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Office real estate crash will be so sharp, values unlikely to recover by 2040

fortune.com

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Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#141

Post by TigeriusKirk »

RyanAdamas wrote: post #25
ricardobeat wrote: post #9

Earlier quoted context omitted.

> the government holds hundreds of millions of acres of land in trust and it needs to be relinquished How would relinquishing that help, is access to land a real issue? You can probably already buy a lot for cheap right now, but it will be far from urban centers and won't be habitable without a ton of investment. Would have zero effect on housing.

You mean like 15 minute cities? We don't need classical infrastructure as we once did when considering the reduction in the costs of solar, wind, and in many places accessible geothermal energy, plus septic tanks, water table access, and satellite based internet, we no longer require massive right of way projects to build these places. Initial investment in locality based infrastructure creates the market; expansion…

The point being made is that there is plenty of very cheap land adjacent to the nationally preserved land.

The reason it's cheap is that no one wants to develop it.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#142

Post by nocoiner »

WillPostForFood wrote: post #109
nocoiner wrote: post #16

Earlier quoted context omitted.

This is not really how a lot of this works. Zoning is basically irrelevant - the problem is that the cost of converting an outmoded commercial building to residential is usually within the same order of magnitude as knocking it down and putting up something built for purpose. I would bet real money that there aren’t more than a handful of municipal governments that would die on the hill of maintaining existing zoning…

the problem is that the cost of converting an outmoded commercial building to residential is usually within the same order of magnitude as knocking it down and putting up something built for purpose. If you look at the urban core of many cities, they are full of old commercial buildings converted to lofts/residentia. The old bank district in LA was empty and in disrepair for decades, then a huge conversion boom in th…

Yeah, I could have been more specific when I said “outmoded commercial buildings.” I meant the typical open floor plan office towers built during the ‘60s-‘80s. Those are challenging, though not impossible, to convert to residential. But absent incentives it’s almost always cheaper to start from scratch.

More recent commercial buildings, particularly anything from the last decade, are generally fine in terms of valuation/viability - there’s been a very noticeable flight to quality in commercial real estate. Lots of tenants are giving up space in the slightly obsolete buildings and moving into new flagship towers.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#143

Post by jefftime »

zzzbra wrote: post #130

The reasoning in this article seems specious. Malls and offices are not the locus of the same activities. fwiw I've RTOed for three to four days a week and I love it. I think it will continue to gain currency with a lot of folks who are serious about their work at companies with other employees who are also serious about their work.

I don't think RTO and "serious about work" are directly proportional. Some people are much more productive away from a noisy and distractive environment. I think it just depends on the person

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#144

Post by andsoitis »

bushbaba wrote: post #140

A collapse or real estate would be a good thing for the economy. It would free up middle class paychecks to be spent on more goods, driving long term growth of our businesses. The risk is without the correction you end up like many EU countries whos main GDP growth is real estate which only takes you a few generations to fall apart.

> The risk is without the correction you end up like many EU countries whos main GDP growth is real estate which only takes you a few generations to fall apart.

What is an example country whose main GDP growth stems from real estate? The EU economy as a whole is driven mostly by the services sector, which accounted for 70% of value added in 2020. https://www.visualcapitalist.com/16-trillion-european-union-...

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#145

Post by throw9away6 »

dmoy wrote: post #90
m0llusk wrote: post #59

Earlier quoted context omitted.

high demand, limited inventory, fifteen years of near zero interest rates mean prices have been set in a market environment of extreme distortion

Sure, but the word to describe it may be "bubble", not "ponzi scheme". E.g. you can't say a failed startup is a ponzi scheme because it loses a bunch of money. A ponzi scheme is a very specific type of fraud.

There is an element of ponzi because none of the actors have an interest to break the cycle. Mutual hallucination might be a better term though.

Like you would think the asset buyers would have an incentive to stop holding the loans and the whole thing would collapse, but because the buyer are investing with other peoples money they are also incentivized to keep the cycle going. The people whose money is eventually going to be lost have no way to stop this because the money is either in a pension fund or they aren’t knowledgeable enough to understand the issue

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#146

Post by seanmcdirmid »

salawat wrote: post #124
seanmcdirmid wrote: post #106

Earlier quoted context omitted.

LA really isn’t a desert. It is definitely near a desert, but the city itself isn’t very desert like. LA’s water use is a lot smaller than the farms around LA, so converting farms to residential use would actually save a lot of water.

>so converting farms to residential use would actually save a lot of water. Pray tell, where would you source the food required to support said new residents if you're going to convert farm land already dedicated to supporting people who are already there? Not sure about California's import/export situation with Ag output.

LA at least gets a lot of its food from Mexico. Most of the farms in that region are for specialty crops that get exported anyways. Like almonds. I like almonds, but most people don’t live on them.

But the point isn’t to get rid of the farms, just that LAs water usage as a city is tiny in comparison to California’s agricultural water usage in general.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#147

Post by klodolph »

dragonwriter wrote: post #133
klodolph wrote: post #119

Earlier quoted context omitted.

> A ponzi scheme is fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. If you’re going to copy/paste a dictionary definition, you should probably cite the dictionary you are using (Oxford, it looks like). I think the correct term here is “speculative bubble”, but there are deep similarities between…

> I think the correct term here is “speculative bubble”, but there are deep similarities between a speculative bubble and a Ponzi scheme. There are deep differences, too, most obviously the one highlighted by the “scheme” in ponzi scheme. > In both a speculative bubble and a Ponzi scheme, early investors are paid out with funds taken from later investors, for an asset which does not have enough utility to justify tho…

> In a ponzi scheme, money is deliberately directed to early entrants to cover the conscious absence of any mechanism to produce actual value.

I don’t think the “deliberate” part is particularly important. It sounds like you disagree. There’s a whole discussion to be had here about mens rea, and that discussion is important in the context of criminal justice, but I think it’s less important when discussing systemic problems because you need a different toolset (besides intent) to discuss problems with economic systems.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#148

Post by endisneigh »

dmbche wrote: post #138
endisneigh wrote: post #115

Earlier quoted context omitted.

From what you’re saying it doesn’t sound like it would be lucrative. Lotta conjecture and hand waiving here

Yeah - I'm spitballing on what to do with empty office space that no one would possibly want to buy if we don't go back to offices. I garantee you that keeping em empty isn't lucrative, so we gotta do something with them. Housing makes some sense. What are you suggesting?

I’m not suggesting anything. I don’t think turning office space into housing makes sense. I also don’t think getting the government involved makes sense either. The government is responsible for the current housing crisis to begin with with excessive zoning and enablement of small communities to block development.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#150

Post by grepfru_it »

snow_mac wrote: post #121
BeFlatXIII wrote: post #111

Earlier quoted context omitted.

Those are all reasons why I hope the crash is as big as possible. Let's enjoy the show.

This is a stupid response. Remember 2009 when the housing bubble popped and it effected the entire economy? With billions tied up in commercial real estate, it will have a wider impact then just office buildings and retail locations

some people just want to watch the world burn
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