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San Francisco braces for commercial real estate crash

sfstandard.com

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Re: San Francisco braces for commercial real estate crash

#101

Post by Longlius »

rapind wrote: post #78
ethbr0 wrote: post #19

Earlier quoted context omitted.

Maybe SF should relax the legal requirements of residential space, then? If they choose not to build sufficient housing... they can at least choose to use what they have. A windowless room with a community bathroom doesn't sound appealing, but at a certain price point it's better than nothing.

> A windowless room with a community bathroom doesn't sound appealing, but at a certain price point it's better than nothing. You make this legal and tomorrow every RE developer stops putting in windows.

Then put restrictions on it - pass a law that allows you to convert commercial to residential during X number of years and for that converted commercial to have slightly laxer requirements than standard residential housing. Don't allow new residential construction to skirt the regulations and put a time limit on the law to keep property developers from simply building commercial with the off-chance of being able to convert it to residential if the market for commercial real estate doesn't rebound.

Re: San Francisco braces for commercial real estate crash

#102

Post by asveikau »

bragr wrote: post #2

Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps…

During the summer I heard a KQED segment of some prominent examples of this from SF and why it's very expensive to do, rare to be able to pull off. Maybe it was this one: https://www.kqed.org/forum/2010101889483/what-would-it-take-...

Just to pick one example out of a hat, the discussion of elevators was one that made an impression on me. They said the allocation of elevators for residential vs office space is very different, and in some SF examples they had to put in entirely new elevators and staircases.

Seems there's lots of these things you wouldn't think about unless you're in that industry...

Re: San Francisco braces for commercial real estate crash

#103

Post by SoftTalker »

mancerayder wrote: post #49
yodon wrote: post #21

Earlier quoted context omitted.

Modern office buildings only have plumbing available in the center of the building. The flooring is designed to function as a highly efficient membrane. If you start punching holes in the flooring to place plumbing and toilets away from the central core you weaken the floor membrane to the point where it loses the required structural integrity. If you try to build raised flooring to provide space for the plumbing the…

I see plumbing exposed in the ceiling in some of the cool fancy new lofts that were converted from offices (in NYC).

Yeah but your ceiling is the next level's floor. If drilling a 4" hole in the floor/ceiling to accomodate a toilet drain is too damaging to the structural integrity (not sure I believe that, but I'm not an engineer) then it's a non-starter.

Maybe you could build the bathrooms and kitchens along partition walls that have space behind them, so pipes could run above the floor, between walls, to the building core where all the main plumbing was designed to be.

Re: San Francisco braces for commercial real estate crash

#104

Post by cellis »

ceeplusplus wrote: post #67
CTmystery wrote: post #27

Earlier quoted context omitted.

> but the government ... is absolutely malevolent towards businesses. How so?

Gross receipts tax of 0.69% plus 1.5% payroll tax [1]. $20,000 trash cans [2] and arcane permitting processes for brick and mortar businesses. The city's leadership has their head so far up their ass about going after rich techies that they proposed a tax which was intended to target Amazon, but was so poorly written that they asked to retract it off the ballot because Amazon wasn't subject to the tax but small busin…

Not to mention allowing camping and undesirability, and property crime like smashed windows and stolen bikes, open air drug use, just to name a few. Source - lived in East Bay, worked in SF for almost a decade.

Re: San Francisco braces for commercial real estate crash

#105

Post by UnpossibleJim »

ethbr0 wrote: post #19
ptmcc wrote: post #8

Earlier quoted context omitted.

Most offices have physical layouts that make conversion to residential difficult to impossible. Big things like lots of interior square footage without windows and plumbing only to a few central locations. And while some or even most of this is fixable, major renovations are a ton of cost and effort to convert them to something that will still be expensive and weird, if even possible to meet the legal requirements of…

Maybe SF should relax the legal requirements of residential space, then? If they choose not to build sufficient housing... they can at least choose to use what they have. A windowless room with a community bathroom doesn't sound appealing, but at a certain price point it's better than nothing.

Given that we spend at least 8 hours a day working in these places, working, is anyone surprised at the resistance to return to the office? It's "basically unlivable" but ok to toil in for a third of your living day in (minus the traffic)... I'm sure I'll face a lot of backlash for placing the argument in this framing, but I think more than a few people feel this way.

Re: San Francisco braces for commercial real estate crash

#106

Post by cronix »

ptmcc wrote: post #8
bragr wrote: post #2

Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps…

Most offices have physical layouts that make conversion to residential difficult to impossible. Big things like lots of interior square footage without windows and plumbing only to a few central locations. And while some or even most of this is fixable, major renovations are a ton of cost and effort to convert them to something that will still be expensive and weird, if even possible to meet the legal requirements of…

Sounds better than living in a tent on the street.

Re: San Francisco braces for commercial real estate crash

#108

Post by adam_arthur »

sharklazer wrote: post #53
ptmcc wrote: post #32

Earlier quoted context omitted.

But that is also key to the problem: the cost to convert these buildings is already prohibitively expensive, and converting them into dormitories cannot possibly recoup the cost. It's like how sometimes it just doesn't make sense to refactor code because it is fundamentally designed for a different purpose. Sure you can grind it out but will it be any better or cheaper than starting fresh?

Even bigger, most of the buildings are highly leveraged. There literally is no incentive unless the mortgages can be restructured, as the ultimate prices will be forwarded to the renter. Everyone’s underwater a there isn’t a good solution without massive price decrease (crash) or commercial space demand re-invigorates.

It's called default and foreclosure, followed by liquidation by the lender.

The mortgages will fail for most new office space, because the underwriting used unrealistic assumptions about rents.

Re: San Francisco braces for commercial real estate crash

#109

Post by bearjaws »

As much as this is going to hurt, it needed to happen. Prime realestate has resulted in square footage being more valuable than peoples time. Worse so, not renting out that 'square footage' can also be valuable by driving down supply.

This is a toxic cycle that produces nothing for society other than big numbers going up. America needs to eliminate rent seeking entirely, its toxic and prevents businesses from forming if they have the audacity to require space...

My only hope is we don't bail out these cancerous REIT groups and let them burn to the ground, even if it takes my 401k with it.

Re: San Francisco braces for commercial real estate crash

#110

Post by somethoughts »

fshbbdssbbgdd wrote: post #26
ptmcc wrote: post #8

Earlier quoted context omitted.

Most offices have physical layouts that make conversion to residential difficult to impossible. Big things like lots of interior square footage without windows and plumbing only to a few central locations. And while some or even most of this is fixable, major renovations are a ton of cost and effort to convert them to something that will still be expensive and weird, if even possible to meet the legal requirements of…

Can they be converted into huge units with an open floor plan and bathroom/kitchen near the center? If someone can figure out how to make it look cool, office conversions could be the 2020s version of the warehouse loft.

Half jokingly - I wonder if that is what sorta is in the works with Adam Neumann's latest project - Flow. Definitely seems similar to how the original WeWork offices were started - transforming unused loft safe into high end but communal office space. It'd probably be more like an extended stay hotel (just rooms on most floors) with a common restaurant.

https://www.forbes.com/sites/davidjeans/2022/08/17/adam-neum...

"When Adam Neumann revealed his new venture to WeWork-ify the residential real estate sector Monday, backed by a $350 million≥."

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