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Office Vacancy Rate in San Francisco Just Hit a New High

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Re: Office Vacancy Rate in San Francisco Just Hit a New High

#31

Post by julianeon »

mortenjorck wrote: post #27

Much as I would like the opposite to be true, it's good to see the reality check at the bottom: > And once again, while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to…

People said that before and it was true before - office space truly was more profitable - but now things have changed. Drastically.

So things that would've been conventional wisdom for 100 years, that were true for each generation, have suddenly stopped being true.

When people say 'no residential' I would say: what's your alternative?

Office space - obviously failing, why we're having this discussion.

Restaurant/coffeeshop/cafe space - nope, too much of it. Not viable.

The only option left is residential.

To be clear, if someone can come up with a better option in 2022 than residential, I'm happy to say I was wrong. But what it is? I just covered the possibilities. There's nothing else.

There's only one thing that can happen, at this point: landlords can keep their spaces unrented. Or they can convert them to residential. There is no third possibility. That's all there is.

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#32

Post by mortenjorck »

jedberg wrote: post #13

Not a surprise there. I was talking to a CEO friend of mine whose company had just leased a huge office right before the pandemic for five years. They closed all their small offices around town and moved everyone early during the pandemic, which means most people have never seen the new building. Their stuff is just in boxes on desks. They can't get out of the lease early, so for now the leadership shows up once a we…

> They wanted to build 3M square feet of office space, but now they probably won't do that, which is a big win for the community who wants it to be retail or housing and not offices.

This is the real point of opportunity. Rather than the well-meaning but economically unviable push to convert office buildings into housing, the most attainable goal right now is to prevent new offices from being built and build housing on that land instead.

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#33

Post by tomtheelder »

mortenjorck wrote: post #27

Much as I would like the opposite to be true, it's good to see the reality check at the bottom: > And once again, while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to…

It's for sure a limited opportunity for now, but the bottom still hasn't properly fallen out of the market for office space IMO, and I think many owners are still clinging to hope that their investments aren't completely trashed. Also if vacancy rates keep rising, at some point the city will probably look to institute an office -> residence conversion program. Empty offices are good for no one.

But it's really hard to say how this plays out. Time will tell.

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#34

Post by dml2135 »

ghaff wrote: post #21
randycupertino wrote: post #2

Will be interesting to see changes taking place in urban planning as the new era of working from home begins to effect the urban center and suburban areas moving forward. I've noticed it in the lunch spots in my suburban town- all way more crowded than they used to be and went through a transition period where they had to get used to the new volume. Feels like a new era of some big changes in relation to city plannin…

On the other hand, the few times I've gone into Boston or Cambridge during the week, rush hour traffic is as bad as it's ever been as far as I can tell. It's really hard for me to square the evidence of my eyes with narratives about city offices emptying out. Perhaps it's a rather uneven phenomenon.

Fewer people are going into the office, but a higher percentage of those that are going in are driving instead of taking mass transit.

The level of traffic remains the same because the biggest incentive against driving is the traffic. Therefore, the traffic will always remain at the highest tolerable level, unless additional disincentives (such as congestion pricing) are introduced. This is commonly known as induced demand.

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#35

Post by kridsdale2 »

jedberg wrote: post #13

Not a surprise there. I was talking to a CEO friend of mine whose company had just leased a huge office right before the pandemic for five years. They closed all their small offices around town and moved everyone early during the pandemic, which means most people have never seen the new building. Their stuff is just in boxes on desks. They can't get out of the lease early, so for now the leadership shows up once a we…

Did they finally close the AMC in that zombie hellscape?

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#36

Post by pkulak »

gkoberger wrote: post #17

It's only going to get worse. Most companies are in the middle of 5- or 10-year leases, and aren't going to renew. With this in mind, it still shocks me how the building managers in SF I work with have just gotten worse. They're bitter and mean and have made things so much harder for us (rather than being kinder and doing everything they can to retain us). My point is that it's not nearly as bad as it's going to be,…

All the "loft" apartments that everyone used to love were converted industrial, if I remember right. I'm hoping this all leads to some new kind of housing term that isn't normal residential (it's nearly impossible to turn office space into "normal" residential), but is also perfectly fine to call home. If artists and creatives scooped up the brand-new, below market housing in inner cities again, that would be perfect.

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#37

Post by anigbrowl »

WalterBright wrote: post #19
hedora wrote: post #12

Earlier quoted context omitted.

I don't think there is a fundamental reason for that. Office buildings are designed to be reconfigured. I guess you'd need to rip out + replace the plumbing + HVAC (or only put in a few ultra-luxury units per floor).

Office buildings tend to have all their plumbing centrally located. Converting to residential means spreading it all around. It's not like just moving partitions around.

Sprinkler systems tend to be evenly distributed around floors so the conduits etc. to run additional piping are already in place. Not every building has such systems but most constructed after 1980 do.

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#38

Post by [deleted] »

mortenjorck wrote: post #27

Much as I would like the opposite to be true, it's good to see the reality check at the bottom: > And once again, while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to…

[deleted]

Re: Office Vacancy Rate in San Francisco Just Hit a New High

#40

Post by thechao »

mortenjorck wrote: post #27

Much as I would like the opposite to be true, it's good to see the reality check at the bottom: > And once again, while tempting to see or promote an opportunity to convert all the vacant office space into housing in a response to San Francisco’s housing woes, the conversion of existing office space to residential use currently makes no economic sense for the vast majority of downtown San Francisco buildings, due to…

I'm trying to imagine how you refit plumbing and elevators on a commercial building.

The office building we have at work has 6 toilets per floor, and each floor is probably 50,000 sqft. If you replaced that with residential, you'd end up with, like, 70 toilets per floor, plus 50 showers, 70+ sinks, ... I mean holy crap. There's only three elevators. That'd probably work? Maybe?

Plenty of parking, though.

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