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

bloomberg.com

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

#121

Post by tgaj »

chii wrote: post #111
breather wrote: post #56

Earlier quoted context omitted.

Again, american cities are a small fraction of the world.

So other than naturally formed caves, everything else is built by, you guessed it, developers. It's just an umberalla term - you might call it builders in some other parts of the world.

It could be a problem of a definition. In my country, a "developer" is someone who constructs buildings not for himself but to sell them to others. If I build a house for myself, then I am not a "developer". The difference is that "developers" only care about profit. For example, I wouldn't want to antagonize future neighbors, but the "developer" doesn't care about that.

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

#122

Post by adrianN »

ryandrake wrote: post #105
thereisnospork wrote: post #92

Earlier quoted context omitted.

The problem with the argument is that capsule apartments aren't the bottom - living on the street is. So as a society we've skipped right past bad to horrid while clapping ourselves on the back as if we're doing the 'undesirables' a favor. Abhorrent.

If capsule housing or cramped tenements were allowed, economics would push already-housed people down into them, rather than raise unhoused people up into them. Everything is a race to the bottom. For example, let’s say the worst homes in your area legally allowed to be occupied are currently renting for $500/mo. Now capsule housing suddenly becomes legal. They’re not going to magically cost less. Landlords already k…

Presumably supply would rise and competition would lower rents instead of raising them.

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

#123

Post by hackerlight »

candiodari wrote: post #112
hackerlight wrote: post #107

Earlier quoted context omitted.

Your conclusion rests on a likely false assumption that things remain expensive in a world where more housing isn't illegal. If capsule (and indeed, all) housing is no longer illegal, the price of everything falls. Regular one-bedroom unit rental will become affordable for the majority of people, so there will be no desire to downgrade to a capsule home. This is not Hong Kong where land is so scarce that even buildin…

Yeah, sorry, but this argument totally stops making sense when you consider: 1) safety: obviously people would not be safe in capsule hotels. This cannot be changed, and would fundamentally alter society if it became popular 2) It applies to other forms of safety. Collapse safety? Why? It's cheaper without (and the state will have to pay most damages anyway). Medical safety (e.g. anti-mold regulation)? Why? Such a po…

I was talking purely about the economics, challenging the idea that rent would remain unchanged, and so everyone would want to downgrade to a capsule dwelling. This is not true. Rents will go down, and a lot of people that can't currently afford a 1 bedroom unit will now be able to afford one.

As a matter of policy, I am in favor of safety regulations. If that makes capsule dwellings illegal then so be it. We can solve the housing crisis without resorting to capsule dwellings.

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

#124

Post by infecto »

cm2187 wrote: post #83
lukas099 wrote: post #43

If someone wanted to take a diversified, low-cost position in office reits, what would one buy?

I don't know if REIT aggressively remark the value of their property to adverse market conditions. I would watch how much they marked down their assets otherwise you might buy at a very overinflated value.

I might be mistaken but I thought it was the inverse. REITs that trade on the public market would have pricing that reflects the market opinion regardless of how the books are marked.

The issue in general with RE is that you would be marking your books based on comps and the mark downs will lag the market. Not investment advice but sometime in the past year to now is when you would want to be investing in publicly traded REITs if you thought there was going to be a rebound.

Private funds like a Fundrise are the ones where their marks are going to be lagging the market as its purely on book value.

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

#125

Post by infecto »

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 always keep hearing this but I have rarely seen it in practice. Yes I have seen a handful of examples where a mall was transformed into apartments on the second floor. Or maybe a historic building was turned into luxury lofts but I suspect for the vast majority of buildings, its cheaper to tear it down and repurpose it.

Now, I do have an appreciation for Japan's mixed use zoning but I suspect that has as much to do with the culture of honor/not being a dick as it does with mixed use zoning. I do think things can be relaxed in the US.

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

#126

Post by infecto »

xyst wrote: post #91

> The magnitude of the crisis is up for debate. Treasury Secretary Janet Yellen said last week that losses in commercial real estate are a worry, but that the situation is “manageable,” a similar sentiment expressed by Fed Chair Jerome Powell in a 60 Minutes interview on Feb. 4. Others have more dire outlooks, with real estate investor Barry Sternlicht predicting $1 trillion in office losses. Fuck man. Another ‘08 si…

Hard to trust a talking head investor who is just advancing his position/holdings.

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

#127

Post by badcppdev »

The language used is funny... "deep discount" implies that the "real" or long term price is higher than the purchase price.

Would "US Commercial property market plummets" be accurate? And obviously avoided by Bloomberg? I guess the question is what percentage of the properties currently changing hands are forced sales due to financing issues?

Edit: And I've just realised that actually the Bloomberg article has a title: "The Brutal Reality of Plunging Office Values Is Here" And a url slug, "real-estate-lenders-confront-falling-us-commercial-property-prices". So apologies to Bloomberg

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

#128

Post by digdugdirk »

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…

In that case, I'd like to introduce you to Houston, Texas.

The only city in the US without zoning laws, and historically known as a bastion of livability.

... If you're a car.

https://www.econlib.org/the-city-without-zoning-ready/

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

#129

Post by gedy »

infecto wrote: post #125
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 always keep hearing this but I have rarely seen it in practice. Yes I have seen a handful of examples where a mall was transformed into apartments on the second floor. Or maybe a historic building was turned into luxury lofts but I suspect for the vast majority of buildings, its cheaper to tear it down and repurpose it. Now, I do have an appreciation for Japan's mixed use zoning but I suspect that has as much to do…

> I suspect that has as much to do with the culture of honor/not being a dick as it does with mixed use zoning.

Yes true, and many people gloss over the issue of lawsuits - the US has a "lawsuit happy" culture that make many things very expensive.

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

#130

Post by chiefalchemist »

badcppdev wrote: post #127

The language used is funny... "deep discount" implies that the "real" or long term price is higher than the purchase price. Would "US Commercial property market plummets" be accurate? And obviously avoided by Bloomberg? I guess the question is what percentage of the properties currently changing hands are forced sales due to financing issues? Edit: And I've just realised that actually the Bloomberg article has a titl…

If only they (read: banks and local govs) had financed the construction of more residential, and less commercial the system would be more in balance.

As it is, there's a lack of residential supply, and an over supply of commercial.

That said, the Fed's addiction to cheap money and other tricks to keep the economy propped up didn't help either.And now we're in a muck and paying for their missteps.

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