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San Francisco braces for commercial real estate crash

sfstandard.com

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Re: San Francisco braces for commercial real estate crash

#11

Post by jdhn »

newaccount2021 wrote: post #3

Not just SF I see For Lease signs on commercial real estate at all price points everywhere I go. WFH has been a paradigm shift and commercial real estate hasn't caught up to the reality yet. Companies that embrace WFH will have access to an entire nations' worth of talent and will end up with a competitive advantage. Requiring RTO means employees must be within thirty miles or so of campus, and lots of talent won't g…

To piggyback off of this, for those companies where WFH doesn't work (lab equipment, etc), now is a fantastic time to negotiate a deal.

Re: San Francisco braces for commercial real estate crash

#12

Post by jeffbee »

coding123 wrote: post #9
downrightmike wrote: post #4

Earlier quoted context omitted.

The only way SF will be fixed is if there is massive earthquake to take care of all the nimby concerns. Can't be concerned and stop construction if you don't have a back yard anymore.

People in SF have backyards? I can see NIMBY as a concern in the rest of the bay area, but SF, it's already stacked housing.

Nope. On an area-weighted basis most of SF is wasted on detached single-family homes. https://www.google.com/maps/@37.7470676,-122.4914956,314m/da...

Re: San Francisco braces for commercial real estate crash

#13

Post by hollywood_court »

newaccount2021 wrote: post #3

Not just SF I see For Lease signs on commercial real estate at all price points everywhere I go. WFH has been a paradigm shift and commercial real estate hasn't caught up to the reality yet. Companies that embrace WFH will have access to an entire nations' worth of talent and will end up with a competitive advantage. Requiring RTO means employees must be within thirty miles or so of campus, and lots of talent won't g…

I’m not near a big tech center, but I know of exactly 3 businesses in my town that no longer exist because they would not allow their employees to work remotely. Two of them were owned by former clients of mine.

They allowed themselves to fail because they wanted to make their employees’ lives more difficult. It was that simple. There was no need for either business to have a brick and mortar location at all. No need for all the overhead. But as the saying goes: “the cruelty is the point.”

Re: San Francisco braces for commercial real estate crash

#14

Post by onlyrealcuzzo »

ryandrake wrote: post #6

Residential crash is potentially already upon us, at least in the outskirts (East Bay for me). We've had our house on the market for over a month now, and nobody else in the neighborhood is selling either. Big changes from only 3 months ago, when sellers were closing in days.

I'd argue that a "crash" isn't really a "crash" if it comes after a 50% increase in 2 years.

Anything short of a 20% correction is simply a reversion.

If prices shot up 100% in 1 year, and then were down 3% in two months - no one would be talking about a crash.

Re: San Francisco braces for commercial real estate crash

#16

Post by lizknope »

bragr wrote: post #2

Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps…

It seems like a logical thing to do. A few articles on why it is difficult.

https://www.nbcnews.com/business/real-estate/why-empty-offic...

https://www.washingtonian.com/2022/07/28/should-dcs-empty-of...

Re: San Francisco braces for commercial real estate crash

#17

Post by guywithahat »

bragr wrote: post #2

Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps…

The underlying issue is government preventing development of both houses and office space. If you were to build more housing in any capacity that would risk lowering housing values and people (including politicians) would lose tens or even hundreds of millions in assets. This would be incredibly unpopular and won't happen anytime soon

Re: San Francisco braces for commercial real estate crash

#18

Post by ryanSrich »

ryandrake wrote: post #6

Residential crash is potentially already upon us, at least in the outskirts (East Bay for me). We've had our house on the market for over a month now, and nobody else in the neighborhood is selling either. Big changes from only 3 months ago, when sellers were closing in days.

Turns out prices have to go down when the fed doubles rates. By my math, a 30% correction is needed to make up the difference in terms of monthly affordability - meaning a $500k house at 6% is the same as a $750k house at 3%.

Re: San Francisco braces for commercial real estate crash

#19

Post by ethbr0 »

ptmcc wrote: post #8
bragr wrote: post #2

Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps…

Most offices have physical layouts that make conversion to residential difficult to impossible. Big things like lots of interior square footage without windows and plumbing only to a few central locations. And while some or even most of this is fixable, major renovations are a ton of cost and effort to convert them to something that will still be expensive and weird, if even possible to meet the legal requirements of…

Maybe SF should relax the legal requirements of residential space, then?

If they choose not to build sufficient housing... they can at least choose to use what they have.

A windowless room with a community bathroom doesn't sound appealing, but at a certain price point it's better than nothing.

Re: San Francisco braces for commercial real estate crash

#20

Post by onlyrealcuzzo »

guywithahat wrote: post #17
bragr wrote: post #2

Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps…

The underlying issue is government preventing development of both houses and office space. If you were to build more housing in any capacity that would risk lowering housing values and people (including politicians) would lose tens or even hundreds of millions in assets. This would be incredibly unpopular and won't happen anytime soon

> The underlying issue is government preventing development of both houses and office space.

We live in a democracy. The underlying problem of government is voters.

Most home owners (especially in The Bay) refuse to allow anyone to build anything because they see that as a threat to their home value.

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