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Nearly 12M Square Feet of Vacant Office Space in S.F

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Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#351

Post by DevX101 »

hogFeast wrote: post #37
sebmellen wrote: post #2

A close relative of mine is a top real estate appraiser based in San Francisco, and she's terrified about what happens in Q2 2021, when leases will start terminating en masse. She's had a call with the St. Louis Fed, as they're trying to get an idea of what this will look like. She thinks it will be a bloodbath, and deal a death blow to corporate real estate (and other capital markets by extension).

This has happened every few years in corporate real estate for the past half century (Sam Zell's biography is a good take). Every. Single. Time. Valuations too high. Debt too high. Equity too low. I am pretty cynical because I have read a bit too much history and seen this so many times working in investment management but...so what? Some rich people lose a ton of money...okay? Capitalism has losers. You lose. Also,…

This time it really might be different. COVID seems to be leading to structural changes in the demand for commercial real estate.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#352

Post by Swizec »

solidsnack9000 wrote: post #338
Swizec wrote: post #219

Earlier quoted context omitted.

As someone who moved from a large small city (300k residents, 100k students, 300k daily commuters) to San Francisco ... yeah the density is totally worth it. Back home we had restaurants and cuisine and all that. It wasn’t a wasteland. But SF has more high quality restaurants within a 20min walk of my apartment than my hometown had in total. Average restaurant quality is higher too. Just because there’s more competit…

I fear this is exaggeration. San Francisco has a few nice restaurants; but many, more affordable cities do just as well or better. The problem facing SF restaurants is the economics: it's so difficult to afford a place to live there, that kitchen staff definitely can not afford to do it. Combined with the relatively poor access story -- it's surrounded on 3 sides by water -- it means the core staffers have to be recr…

You’re right what counts as “nice restaurant” depends a lot on perspective.

So here’s some perspective: My entire home country has 6 Michelin star restaurants. Of those, 1 is in the capital which is the home town I’m comparing above.

SF has 7 restaurants with 3 stars.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#353

Post by pbourke »

jtbayly wrote: post #231
reaperducer wrote: post #196

Earlier quoted context omitted.

Developers in Chicago are building as fast as they can right now. It's counterintuitive to people on the outside, but from what I read, it's because labor, material, and capital are dirt cheap. So the developers are putting up new skyscrapers and other mega-developments so they're in a good position to take advantage of the recovery. A new 57-story office tower opened just last week: https://www.chicagoarchitecture.o…

I was under the impression that building materials are very expensive right now.

Money is cheap now.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#354

Post by cft »

sebmellen wrote: post #12
OpticalWindows wrote: post #5

We haven't even seen the extent of the depression yet. Combined with congressional inaction on social spending a lot of people are going to be in very deep finanical issues. This is a systemic problem that we needed fixed 3 months ago.

The lack of continued large-scale stimulus is tragic. We need a strong stimulus package with direct monetary relief (one $1200 check is not enough), and a program of structured financial relief / rent forgiveness. Unfortunately, I don't see it happening.

The response to such stimulus will likely be inflation.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#355

Post by pbourke »

fred_is_fred wrote: post #311
sebmellen wrote: post #2

A close relative of mine is a top real estate appraiser based in San Francisco, and she's terrified about what happens in Q2 2021, when leases will start terminating en masse. She's had a call with the St. Louis Fed, as they're trying to get an idea of what this will look like. She thinks it will be a bloodbath, and deal a death blow to corporate real estate (and other capital markets by extension).

Oh relax. They're not going to implode the buildings and nobody is going too die. Rents will fall, some bond holders will default, but at some cost point that real estate has value to someone. Rents are not going to zero.

Basically this. Lots of people leave. Lots of companies go fully remote or are wound up. Lots more people and companies get more bang for their buck in the real estate market. Some real estate businesses tank. The market finds a clearing price.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#356

Post by mariojv »

jtbayly wrote: post #231
reaperducer wrote: post #196

Earlier quoted context omitted.

Developers in Chicago are building as fast as they can right now. It's counterintuitive to people on the outside, but from what I read, it's because labor, material, and capital are dirt cheap. So the developers are putting up new skyscrapers and other mega-developments so they're in a good position to take advantage of the recovery. A new 57-story office tower opened just last week: https://www.chicagoarchitecture.o…

I was under the impression that building materials are very expensive right now.

Absolutely. Check out the price of lumber: https://www.bloomberg.com/news/articles/2020-08-07/timber-to...

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#357

Post by postalrat »

albacur wrote: post #91

I'm excited by the idea of permanent remote work and moving somewhere more affordable. I moved to SF relatively late in my career, and only realized afterwards that I have nowhere near enough savings to own a nice home here. But most of my coworkers seem eager to return to the office. They miss the office environment, the perks and catered meals, and the socialization. And the managers, who subsist on meetings and in…

I feel working from home is convenient but will never be fun like working in an office can be.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#358

Post by paul_f »

thatguy0900 wrote: post #349
paul_f wrote: post #283

Earlier quoted context omitted.

Proposition 47 essentially decriminalized shoplifting. Californians literally voted for this petty crime wave. As a Florida resident, all I can say is, y'all have fun with that

When I read about them moving to states like Texas in numbers, all I can think is that they will inevitably try to take these same policies with them when they find out wherever they moved too isn't quite liberal enough

I don't know, but my guess is the people that moved didn't like the policies of the state they left

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#359

Post by CitrusFruits »

thatguy0900 wrote: post #349
paul_f wrote: post #283

Earlier quoted context omitted.

Proposition 47 essentially decriminalized shoplifting. Californians literally voted for this petty crime wave. As a Florida resident, all I can say is, y'all have fun with that

When I read about them moving to states like Texas in numbers, all I can think is that they will inevitably try to take these same policies with them when they find out wherever they moved too isn't quite liberal enough

I think you're totally right in some capacity, but there's also a lot of people who are excited to get away from the hyper-liberal climate of California.

Re: Nearly 12M Square Feet of Vacant Office Space in S.F

#360

Post by epa »

rossdavidh wrote: post #138
albacur wrote: post #91

I'm excited by the idea of permanent remote work and moving somewhere more affordable. I moved to SF relatively late in my career, and only realized afterwards that I have nowhere near enough savings to own a nice home here. But most of my coworkers seem eager to return to the office. They miss the office environment, the perks and catered meals, and the socialization. And the managers, who subsist on meetings and in…

I agree, but with a caveat. The _very_ top execs of large organizations (Google, Facebook, etc.) may be anxious to get to a lower-salary environment, and remote work may be a necessary part of that. If they are determined to move to a structure where they don't have to pay SV salaries, they might overrule their middle-management and extend remote work in order to facilitate that.

This is a very underrated comment. Many people romanticize the work from home no commute in a rural area, but do not be surprised to find corporations taking advantage of your new found anchor.
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