A lot of offices are still empty and it's becoming a major risk for the economy
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Re: A lot of offices are still empty and it's becoming a major risk for the economy
#2It's not "becoming" a major risk. It already is a major risk:
* As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore.
* Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft.
* Many regional banks are loaded up with loans to office buildings likely to default in the near term.
* Downtown restaurants, pharmacies, shops, and other retail operations have lost a lot of foot traffic. Many are on the verge of shutting down.
* City governments depend significantly on downtown economic activity for tax collections. Local governments are likely to see a big hole in their finances.
All of this has been on economists' radar for well over a year:
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#3How does the “economy” measure the billions of hours that are no longer wasted in commuting? The $millions not wasted on gas? The decrease in pollution? The increased quality of life of millions of remote workers who spend the extra hours working out, doing yoga, preparing healthy meals or spending a bit more time with family?
Or, you know, working a bit longer for their employer?
If landlords’ profit is the only measure then yes, this is a difficult time for commercial landlords who refuse to adapt in any way.
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#4It's not "becoming" a major risk. It already is a major risk: * As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore. * Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft. * Many regional banks are loaded up with loans to office buildings lik…
Time to retrofit into housing!
Those who built smarter buildings that are easier to convert will come out on top. Those who didn't... maybe they should have put their money in VC instead of rental properties!
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#5It's not "becoming" a major risk. It already is a major risk: * As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore. * Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft. * Many regional banks are loaded up with loans to office buildings lik…
This is going to sound rough, but who gives a fuck? How is it my obligation to pay money and waste my time sitting in traffic to prop up commercial real estate? Or banks? Local governments... Oh, poor local governments!
The future is now and the pandemic showed that it's feasible to do a lot of the work remotely. Companies that jump on it will thrive, the ones that do not will slowly sink.
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#6It's not "becoming" a major risk. It already is a major risk: * As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore. * Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft. * Many regional banks are loaded up with loans to office buildings lik…
converting these buildings to homes would solve a lot these issues. Local business can’t survive from locals? What about the inverse of the increased economic activity in the community these workers live in instead of commute to? There has to be solutions that work for everyone besides forcing everyone back to office.
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#7It's not "becoming" a major risk. It already is a major risk: * As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore. * Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft. * Many regional banks are loaded up with loans to office buildings lik…
What are the solutions?
- vacant buildings suck, but there's no urgent cost to ignoring them for 5-10 years
- multi-use "free-for-all" buildings like those big apartment blocks in Hongkong. Doesn't mesh w/ western sensibility.
- convert to apartments. Works in theory, but city centre would have to remap target customer from to .
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#8It's not "becoming" a major risk. It already is a major risk: * As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore. * Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft. * Many regional banks are loaded up with loans to office buildings lik…
Time for HubHaus Extreme?
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#9It's not "becoming" a major risk. It already is a major risk: * As long-term office leases expire, more tenants are giving notice of non-renewal, because they don't need as much space anymore. * Many office buildings cannot fulfill their monthly debt service obligations if tenant collections drop below ~80% leased, give or take, at the old $/sqft. * Many regional banks are loaded up with loans to office buildings lik…
This is going to sound rough, but who gives a fuck? How is it my obligation to pay money and waste my time sitting in traffic to prop up commercial real estate? Or banks? Local governments... Oh, poor local governments! The future is now and the pandemic showed that it's feasible to do a lot of the work remotely. Companies that jump on it will thrive, the ones that do not will slowly sink.
If society doesn't find a way to work through these issues before they turn into a crisis, we're bound to see (a) a wave of building bankruptcies, (b) a wave of small-business failures, (c) a wave of regional bank failures, (d) a wave of regional tax-collection holes, (e) significant stock and debt market losses for pensions, endowments, 401(k) plans, individuals, etc., and (f) higher local taxes for everyone, including you.
Re: A lot of offices are still empty and it's becoming a major risk for the economy
#10Earlier quoted context omitted.
This is going to sound rough, but who gives a fuck? How is it my obligation to pay money and waste my time sitting in traffic to prop up commercial real estate? Or banks? Local governments... Oh, poor local governments! The future is now and the pandemic showed that it's feasible to do a lot of the work remotely. Companies that jump on it will thrive, the ones that do not will slowly sink.
If society doesn't find a way to work through these issues before they turn into a crisis, we're bound to see (a) a wave of building bankruptcies, (b) a wave of small-business failures, (c) a wave of regional bank failures, (d) a wave of regional tax-collection holes, (e) significant stock and debt market losses for pensions, endowments, 401(k) plans, individuals, etc., and (f) higher local taxes for everyone, includ…
We need to stop propping up the economy and let the natural cycles take hold.