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One in five Silicon Valley office buildings is vacant

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Re: One in five Silicon Valley office buildings is vacant

#31

Post by CapstanRoller »

fragmede wrote: post #30
rs999gti wrote: post #26

Earlier quoted context omitted.

This is a feel good comment, but the reality is these building are not designed for residential use and would require substantial build out to be habitable for multiple residents. Now if the thought is just to move the homeless eyesore out of site, then open office space might work.

To bring it up to code, is a very different situation than make it livable, especially when compared to living in a tent on the street. If you gave me a floor of a commerical building that was mine, that I was allowed to build in and improve how I saw fit, I'd take that in a heartbeat. If there's an Kafkaesque set of red tape, then forget it.

What happens when someone in the building decides who DOESN'T know what they're doing turns you into the next Ghost Ship[0] type fire?

No, we need massive zoning & code reform but not a total free-for-all. You may be resourceful enough to build a safe habitat but there's a good chance all your work will be destroyed because someone decided to build an indoor slum out of pallets and space heaters.

All safety regulations are written in blood.

[0] https://en.m.wikipedia.org/wiki/Ghost_Ship_warehouse_fire

Re: One in five Silicon Valley office buildings is vacant

#32

Post by quickthrowman »

toomuchtodo wrote: post #24
quickthrowman wrote: post #22

Earlier quoted context omitted.

Based on this tenant space listing [0] the building appears to have around 40k sq ft of leasable space. That works out to around 3.25 years of rent assuming 40k sq ft leasable at $32/sq ft. It’s definitely not a good sign for commercial office space, that’s for sure. US 30 year bonds are yielding 5%, that’s much more attractive than a half-leased Class B office tower with an 8% mortgage right now. [0] https://bradvis…

Consider that a lot of these mortgages are not yet at 8%. There is about $1.5T in commercial debt coming due before 2025. https://archive.ph/ku9Xr | https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri...

My comment about 5% 30 year Treasury bonds being more attractive than mid tier office buildings financed at 8% was referring to someone making a current investment decision.

The refinancing of $1.5T in CRE before 2025 is going to be a bloodbath for regional banks, hopefully we don’t have multiple SVB situations as a result.

For anyone unfamiliar with CRE financing, a typical loan might have a term of 5-10 years and an amortization schedule of 20-30 years. A lot of loans that were taken out when the prime rate was 0-2% are now going to have to be refinanced when the prime rate is 5.25% and occupancy rates have dropped, meaning the building is worth less than it was previously and also the monthly payments are higher as a result of the higher interest rates. Lots of building owners are going to walk away and the banks will have to repossess and resell a bunch of CRE.

Re: One in five Silicon Valley office buildings is vacant

#33

Post by toomuchtodo »

quickthrowman wrote: post #32
toomuchtodo wrote: post #24

Earlier quoted context omitted.

Consider that a lot of these mortgages are not yet at 8%. There is about $1.5T in commercial debt coming due before 2025. https://archive.ph/ku9Xr | https://www.bloomberg.com/news/articles/2023-04-08/a-1-5-tri...

My comment about 5% 30 year Treasury bonds being more attractive than mid tier office buildings financed at 8% was referring to someone making a current investment decision. The refinancing of $1.5T in CRE before 2025 is going to be a bloodbath for regional banks, hopefully we don’t have multiple SVB situations as a result. For anyone unfamiliar with CRE financing, a typical loan might have a term of 5-10 years and a…

Apologies for talking past each other. Agree with your analysis.

Re: One in five Silicon Valley office buildings is vacant

#34

Post by fragmede »

CapstanRoller wrote: post #31
fragmede wrote: post #30

Earlier quoted context omitted.

To bring it up to code, is a very different situation than make it livable, especially when compared to living in a tent on the street. If you gave me a floor of a commerical building that was mine, that I was allowed to build in and improve how I saw fit, I'd take that in a heartbeat. If there's an Kafkaesque set of red tape, then forget it.

What happens when someone in the building decides who DOESN'T know what they're doing turns you into the next Ghost Ship[0] type fire? No, we need massive zoning & code reform but not a total free-for-all. You may be resourceful enough to build a safe habitat but there's a good chance all your work will be destroyed because someone decided to build an indoor slum out of pallets and space heaters. All safety regulatio…

Safety regulations won't keep you warm at night.

Ghost Ship was an absolute tragedy, and a close dear friend was on her way there that night. It made national news. But it's funny, the homeless encampment fires that keep happening in West Oakland just five miles away, that keep killing people don't get the same kind of national coverage. There was one just this past April.

To be able to be used for commercial occupancy, the buildings have an up-to-code sprinkler system. Keeping those systems up to code requires yearly inspections and walkthroughs and testing. So just keep doing those while we let people live in them?

Ghost Ship is good to bring up. In the wake of it neighboring San Francisco shut down several warehomes, forcing people out onto the streets in one of the most expensive housing markets in the world. There was no real help from the city or fire marshals to bring things up to code, just a bunch of red tape. Critically, no money was made available from the government to do any renovations to bring things up to code and stop people from dying in fires. Just evictions.

> In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread.

Re: One in five Silicon Valley office buildings is vacant

#35

Post by CapstanRoller »

fragmede wrote: post #34
CapstanRoller wrote: post #31

Earlier quoted context omitted.

What happens when someone in the building decides who DOESN'T know what they're doing turns you into the next Ghost Ship[0] type fire? No, we need massive zoning & code reform but not a total free-for-all. You may be resourceful enough to build a safe habitat but there's a good chance all your work will be destroyed because someone decided to build an indoor slum out of pallets and space heaters. All safety regulatio…

Safety regulations won't keep you warm at night. Ghost Ship was an absolute tragedy, and a close dear friend was on her way there that night. It made national news. But it's funny, the homeless encampment fires that keep happening in West Oakland just five miles away, that keep killing people don't get the same kind of national coverage. There was one just this past April. To be able to be used for commercial occupan…

I completely understand your point, and I agree with it. I just don't trust laissez-faire economics. We've got entrepreneurs trying to put SF techies into communal bunks.

If that's how they're willing to treat engineers, how will they treat the poor and disabled?

Then again, I also understand the historically bad examples of crime-filled government housing projects.

I don't know how to convince Americans to do things the more European way. As someone born in the USSR and raised in a "commieblock" I see how housing like this is far better than living on the street. Many of the big block style apartments all over western Europe are quite decent.

How much more pain before we have massive housing reform? Will we ever? I don't know. Neoliberalism is eating the country and we're in a deadlock. The pressure is continuing to build and build.

I am very concerned about a collapse scenario, because the USA is awash with guns and the far right keeps gaining ground.

Re: One in five Silicon Valley office buildings is vacant

#37

Post by francisofascii »

MrFoof wrote: post #11

Two Class B office buildings totaling ~150,000 ft2 in Boston just sold for $4.1M, when in 2016 they had previously sold for $16M https://archive.ph/AADPP . Here's the location: https://maps.app.goo.gl/ezkNUEPAVCJJ2rps8 Things to note: * Within HALF A BLOCK of Boston Common * Within one-to-two short blocks of THREE subway stations serving THREE of the four subway lines * A Dunkin' Donuts 30 seconds away on foot, with…

Downtown Boston hotel prices always seem to be insanely high, like higher than NYC and way higher than SF. I don't understand why. Too bad they can't covert easily.

Re: One in five Silicon Valley office buildings is vacant

#38

Post by francisofascii »

rs999gti wrote: post #26
juunpp wrote: post #17

In SF you will find entire floors vacant while the homeless camp outside.

This is a feel good comment, but the reality is these building are not designed for residential use and would require substantial build out to be habitable for multiple residents. Now if the thought is just to move the homeless eyesore out of site, then open office space might work.

I would wager these buildings are more appropriate for residential use than the sidewalk.
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