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Work from home and the office real estate apocalypse

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Re: Work from home and the office real estate apocalypse

#81

Post by [deleted] »

shuckles wrote: post #70
_delirium wrote: post #57

Earlier quoted context omitted.

I doubt that practical considerations relating to renovating a building's plumbing are very relevant. NYC is known for an aggressive zoning policy against commercial-to-residential conversations, which they overtly defend as policy (to keep NYC attractive for business headquarters). If it were infeasible to undertake commercial-to-residential conversions for practical/construction reasons, the city wouldn't need to g…

They are extremely relevant. Office buildings have floor plates that are simply unlike residential ones. Rules of that kind are probably to discourage (i) conversions from commercial for old buildings that weren't as differentiated, possibly and (ii) stealth residential projects that are proposed as office for expedited planning review. SPUR recently hosted a panel with AIA and large developers which basically said t…

[deleted]

Re: Work from home and the office real estate apocalypse

#82

Post by justin_oaks »

vba616 wrote: post #39
cortesoft wrote: post #8

Earlier quoted context omitted.

Whether value was 'destroyed' or not depends on how you look at it. $500 billion dollars worth of assets were lost by the owners of the real estate; that value is gone, and it didn't go to someone else. It just vanished. The value didn't disappear because it transferred to someone else, it went away because the asset itself become less desirable and valuable to other people. You can imagine it being like if a farmer…

>You can imagine it being like if a farmer had a bunch of grain stored in a silo and it somehow went bad. It's fundamentally different, practically the opposite. Paper losses are like a farmer realizing that the grain in his silo is bad. Knowing this when you were oblivious before is a good thing, whereas the grain going bad is obviously not. Once you start regarding bad news as a loss, very bad stuff happens. In som…

You're saying that they were unrealized gains, not losses.

In some cases, building something that nobody will use is still a loss. It still cost money to build a building, and if the one paying for that building doesn't recoup the cost the it's a lost.

Beyond that, of course you're right. It's unrealized gains, not a loss.

Re: Work from home and the office real estate apocalypse

#83

Post by qaq »

cortesoft wrote: post #78
qaq wrote: post #65

Earlier quoted context omitted.

So companies that save money by not renting as much real estate and companies that supply equipment for WFH did not appreciate in value?

Not at an equal value to what was lost. Money was spent to build all those buildings, and all the things inside them, and all he services that kept them running. That money isn’t just gone. Plus, all the companies that relied on servicing commercial real estate depreciate in value.

Do you have any numbers to back it up or just making a guess? From 2020 to now Apple alone is up more than a trillion dollars in value what percentage of that was driven by wfh trend? Apple is not the only beneficiary.

Re: Work from home and the office real estate apocalypse

#84

Post by DougMellon »

Ratalala wrote: post #77
cookiengineer wrote: post #69

Earlier quoted context omitted.

Ask yourself how much infrastructure exists only for the purpose of commuting. You'll be amazed by the statistics. There's also lots of interesting satellite data about how clean the air in cities world wide got when COVID lockdowns started. [1] We don't need roads in cities. And definitely not multi-lane roads. [1] https://maps.s5p-pal.com/

They are pretty rare in European cities (that I know of). They do exist, but in the largest cities, and are limited to the main arteries.

I grew up in New England and currently live in Denver, but have traveled to over 20 countries and lived in both Italy and Croatia. Europe is a very broad statement so maybe you are talking about some outliers, but roads are not rare nor are they limited to main arteries in any of the locations I traveled.

Is public transportation better than most places I’ve been in the US? Without a doubt - it’s not even close. But roads are just as relevant.

Re: Work from home and the office real estate apocalypse

#85

Post by asimpleusecase »

This has an impact not just in rents for office buildings but the entire ecosystem of support businesses that sell to workers who come into city centre to work. One example. Small organic food shop, that sold mostly to office workers and has seen a 70% drop in foot traffic. The same thing hits bars, cafes, restaurants, theatres and other venues. Those very things that make living near or in a city interesting for many people. In my case, precovid I thought a city centre apartment could be kinda nice, no commute, nice vibe and lots of access to amenities. But now much of that vibrant ecosystem is gone. Why would someone want to live in a converted office in such a setting? And if you house people who only have no other options - aren’t you just creating a type of ghetto?

Re: Work from home and the office real estate apocalypse

#86

Post by urthor »

cookiengineer wrote: post #69
jasper_fitussi wrote: post #66

Earlier quoted context omitted.

Wait, what?

Ask yourself how much infrastructure exists only for the purpose of commuting. You'll be amazed by the statistics. There's also lots of interesting satellite data about how clean the air in cities world wide got when COVID lockdowns started. [1] We don't need roads in cities. And definitely not multi-lane roads. [1] https://maps.s5p-pal.com/

You need roads to move irregularly shaped construction equipment.

The solution isn't to remove roads. The solution is a London style congestion tax.

Which planning economists have cried out for, for ages.

Re: Work from home and the office real estate apocalypse

#87

Post by exolymph »

cookiengineer wrote: post #64
fnordpiglet wrote: post #62

Redevelop the office space as residential space. Our cities are flush with office space but are squeezed for housing. Sounds like a win / win.

Get rid of roads while we're at it. There are better and more efficient ways to transport goods into the city.

Fun fact: roads predate cars.

Re: Work from home and the office real estate apocalypse

#88

Post by ojbyrne »

fnordpiglet wrote: post #62

Redevelop the office space as residential space. Our cities are flush with office space but are squeezed for housing. Sounds like a win / win.

Definitely but first there will be a lot of lose/lose. Commercial real estate first has to collapse, taking people’s savings with it. Redeveloping is not a very fast process, especially since the prime places for the development are in highly regulated cities. In 20 years-ish you’ll be proved correct.

Re: Work from home and the office real estate apocalypse

#89

Post by yakak »

asimpleusecase wrote: post #85

This has an impact not just in rents for office buildings but the entire ecosystem of support businesses that sell to workers who come into city centre to work. One example. Small organic food shop, that sold mostly to office workers and has seen a 70% drop in foot traffic. The same thing hits bars, cafes, restaurants, theatres and other venues. Those very things that make living near or in a city interesting for man…

I know a few areas that were gentrified in earlier times and ended up with things more suited for residents of a certain class than commuters. I also know of other downtown locations that became terrible to live in because a grocery store was uneconomical use of space.

I'd generally say that if they can fill it to a good density it can have a good local market compared to suburbs with poor density.

Re: Work from home and the office real estate apocalypse

#90

Post by bryanrasmussen »

fnordpiglet wrote: post #62

Redevelop the office space as residential space. Our cities are flush with office space but are squeezed for housing. Sounds like a win / win.

wait - the managerial class will lose all that equity they put in their homes!

on edit: somehow put learn instead of lose.

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