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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

#131

Post by makeitdouble »

sandworm101 wrote: post #114
makeitdouble wrote: post #27

Earlier quoted context omitted.

There might be many issues with the gap in construction standards for offices and housings. A very dumb one: windows are required for houses, where offices can get away with huge open spaces holding a central hub of indoor areas. It's still possible to convert to houses, but that makes for ridiculously small liveable areas compared to the whole floor surface. Then plumbing, evacuation paths etc. can all be solved by…

Bedrooms must have windows. That isnt "very dumb". That is based on centuries of knowledge. It is fire code. It is for comfort. It is for health. Some think it anachronistic only because few alive today have ever lived without it. But forgetting the reasons behind a rule does not make that rule unnecessary. And a rule isnt dumb simply because it decreases profit margins. All rules do.

Sorry, I didn't mean "dumb" as meaningless but as plain and basic. I enjoy my windows very much and don't wish to anyone to spend their indoor time without windows days and nights.

On the sister comment about windows on the 33th floor, those will still have a ton of benefit from an health perspective as a source of natural light (full spectrum), open view (can focus to infinity instead of a few meters away) and overall mental relief if there's no fear of height.

There's actually the same debate on access to sun, where construction code usually prohibit a taller building from 100% occulting the sun from surrounding houses.

Those could be compensated by some artificial mechanism, but would not be guaranted to work. Windows FTW.

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

#132

Post by infecto »

gedy wrote: post #129
infecto wrote: post #125

Earlier quoted context omitted.

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.

I think that takes too negative of a approach. It is simply a cultural difference. I think about China, most of the cities have pretty lax zoning...to be fair I don't know their exact regulations but its quite normal to have business in the first floor, your home above it. But people there do not generally care about personal space, same with Vietnam, nobody cares there is a welding shop right next to their house.

In the US there is generally a large desire to have a garage and some space away from your neighbors.

On top of cultural differences, I think itsj ust really hard to change existing cities without massive forces pushing it. You almost have to start fresh and even then you need a level of collaboration that is hard to get. I do think there is some change happening, I have seen new communities in Texas being build where there is central playgrounds and coffee shops being built as part of the development.

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

#133

Post by lostemptations5 »

sandworm101 wrote: post #114
makeitdouble wrote: post #27

Earlier quoted context omitted.

There might be many issues with the gap in construction standards for offices and housings. A very dumb one: windows are required for houses, where offices can get away with huge open spaces holding a central hub of indoor areas. It's still possible to convert to houses, but that makes for ridiculously small liveable areas compared to the whole floor surface. Then plumbing, evacuation paths etc. can all be solved by…

Bedrooms must have windows. That isnt "very dumb". That is based on centuries of knowledge. It is fire code. It is for comfort. It is for health. Some think it anachronistic only because few alive today have ever lived without it. But forgetting the reasons behind a rule does not make that rule unnecessary. And a rule isnt dumb simply because it decreases profit margins. All rules do.

Lots of long term rentals have no window in Asia. Sure they're small and cheap-- but no need for bedrooms to "must" have windows.

And I've lived in them and they're fine. Forever no. For a few weeks or months on a budget sure.

"Must" have windows is simply a preference people have.

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

#134

Post by makeitdouble »

AnthonyMouse wrote: post #79
makeitdouble wrote: post #69

Earlier quoted context omitted.

> 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 h…

> Right now their choice is to pay more, potentially sacrificing something even worse, or to be homeless

That logic doesn't work when the resident isn't paying the house, or not in full. A locality mandating housing is one example: if they go for the bare and cheapest minimum to fullfil an obligation for a specified number of houses, allowing for basement closets will result in more basement closets, without anyone being less homeless than they were before.

An employer providing rooms for employees is another. And there's so many more cases.

I see it the same way as minimum wages. Putting the bar too high is penalizing for everyone, but lowering it to the ground only breeds a hellscape.

> It has the potential to do the opposite.

But it's only a potential. And the other side is not hypothetical, it's what we had before the regulations, and it was bad enough that people agreed to put rules in place.

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

#135

Post by cm2187 »

infecto wrote: post #124
cm2187 wrote: post #83

Earlier quoted context omitted.

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 tr…

Surely at one point someone has to invest into the fund, you can't just buy shares on the secondary market otherwise how do they fund assets?

For ETFs, market makers are liaising with the issuer to issue and redeem as the demand fluctuates. But that only works for liquid underlying assets.

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

#136

Post by makeitdouble »

maxerickson wrote: post #113
makeitdouble wrote: post #69

Earlier quoted context omitted.

> 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…

So is your argument that we have to have bad regulation because if we don't, we might have bad regulation?

My argument is those buildings should be primarily used for something else.

Have some housing in the "good" parts, but use the rest another way.

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

#137

Post by dboreham »

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…

> Another ‘08 situation is building up.

Have they been selling synthetic REIT stock?

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

#138

Post by SamBam »

tgaj wrote: post #121
chii wrote: post #111

Earlier quoted context omitted.

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.

Ok, but still by that definition every apartment building is built by a developer. So all the beautiful buildings in Paris or Rome or wherever. So they are hardly a modern American phenomenon.

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

#139

Post by cpitman »

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.

The window is required for emergency egress, not light.

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

#140

Post by le-mark »

chiefalchemist wrote: post #130
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.

Lowering inflation, strong gdp, and strong jobs growth seems to indicate they’re doing something right. Or did I miss the point (I don’t watch fox)?
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