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Work from home and the office real estate apocalypse

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Re: Work from home and the office real estate apocalypse

#261

Post by DougN7 »

asimpleusecase wrote: post #85

This has an impact not just in rents for office buildings but the entire ecosystem of support businesses that sell to workers who come into city centre to work. One example. Small organic food shop, that sold mostly to office workers and has seen a 70% drop in foot traffic. The same thing hits bars, cafes, restaurants, theatres and other venues. Those very things that make living near or in a city interesting for man…

Is this true? Won’t the businesses go where the people are? So more organic shops and cafes in the suburbs? Or if the office building is turned into housing, all the people would be back again, and not just from 9-5, so the businesses would follow, right?

Re: Work from home and the office real estate apocalypse

#262

Post by MichaelZuo »

lmm wrote: post #260
MichaelZuo wrote: post #259

Earlier quoted context omitted.

You were not carefully reading. Land costs are different from construction costs. EDIT: And in any case there is no real benefit for the city council to stop upzoning at mid-rises only. If they’re expending the political capital to upzone they have every reason to go all the way.

Land costs are a sunk cost as I said. If it's too expensive to build skyscrapers then it will make sense to build midrise. If it's not too expensive to build skyscrapers then it will make sense to build skyscrapers. There's no scenario where "it's upzoned so we'd better leave it empty instead of building midrise" makes any kind of sense.

Since when are land costs 'sunk costs'? Do you imagine land owners can't sell their land to a higher bidder? I'm talking about Canada and the U.S. here, not about countries which prohibits private land sales without prior government approval.

Re: Work from home and the office real estate apocalypse

#263

Post by lmm »

MichaelZuo wrote: post #262
lmm wrote: post #260

Earlier quoted context omitted.

Land costs are a sunk cost as I said. If it's too expensive to build skyscrapers then it will make sense to build midrise. If it's not too expensive to build skyscrapers then it will make sense to build skyscrapers. There's no scenario where "it's upzoned so we'd better leave it empty instead of building midrise" makes any kind of sense.

Since when are land costs 'sunk costs'? Do you imagine land owners can't sell their land to a higher bidder? I'm talking about Canada and the U.S. here, not about countries which prohibits private land sales without prior government approval.

If you paid high pre-recession prices for land whose value has now dropped, that money is sunk; refusing to build a moderate-price building (appropriate to the land's current value) on the land because the land is "too expensive" (in terms of the price you originally paid) is cutting your nose off to spite your face.

Re: Work from home and the office real estate apocalypse

#264

Post by MichaelZuo »

lmm wrote: post #263
MichaelZuo wrote: post #262

Earlier quoted context omitted.

Since when are land costs 'sunk costs'? Do you imagine land owners can't sell their land to a higher bidder? I'm talking about Canada and the U.S. here, not about countries which prohibits private land sales without prior government approval.

If you paid high pre-recession prices for land whose value has now dropped, that money is sunk; refusing to build a moderate-price building (appropriate to the land's current value) on the land because the land is "too expensive" (in terms of the price you originally paid) is cutting your nose off to spite your face.

Huh? Land value has at least doubled everywhere I know of in the U.S and Canada since 2009.

In which municipality has land value declined since 2009?

And even if so, why does that mean they are forced to build anything? They can just keep it vacant and pay a much lower property tax, some folks just don't want to go through hassles even if it's somewhat less efficient.

Re: Work from home and the office real estate apocalypse

#265

Post by beardedwizard »

dougmwne wrote: post #225
beardedwizard wrote: post #205

Earlier quoted context omitted.

These characteristics are not true for most large cities. San Francisco for example suffers none of this.

Yeah, I used to work on Market Street and SF is exactly like this.

So a single block represents the entire city? What about the thousands of other businesses that remain open and within walking distance?

Re: Work from home and the office real estate apocalypse

#266

Post by lmm »

MichaelZuo wrote: post #264
lmm wrote: post #263

Earlier quoted context omitted.

If you paid high pre-recession prices for land whose value has now dropped, that money is sunk; refusing to build a moderate-price building (appropriate to the land's current value) on the land because the land is "too expensive" (in terms of the price you originally paid) is cutting your nose off to spite your face.

Huh? Land value has at least doubled everywhere I know of in the U.S and Canada since 2009. In which municipality has land value declined since 2009? And even if so, why does that mean they are forced to build anything? They can just keep it vacant and pay a much lower property tax, some folks just don't want to go through hassles even if it's somewhat less efficient.

If land value hasn't declined then what on earth would be the logic of leaving it vacant? If you're not doing anything with it then just sell it. I don't even get what you're arguing at this point.

Re: Work from home and the office real estate apocalypse

#267

Post by MichaelZuo »

lmm wrote: post #266
MichaelZuo wrote: post #264

Earlier quoted context omitted.

Huh? Land value has at least doubled everywhere I know of in the U.S and Canada since 2009. In which municipality has land value declined since 2009? And even if so, why does that mean they are forced to build anything? They can just keep it vacant and pay a much lower property tax, some folks just don't want to go through hassles even if it's somewhat less efficient.

If land value hasn't declined then what on earth would be the logic of leaving it vacant? If you're not doing anything with it then just sell it. I don't even get what you're arguing at this point.

Some people want to own bare land? You were the one who brought up the issue of vacancy.

Re: Work from home and the office real estate apocalypse

#268

Post by lmm »

MichaelZuo wrote: post #267
lmm wrote: post #266

Earlier quoted context omitted.

If land value hasn't declined then what on earth would be the logic of leaving it vacant? If you're not doing anything with it then just sell it. I don't even get what you're arguing at this point.

Some people want to own bare land? You were the one who brought up the issue of vacancy.

> In that case land acquisition costs make it too pricy since attractive downtown plots in a big city like Toronto are easily hundreds of millions per acre. Because they are zoned for 40+ story buildings. And why would any land owner seek to zone for less than the maximal allowance?

> If you mean forced downgrading of the zoning or replacing existing suburbia with mid density developments, or subsidizing mid density as opposed to suburbia, that’s an entirely political conversation since the roadblock is zoning laws and the legislature.

You appeared to be claiming that land will be left vacant in the absence of political changes (with the frankly bizarre suggestion that land needs to be downzoned to encouraged more building). If that wasn't what you were claiming then what were you claiming?

Re: Work from home and the office real estate apocalypse

#269

Post by MichaelZuo »

lmm wrote: post #268
MichaelZuo wrote: post #267

Earlier quoted context omitted.

Some people want to own bare land? You were the one who brought up the issue of vacancy.

> In that case land acquisition costs make it too pricy since attractive downtown plots in a big city like Toronto are easily hundreds of millions per acre. Because they are zoned for 40+ story buildings. And why would any land owner seek to zone for less than the maximal allowance? > If you mean forced downgrading of the zoning or replacing existing suburbia with mid density developments, or subsidizing mid density…

You need to understand the fact that many are willing to own bare land and put it to its less than theoretically optimal usage. In fact they will fight against attempts to develop it.

It's called land banking if you haven't heard of it before.

I'm not sure how any of your comment follows.

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