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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

#181

Post by orwin »

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.

Can we call it ponzi pyramid? Or speculative pyramid?

I agree this isn't a scheme, as it wasn't done out of maliciousness, but it share so much property with it (including who will have to hold the bag) that I kinda like the image.

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

#182

Post by hotpotamus »

dmbche wrote: post #113
hotpotamus wrote: post #79

Earlier quoted context omitted.

> Strictly speaking it is true that the F-35 is an air superiority fighter. I wonder, does it have more kills in the air or on the ground?

Probably more ground - but that's not the point. The f-35 is built to be good in all conditions, have long range and carry quite a lot of ordonance, all the while being quite stealthy. It's a do-it-all plane.(80-120M usd) The f16 is made to stay close to airbases and defend against intrusions. Kinda cheap - relatively.(60 M usd) The f22 is the peak stealth air superiority fighter. It's made to go anywhere and murder…

> but that's not the point

There's a saying in systems engineering that comes to mind: "the purpose of a system is what it does".

It's why I've only become more and more convinced that we should leave the rest of the world alone.

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

#183

Post by ImPostingOnHN »

orwin wrote: post #181
dmoy wrote: post #90

Earlier quoted context omitted.

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.

Can we call it ponzi pyramid? Or speculative pyramid? I agree this isn't a scheme, as it wasn't done out of maliciousness, but it share so much property with it (including who will have to hold the bag) that I kinda like the image.

maybe the latter?

the Ponzi in Ponzi scheme refers to a specific person, and the scheme in Ponzi scheme refers to the specific scheme that specific person executed

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

#184

Post by Arrath »

pclmulqdq wrote: post #166
WillPostForFood wrote: post #109

Earlier quoted context omitted.

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…

Many of today's office buildings are not built to last, honestly. There is a good chance that a glass/concrete tower will collapse in 100 years, while the old brick factories are basically indestructible.

Brick structures, famously known for surviving earthquakes with flying colors.

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

#185

Post by lost_tourist »

xbmcuser wrote: post #5

Current market prices for a lot of commercial real estate seems to be a ponzi scheme especially in the US. It is not in the interest of any of the players to decrease prices only the renters. Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. Banks need higher prices as they are highly leveraged and will be on the hook…

It's price gouging and they are trying to hold out as long as possible, but eventually they will have to give in and accept that they need to use the space for something different and/or drop the rent.

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

#186

Post by [deleted] »

grepfru_it wrote: post #150
snow_mac wrote: post #121

Earlier quoted context omitted.

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

[deleted]

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

#187

Post by lost_tourist »

ricardobeat wrote: post #9
RyanAdamas wrote: post #4

This is why changing zoning laws is so important. These buildings and their underlying values can be saved by 'going condo' or conversion to smaller unit spaces for the purpose of housing so many who are struggling with massive increases to rent. Most rent does not increase because of increased asset expenses, it increases because of increased owner expenses and that quickly becomes a slippery slope in the face of ad…

> 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.

This is usually a libertarian knee jerk response. For some reason they are jealous that land can be community owned and controlled. Trust me it's a bad idea and results in stuff like in Texas with 97% of the land being owned privately and hoarded with "no trespassing signs" and fences up everywhere

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

#188

Post by [deleted] »

king_magic wrote: post #178
bell-cot wrote: post #13

Earlier quoted context omitted.

> Zero sympathy. For Wall Street & the billionaires? Reasonable. But the crash will cause vastly more suffering for normal people than for the 0.1%.

So what, we’re all supposed to be happy going back to a miserable life of commuting 2-3 hours a day to work in miserable open office layout nightmare factories to “soften the blow” (that might not happen) for everyone else? Nah. I’m good. The world has changed. Adapt or die. Frankly, between AI and remote work, I’m happy to watch our miserable current instance of the world burn to the ground .

[deleted]

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

#189

Post by WillPostForFood »

eganist wrote: post #126
WillPostForFood wrote: post #116

Earlier quoted context omitted.

windows mean a lot of office spaces would have empty cores Just change the code.

Not only is this a massive fire safety concern (considering why the requirement for two means of egress exists in residential building code), it's also a massive optics concern to stuff unhoused people into what'll effectively be written up by the press as a prison cell. Changing code here is unviable.

There is no egress from windows in tall buildings. They don't open, it is too high for ladders. So it adds no safety in this context, so change the code.

Also, if you need a window for a bedroom to be safe, why not an office? People spend 8 hours in an office without a window. Mitigating fire risk in tall buildings is a serious issue, but you have sprinkler systems, internal stair exits, etc.

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

#190

Post by lost_tourist »

spokeonawheel wrote: post #6

crazy idea: us govt scoops up all the office real estate at the crash and converts to low income housing for free. Solve two crisis at once, the obviously coming real estate crisis and the homeless crisis. All for the cost of a handful of F35s If only politicians had an iota of strategy.

This will never happen. Also it's not about "iotas of strategy", it's about politicians not caring. You can't make conservatives care about homeless housing, it simply doesn't compute, "get a job" is their answer to the chronically homeless who are usually either completely addicted to a substance or suffer severe mental issues.
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