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Commercial property deals in the US are starting to pick up at deep discounts

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Re: Commercial property deals in the US are starting to pick up at deep discounts

#71

Post by Scoundreller »

esoterica wrote: post #70
keiferski wrote: post #15

Only speaking from my personal travel experiences, not any hard data, but: I feel like this issue is nearly non-existent in places with mixed use zoning. If the office values go down in a place with equal amounts of housing, they are repurposed as new apartments. The problem is when the office architecture isn’t interchangeable with apartment architecture, which usually happens because certain areas are zoned as offi…

Big office buildings have very deep plates which make them very difficult to convert to sensible apartment layouts. You can have windowless conference rooms but you can't have windowless apartments.

I’m probably a weirdo, but a bedroom without windows feels like a great way to get the best sleep in an urban environment. Low noise, no light pollution. Kinda a dream really.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#72

Post by harha »

ugh123 wrote: post #37
harha wrote: post #28

Earlier quoted context omitted.

Or fixing the problem of bad regulation - you can always uplift living standards when money is cheap, right now there's a chance to operate more efficiently, rather than create more debt. One idea would be to convert spaces to something competing with airbnb, with the added value of being near offices.

Do you mean like capsule hotels in Tokyo?

Sort of - I’m thinking like a college dorm, it’s probably easier to install shared showers and kitchen (they might even already be there) - rather than individually per unit, along with some other useful shared spaces like libraries.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#73

Post by suzzer99 »

Scoundreller wrote: post #71
esoterica wrote: post #70

Earlier quoted context omitted.

Big office buildings have very deep plates which make them very difficult to convert to sensible apartment layouts. You can have windowless conference rooms but you can't have windowless apartments.

I’m probably a weirdo, but a bedroom without windows feels like a great way to get the best sleep in an urban environment. Low noise, no light pollution. Kinda a dream really.

That's not bad. I do everything I can to darken my room while I sleep.

Just need an automatic light set to sunlight temperature that comes on when I want to get up.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#74

Post by impossiblefork »

keiferski wrote: post #15

Only speaking from my personal travel experiences, not any hard data, but: I feel like this issue is nearly non-existent in places with mixed use zoning. If the office values go down in a place with equal amounts of housing, they are repurposed as new apartments. The problem is when the office architecture isn’t interchangeable with apartment architecture, which usually happens because certain areas are zoned as offi…

I don't think it has anything to do with either that or with WFH.

Rather, the increase in interest rates necessitate a general reduction in price on both commercial and other property. WFH means that commercial property will be affected more, but it's something general.

Interest rates have gone from <1% to 5.5%, and if that's sustained there must either be such an increase in rents, which people would not be able to pay, or there must be a reduction in the price of commercial and rental property corresponding to the remainder.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#75

Post by candiodari »

hackerlight wrote: post #55
CamperBob2 wrote: post #38

Earlier quoted context omitted.

No, modern urban planners basically want us all (except for them, of course) living in a modern Kowloon.

It's the opposite. Urban planners have a vested interest in zoning because their career relies on it. Also, the existence of Kowloon is a good thing. The people who live there would have worse lives if Kowloon was never allowed to build like that. They would be forced to live further away from their work, subjecting them to an hour a day on a cramped train, for example. The wrong question: "Is X bad?". The right ques…

This can result in a race to the bottom, is the argument against it. If we allowed people to live in "capsule hotels" for example.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#76

Post by refurb »

epistasis wrote: post #25
zbrozek wrote: post #23

Earlier quoted context omitted.

Some local councils around here want to make it a condition of approval that the first floor of mixed-use must remain commercial. Developers want it to be flexible because they can't predict future need. Constraints cost! Euclidean zoning is an unspeakably expensive economic blunder.

Urban Planning has to be one of the worst professions in the existence of humanity. We were all better off without urban planners, and everything they advocate for and enforce makes the world worse.

I mean go to a low income country and you can see the results.

No setbacks, sidewalk encroachment (building or parking), restaurants on the ground floor of houses (i remember going into one huge restaurant and seeing the family in a separate room watching TV). Bizarre road layout, etc,etc

Not all bad, but man is it chaotic.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#77

Post by refurb »

nox101 wrote: post #49
Nursie wrote: post #10

Interesting, but predictable. The clamouring for "return to the office" was always a minority voice, and it seemed to be two major classes of people doing the clamouring - old fashioned managers who didn't believe staff could produce while at home, and those who made their living from forced commutes - a broad class of building owners and ancillary business owners such as meal providers. The ancillary businesses I ha…

I'm probably wrong, but I feel like in the style of city that urban advocates like "No Just Bikes" advocate for, there would be lots more "ancillary business owners such as meal providers" because the cities would be designed to be walkable and so instead of driving 3-4 miles to the nearest big box car lot you'd walk 1/2 a mile to your local "pedestrian and bicycle only shopping street" with a bunch of small shops, r…

This reads like designing a city for 20-something singles whose highest priorities are nightlife and dining.

What about the rest of us?

Re: Commercial property deals in the US are starting to pick up at deep discounts

#78

Post by chongli »

epistasis wrote: post #36
screye wrote: post #30

Earlier quoted context omitted.

Modern urban planners oppose most of the dystopian development seen in the US. What you see here is the stakeholders getting what they want. (Which might not be what they need) Only in this case, the stakeholders are other residents in the neighborhood...not prospective buyers.

Despite what they might oppose, as part of their profession they must uphold the determinations of the stakeholders. The purpose of a system is what it does. The supposed opposition of planners, a completely ineffectual and meaningless opposition that has zero effect on any policy outcome, does not change the fact that planning as a profession ends up being this means to an end.

Urban planners are people, not systems. Firefighters oppose fires and try to put them out, yet fires still happen. Would you say that the purpose of firefighting is to burn down houses?

Re: Commercial property deals in the US are starting to pick up at deep discounts

#79

Post by AnthonyMouse »

makeitdouble wrote: post #69
AnthonyMouse wrote: post #48

Earlier quoted context omitted.

> It's still possible to convert to houses, but that makes for ridiculously small liveable areas compared to the whole floor surface. This is only a problem if it's prohibited by zoning. Otherwise it just gets reflected in the price. Houses in the suburbs often contain a large amount of space with no windows, i.e. a basement the size of the entire first floor, and no one objects because it can be used for storage or…

> Otherwise it just gets reflected in the price This is one of my nightmares. What if we allowed people to live in basically confinment cells and they have no choice as they're broke af or the gov or their companies assigns them one in a relocation program. My gut feeling is that the social consequences would be subtle and easily overlooked by officials but widespread and long lasting. > Houses in the suburbs often c…

> What if we allowed people to live in basically confinment cells and they have no choice as they're broke af or the gov or their companies assigns them one in a relocation program.

But they'd still have the same choice they have now. Pay more for something better. Right now their choice is to pay more, potentially sacrificing something even worse, or to be homeless. Presumably the small living space is better than homelessness, right? And if it somehow wasn't, the latter would still be available, which is what happens now.

> My gut feeling is that the social consequences would be subtle and easily overlooked by officials but widespread and long lasting.

It has the potential to do the opposite. It makes low cost housing available (even if it sucks), which provides a backstop against high rents because people won't pay an extra $3000/month just for access to a window. But then the high rents go away and with them the incentive to constrain new construction, and then we can build more apartments that actually have windows.

Then the windowless space gets converted back into storage or something as long as better housing isn't forced into scarcity, but if it is then that space goes back into service suppressing high rents.

> Yes, it's on top of the wide livable areas though.

And so is the part of the office building on the exterior where there is a window.

Re: Commercial property deals in the US are starting to pick up at deep discounts

#80

Post by jillesvangurp »

andrewflnr wrote: post #11

Can any of these be turned into residences? I'm sure there's zoning and similar nonsense, but in the real world there's also problems like having enough water hookups.

The key issue is the extend and pretend thing that is preventing fore closures on these buildings and is artificially inflating the price per square meter for office real estate. This artificial price is about as high as it is for apartment buildings. The problem of course is that this is an artificial price in a market where nobody in their right mind is going to pay those prices. The real price will have to come down for things to start moving. That will happen eventually as these buildings stay empty but it might take a while.

Once foreclosures start happening and building owners default, the debt holders end up taking ownership of property that just isn't worth as much has housing real estate anymore. It then becomes a problem for them because empty offices still cost money. They can sell the building at a steep discount or do something else with it.

It's the the price difference between office and housing prices that might make it economical to convert buildings. The issue with that of course is that housing real estate prices are also under pressure as people are no longer as eager to live close to their now empty office buildings. So, it's still a risky investment and whoever ends up owning the building would need to finance that somehow. And there are those pesky zoning rules that outright prevent this in a lot of places.

Those rules are no accident of course. Banks have an interest in keeping housing prices artificially high as well. If those prices come down, they have another debt bubble to worry about.

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