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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

#411

Post by faeyanpiraat »

antognini wrote: post #11
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).

Why will leases be terminating in Q2 2021 in particular?

Edit: Deleted: realized I replied to old comment

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

#412

Post by dmode »

InTheArena wrote: post #57

I live in a state where we are suddenly inundated with California’s refugees, fleeing the state now that they don’t have to physically live there. Reasonable taxes, a much less stressful work-life balance, bigger homes all make it very appealing to ditch the once0golden state. Our company has decided not to reopen a majority of it’s office space. Ironically, the Bay Area office is remaining open while other offices a…

California refugees is a weird point to make (I know you are trying to make a political point here). But in my 13 years of living here, I have met only a handful of “native” Californians. Everyone is from somewhere else. And that’s what make this special. I have lived all over the world, and consider CA to be the best place in the world to live for me

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

#413

Post by dmode »

paul_f wrote: post #321
mancerayder wrote: post #74

Earlier quoted context omitted.

Seriously? How about do what mayors have done for centuries: find ways to encourage investment and movement into the city. Business seems to be moving to places like Austin. Why do you think that is?

Business has been moving to places like Austin for years. Las Vegas, Phoenix, Atlanta, Nashville, Orlando. The pace will accelerate now that it is even more acceptable to do so.

Can’t think of a single unicorn that came out of these cities over the last 10 years, forget the Facebooks, Googles, Tesla’s, Ubers, Airbnb’s, Slacks, Snowflakes, and Zooms of the worlds. I have lived in Phoenix and Vegas for many years. Extremely overrated and couldn’t wait to leave

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

#414

Post by meerita »

dasil003 wrote: post #54
meerita wrote: post #23

Earlier quoted context omitted.

Keynesian economy never worked. Redistributing money will just make it worthless.

This is too reductive and unclear what you are saying. If we do no redistribution and simply allow people to starve in the streets then revolution is coming. On the other hand, if we prioritize helping people, and stop propping up failing businesses then we can maintain social stability long enough for the economy to restructure according to natural economic forces.

You don't need to print money. The measures of injecting money for consumption never work. There are too many precedents, the best, I think, is Argentina, which uses the Keynesian method of injecting money to generate consumption, creating brutal annual inflation and putting the country into recession every 2 years. If you really want to improve people's quality of life, you have to encourage investment, saving and deregulating things so that prices fall, and investment strategies change and focus where it would really give money.

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

#415

Post by kelnos »

twblalock wrote: post #295
cm2187 wrote: post #184

Earlier quoted context omitted.

Looking at an office tower and a residential tower being built side by side by my window. I would never live in a converted office building. The resi tower has concrete separations between floors and if you are lucky, between flats on the same floor. Office buildings don’t have any real separation between floors as you are supposed to walk on accessible fake floors and have fake ceilings too. The sound insulation bet…

> The sound insulation between flats on a converted office building must be nil. A lot of the older buildings in SF just have 2x4 walls separating the apartments, with fiberglass insulation. It's not very good at insulating sound either. If the office conversions are done properly they will be better at sound insulation than much of the existing housing stock in SF. The real question is, why bother renting in SF when…

> The real question is, why bother renting in SF when any of the surrounding cities are cheaper?

Because the pandemic-related shutdowns are temporary (though of course there will be lasting effects), and rents are 30% off their highs, with many landlords throwing free months and other incentives at people to get them to rent.

Sure, if you need/want to save some money over the span of the next 8-12 months, moving out might be a good idea, but if you want to live in the city, you're going to move back eventually, and moving itself isn't free. I think that's a thing that people seem to be missing: posts like yours seem to suggest that the only or main reason people live in SF is because their jobs are there and they want a short commute. That's... just not the case for many, many people.

I think there are valid arguments for leaving, valid arguments for staying, and valid arguments for moving in. But it depends on each person's individual situation and wants and needs.

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

#416

Post by meerita »

drxzcl wrote: post #39
meerita wrote: post #23

Earlier quoted context omitted.

Keynesian economy never worked. Redistributing money will just make it worthless.

I love your certainty. I'm not sure it's warranted though.

Well, just look the evidence: Venezuela, Argentina, Spain, etc.

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

#417

Post by kelnos »

orev wrote: post #225
Moru wrote: post #205

Earlier quoted context omitted.

Thankfully you can do sound isolation without concrete. If they do that or want to save money is a different topic I guess.

Concrete separation also acts as fire barriers, which is very important in areas where people will be cooking stuff. Office buildings don’t typically have stoves with open flame everywhere.

I would assume that office buildings aren't set up with gas lines running all over them, so likely these retrofits will include electric ranges and stoves.

There's still a fire danger, of course, with any kind of cooking, but at least there shouldn't be open flames all over the place.

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

#418

Post by manquer »

naderkhalil wrote: post #407
manquer wrote: post #405

Earlier quoted context omitted.

Only SF residents can say and mean this, no city wants jobs to go away. It is not just jobs you don't like that goes, those jobs support and pays for a lot of other jobs in the area. They also a pay lot in taxes which keeps the city running Ghost towns are not the same small towns. Larger cities become ghost cities not go back to being smaller. SF is lot more likely to become Detroit if businesses leave, everyone sho…

SF won’t become Detroit. I credit SFs culture for a lot of the innovation seen here. Not sure if it’s gold rush energy or what, but there’s an unparalleled optimism and just people looking to reinvent themselves.

I certainly hope so, I don't wish this either.

A lot of that optimism that makes SF vibrant is driven by the immigrant population [1].

The exodus that OP prefers, if it comes to pass will be lot more them than the 2nd-3rd gen residents

[1] immigrants to San Fran, or California or the U.S.

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

#419

Post by kelnos »

JMTQp8lwXL wrote: post #399
greesil wrote: post #379

Earlier quoted context omitted.

Commerical real estate != residential, I wouldn't get your hopes up unless demand drops, which it totally could.

It seems unlikely that a commercial real estate crash wouldn't have second-order effects on residential. After all, if none of this commercial space is getting used, there is less of a reason to be interesting in the residential housing that surrounds said commercial space.

Depends on what is meant by "commercial". If we're talking about retail and restaurants and bars, then sure, the loss of those things will make it less attractive to live in/near those locations.

But if we're talking about office buildings, and the reason for the collapse is because people don't need/want offices at all (not because those offices are moving elsewhere), then I think it'll have a much smaller effect on the residential markets.

What I think has a higher chance of hurting residential markets would be hiring moving away from HCoL areas because companies believe that most workers can be remote (and workers in LCoL areas are cheaper comp-wise). That hiring movement already seems to be happening, though SF home prices haven't changed much. There might just be a delayed response to that, though.

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

#420

Post by kelnos »

sebmellen wrote: post #46
hogFeast wrote: post #37

Earlier quoted context omitted.

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,…

Point taken, but I don't think you're taking into account the monumental impact of COVID-19. We've never had such a large, immediate, and impactful shift to work culture. Working remote was still a niche idea at the beginning of 2020, now it's ubiquitous. That has never happened before.

Remote work is ubiquitous among jobs that can be done remotely. In reality, something like 30% of the US workforce has been remote due to COVID-19. That's not a small amount, to be sure, but that's hardly ubiquity.
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