoted context omitted.

Agreed. Very hard to estimate that effect. With corporate real estate, it is inherently local (you cannot export an office) so the question is about the swings in vacancies. Have some markets seen ~15% vacancies before? Yes, corporate real estate is very cyclical, no-one builds for years, and then the market adds 40-50% in a few years. But when it gets to 30-40% then you are probably looking for examples outside the…

There are a lot of companies that require office space e.g. pharma, hospitals etc. I wouldn't be surprised to see established companies expand on cheap real estate and start offering closed offices to employees.

> I wouldn't be surprised to see established companies expand on cheap real estate and start offering closed offices to employees.

As much as I like closed offices, I think that companies that want to save money still won't offer them. The cost of closed offices isn't just more square footage; they also incur construction costs that open office space don't: walls, doors, their own heating/cooling/ventilation ducts, their own lighting and electrical wiring, etc. And an office layout with closed offices is more expensive to modify.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#217

Post by throwaway9980 » Sun, Oct 25, 2020, 11:48 PM UTC

FreakyT wrote: post #172

kristopolous wrote: post #158

Earlier quoted context omitted.

The other week I was on real estate sites and I saw a bunch of "apartments" in SOMA that just looked like offices with some hastily slapped on anemities, as if there was some "wink wink nudge nudge" going on and they had to call the place an "apartment" for some city ordinance but everyone knew it was an office. However, I realized it was exactly the opposite. These people were taking their office spaces and desperat…

That actually seems like a really good idea — I’d love to see more housing in the “downtown core” areas of SF, which are like 95% office space.

Especially good if the converted office space also provides a good work from home environment. Everyone is working from home and those that can are scrambling to expand their houses to suit a new lifestyle.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#218

Post by jsjohnst » Sun, Oct 25, 2020, 11:51 PM UTC

ChuckMcM wrote: post #132

sebmellen wrote: post #2

A close relative of mine is a top real estate appraiser based in San Francisco, and she's terrified about what happens in Q2 2021, when leases will start terminating en masse. She's had a call with the St. Louis Fed, as they're trying to get an idea of what this will look like. She thinks it will be a bloodbath, and deal a death blow to corporate real estate (and other capital markets by extension).

This is a good point. I explained it to my mother with an analogy to a cruise ship heading toward shore at full speed. Everyone knows this means the ship will run aground, but few appreciate that given the mass (and thus momentum) the ship would travel far inland just scraping across the ground. The coming economic response to the pandemic has the potential to be like that, basically 10x the 2009 "great recession" an…

> analogy to a cruise ship heading toward shore at full speed. Everyone knows this means the ship will run aground, but few appreciate that given the mass (and thus momentum) the ship would travel far inland just scraping across the ground.

Are you sure you aren’t basing that analogy on the movie Speed 2?

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#219

Post by Swizec » Sun, Oct 25, 2020, 11:53 PM UTC

meddlepal wrote: post #156

jelling wrote: post #113

Earlier quoted context omitted.

I live in NYC and lots of friends have left town for upstate New York or similar places. But I'm waiting to see how great they think these places are after they have eaten at the same 5 restaurants for a year. And once live culture returns to NYC and other places, how will they feel then? Of course, the other way to look at the de-campers is that they were going to move to the burbs inevitably. Which good for them, b…

I feel like comments like this often lack perspective. Upstate NY, especially Buffalo and Rochester have plenty of things to do in them and far more than five restaurants. It strikes a nerve with me because in Massachusetts a similar sentiment is expressed by Boston-Cambridge folks about Lowell, Worcester, and other periphery cities. Its simply mot true that these places are devoid of culture snd cuisine and in the a…

As someone who moved from a large small city (300k residents, 100k students, 300k daily commuters) to San Francisco ... yeah the density is totally worth it. Back home we had restaurants and cuisine and all that. It wasn’t a wasteland.

But SF has more high quality restaurants within a 20min walk of my apartment than my hometown had in total. Average restaurant quality is higher too. Just because there’s more competition.

Another fun example: in SF we have 5 grocery stores within a 10min walk. Back home the nearest grocery store was a 3min walk away, great. But the next one after that was 10min. To get to a proper supermarket size grocery store ... that’s a car trip. In SF it’s a 15min walk.

Density is wonderful. There’s economies of scale that you get at 18,400 people per square mile that you just can’t pull off at 4,500.

The ultimate test for a city is this: Do you have 5 “asian restaurants” or do you have 5 south vietnamese, 3 north vietnamese, 10 cantonese, 5 ramen, 6 japanese grill, 3 sushi, 4 dimsum, etc

For example back home we had the mexican restaurant, here you have 10 for each type of mexican food.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#220

Post by zeristor » Sun, Oct 25, 2020, 11:54 PM UTC

FreakyT wrote: post #172

kristopolous wrote: post #158

Earlier quoted context omitted.

The other week I was on real estate sites and I saw a bunch of "apartments" in SOMA that just looked like offices with some hastily slapped on anemities, as if there was some "wink wink nudge nudge" going on and they had to call the place an "apartment" for some city ordinance but everyone knew it was an office. However, I realized it was exactly the opposite. These people were taking their office spaces and desperat…

That actually seems like a really good idea — I’d love to see more housing in the “downtown core” areas of SF, which are like 95% office space.

It depends, and whilst San Francisco can’t be compared to Harlow there can be some tragic ramifications:

https://www.bbc.co.uk/news/uk-england-essex-47720887