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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

#191

Post by chongli »

epistasis wrote: post #166
chongli wrote: post #78

Earlier quoted context omitted.

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?

The proper analogy here would be that the firefighters, despite personally opposing more fires, go out and set houses on fire because their profession requires them to do so. The entire system is set up to produce worse outcomes, and the planners are the ones constructing and enabling the system.

planners are the ones constructing and enabling the system

No, they aren't. The worst outcomes would happen regardless of whether or not planners were involved. The ones to blame are the vested stakeholders (homeowners and developers), not the planners working for the city trying to fix things.

You can see the whole thing play out (comedically) on the show Parks and Rec. Real life is just a drier, more cynical version of that story.

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

#192

Post by ugh123 »

csomar wrote: post #81
andy_ppp wrote: post #63

Earlier quoted context omitted.

Can you show me where you can get a capsule hotel for $10-13 per night? I have not seen this rate, you’d probably be looking as $25 per night minimum probably more. Most actually nice capsule hotels are a tourist attraction and are nearly as expensive as normal hotels.

Not a capsule hotel but your very own room (also Osaka not Tokyo) $9/night: https://www.booking.com/Share-IONY8u

Wow, those rooms are passable for that cheap, although clearly on the grimy side. I don't know how this place keeps from turning into a brothel.

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

#193

Post by xnx »

zer00eyz wrote: post #181
AnthonyMouse wrote: post #169

Earlier quoted context omitted.

> Total volume of water to every floor + distribution of the bathrooms (where they need to be moved in an updated floor plan) makes these sorts of change overs prohibitively expensive. You say "prohibitively expensive" while ignoring both of the alternatives where it isn't. The first is dorm-style housing with shared bathrooms, and then you put the bathrooms where they are right now. The second is upscale housing, an…

> The first is dorm-style housing with shared bathrooms, and then you put the bathrooms where they are right now. No one wants to live like this. > The second is upscale housing, and then you invest in the conversion because you're targeting tenants who can pay. But they have to want to live there. Creating high end housing can be a challenge. > Either of these at scale increases the housing supply and thereby lowers…

> No one wants to live like this.

People (often recent graduates) pay a lot of money to live like this in NYC. The right price makes up for a lot of other deficiencies.

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

#194

Post by AnthonyMouse »

zer00eyz wrote: post #181
AnthonyMouse wrote: post #169

Earlier quoted context omitted.

> Total volume of water to every floor + distribution of the bathrooms (where they need to be moved in an updated floor plan) makes these sorts of change overs prohibitively expensive. You say "prohibitively expensive" while ignoring both of the alternatives where it isn't. The first is dorm-style housing with shared bathrooms, and then you put the bathrooms where they are right now. The second is upscale housing, an…

> The first is dorm-style housing with shared bathrooms, and then you put the bathrooms where they are right now. No one wants to live like this. > The second is upscale housing, and then you invest in the conversion because you're targeting tenants who can pay. But they have to want to live there. Creating high end housing can be a challenge. > Either of these at scale increases the housing supply and thereby lowers…

> No one wants to live like this.

There is generally not a law requiring college students to live in dorms. They can go and rent an apartment off campus. Why do they choose to do it?

> But they have to want to live there. Creating high end housing can be a challenge.

That doesn't require you to prohibit someone from trying.

> Supply isnt at issue.

The measure of whether supply is an issue is the size of rents. If rents are high, supply is low relative to demand.

> The demographics of Air BnB and empty investments in the US is appalling.

There is nothing wrong with Air BnB if you don't have artificial constrains on increasing supply. And the reason speculators hold empty units is the expectation that prices will increase, which is due to the expectation that supply will remain constrained as the population increases, which would be alleviated in short order through the adoption of policies that can reasonably be expected to relieve supply constraints by allowing new construction.

> see NYC real estate not getting updates due to rent control

In other words rent control is a terrible policy that constrains supply, which is one of the rare issues where there is broad consensus among economists.

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

#195

Post by xenadu02 »

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…

Conversions are only possible one way and tend to be permanent.

Industrial -> Commercial -> Residential.

Industrial equipment is heavy and needs much more reinforcement of the floor plates and columns. You can convert an old factory to lofts but not the other way around (lofts to factory is basically rebuilding the building inside the existing shell... much cheaper to knock it down and start over).

Commercial has vastly different plumbing, electrical, and ventilation requirements. Residential wants more natural light so you tend not to get the kind of profitable open floor plates you need in commercial. And generally commercial is over-supplied with electric but vastly under-supplied with water/sewer for residential needs. Once a commercial building is converted to apartments it doesn't go back - with the exception of very small commercial like a doctor's office taking over a house or similar.

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

#196

Post by evanelias »

ethagknight wrote: post #178
lukas099 wrote: post #43

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

Before you get too far down this road, remember that the REIT's slice of the ownership is second or even third to a lender, and said lender may be just about to take that property back from the equity holders, wiping out your investment.

As an alternative to a REIT, any thoughts on TIAA's Real Estate Account [1]? It seemed like a popular retirement investment choice when I worked in higher education. (IIRC it's only available in retirement accounts and only for employees of nonprofits, education sector, etc.)

If I understand correctly, they mostly invest directly in commercial real estate, and they keep their LTV ratio quite low (20%). I'm curious about how it might perform during a plummeting market for office space... perhaps it'll drop but not as badly as REITs?

[1] https://www.tiaa.org/public/retire/financial-products/annuit...

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

#197

Post by Scoundreller »

fmobus wrote: post #96
Scoundreller wrote: post #71

Earlier quoted context omitted.

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.

Soundproof windows are the norm in Germany for modern buildings and are a ducking godsend. Mine are so good I can't even hear the rain unless it's a full-on storm. Also, outside curtains are pretty good at blocking light. To the point I had to hack mine to open on sunset to ensure I wake up.

My beef is that windows are usually pretty good, but sliding doors to a balcony are garbage.

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

#198

Post by AnthonyMouse »

mschuster91 wrote: post #184
AnthonyMouse wrote: post #168

Earlier quoted context omitted.

Let's suppose that we hypothetically make affordable, quality housing available. Then we still don't need rules prohibiting lower quality housing because nobody will choose it when higher quality housing is affordable, right? The exception would be people who don't care, e.g. someone who works nights and doesn't want daylight in the place where they sleep while they're trying to sleep, and then all you're doing is de…

> The exception would be people who don't care, e.g. someone who works nights and doesn't want daylight in the place where they sleep while they're trying to sleep, and then all you're doing is depriving them of an opportunity to save money through their own circumstances. Roller shutters, nothing easier than that. These things are standard in Germany. > The only reason a poor person in ordinary circumstances would c…

> Roller shutters, nothing easier than that. These things are standard in Germany.

The problem is not that they can't figure out how to cover the window, the problem is that you're forcing them to pay extra for the window they're only going to cover up.

> The problem is slumlords.

Slumlords exist because housing supply is constrained. If good housing was affordable, nobody would take a trivial discount to live in a slum.

> Allowing usage of unfit rooms (i.e. no/small windows, basement rooms) for permanent living once makes it very hard to force landlords to upgrade these rooms or condemn them later on

The key is to force them through competition rather than zoning. Nobody wants to live in a crappy apartment but they will if it's the only thing available to them. Make something better affordable and the owner of the crappy apartment would have to improve it to find a tenant.

> Rooms without windows to escape are deadly fire traps, and basement rooms can be just as deadly (or at least destructive) in floods.

Rooms don't have to have windows to have fire exits. "Floods can destroy your stuff" hasn't prevented every suburban homeowner from keeping stuff in their basement, and it's not obvious how that's even relevant to residential tenants keeping their stuff in the interior section of an above-ground floor of a formerly commercial building.

> Whatever we create now will most likely outlive us, so we better do it right now instead of just kicking the can down the road for the next decades!

Buildings last a long time. What you use them for can change in a week. If you turn a commercial building into low-cost apartments during a housing shortage and then you later resolve the housing shortage by building higher quality apartments, you can turn it back into a commercial building, or whatever else is needed at the time.

The problem is when you're prohibited from converting it to the use which is currently in demand, and then rents are high and people are screwed because you took away a bad option and only left a worse one.

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

#199

Post by dexterdog »

AnthonyMouse wrote: post #52
dexterdog wrote: post #24

Earlier quoted context omitted.

The problem is that those regulations are written by people who have vested interests in keeping the supply of residential real estate where it is.

Right, and the solution is to have them written by someone else, e.g. at the state rather than local level.

Do you think those same people don't have the same kind of influence at the state level? If anything they have even more.

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

#200

Post by Retric »

sandworm101 wrote: post #188
Larrikin wrote: post #165

Earlier quoted context omitted.

This isn't a rule everywhere. I have the largest and most windows I've ever had in an apartment and my bedroom is in the interior. I actually find it nice, no need for black out curtains, I can easily nap during the day. My apartment is fitted with multiple sprinklers, which I assume gets it up to code.

Nor are fire escapes and sprinklers mandatory everywhere. Each local has its own standards but nobody should ever argue for a race to the bottom, that because some area doesn't do X that another area should follow that example just to lower costs.

As long as you maintain safety, more options aren’t a race to the bottom. People take cruise vacations on indoor cabins without windows demonstrating it isn’t a problem for a significant percentage of the population.
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