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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

#51

Post by function_seven »

jedberg wrote: post #16
fny wrote: post #8

Earlier quoted context omitted.

Last I heard there was a housing shortage. Obvious solution would be to turn commercial properties into residential ones.

It's obvious but not easy. Oftentimes commercial spaces don't have a lot of plumbing. They usually just have the one bathroom and kitchen space per floor usually in the middle. A large office space would need walls and a lot of plumbing work to convert to apartments (and probably a lot more electricity to power multiple kitchens full of appliances).

So what makes converting existing structures to residential use harder than building new residential buildings on empty land?

I view this as an "outrunning the bear" situation. I.e. you don't need to run faster than the bear, just run faster than your poor friend.

The cost to convert an office tower into apartments is high I'm sure, but is it higher than building a similarly-sized apartment tower from scratch? A lot of money goes into the foundation works and soils engineering.

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

#52

Post by ghaff »

dml2135 wrote: post #34
ghaff wrote: post #21

Earlier quoted context omitted.

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…

>a higher percentage of those that are going in are driving instead of taking mass transit

I can believe that. I think I've only taken the train in once. (Not because I was avoiding it but because it didn't align with my schedule.) And there were a fair number of empty seats at the point it would have probably have been standing room only pre-pandemic. But sample size of one and this was a number of months ago.

That said, my overall observation is that things are probably closer to back to normal than in some tech industry bubbles.

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

#53

Post by zeusk »

jonathankoren wrote: post #45
vinyl7 wrote: post #29

Earlier quoted context omitted.

I don't believe WFH will last as long as people think it will

Companies that own their empty offices (e.g. the FAANGs) are definitely going want them full because of sunk costs, and then hope all the other smaller companies cargo cult them. It probably will work. A better world is possible, and it's actively sabotaged by entrenched interests.

FAANG is actually changing faster than you'd believe.

I've been at Microsoft and now Amazon; they're both extremely remote friendly. Offices have been largely empty so they've not renewed most of the expiring leases.

Some functions still need to be performed in-person so they'll have some space but no longer the everyone comes to office to put on noise cancelling headphones to work individually mostly. And even that space is getting distributed across the country and not concentrated in SF/Seattle

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

#54

Post by b112 »

dml2135 wrote: post #34
ghaff wrote: post #21

Earlier quoted context omitted.

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…

Well, the type of job you can work from home at, is limited. Only a small minority of people are working from home.

Think of all the trades(mechanics, construction, plumbing, builders, etc). Think of all retail workers. Think of manufacturing.

That's already well more than 1/2 the jobs out there, and there are more.

I would be surprised of more than 10% of people, are wfh.

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

#55

Post by mortenjorck »

julianeon wrote: post #31
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/coff…

Indeed, I wonder that too: when push comes to shove and the commercial office market is left with billions of dollars in worthless real estate, what happens next?

My hunch is that you're right, but that it will follow a different pattern from what is popularly imagined. I think we tend to have this lofty vision of office towers being converted into no-frills, affordable homes that will offer working-class families a place to live close to where they work, but this vision doesn't really match with economic reality.

Much more likely in my view, given present residential construction macro-trends and the actual costs of residential conversion, is this: A slow process of converting the buildings that are currently losing the most money into luxury housing. The conversions will be massively expensive, in some cases more than the cost of new construction, but they will happen.

The upside of this, while much more limited in scope than the popular conception of residential conversion, is that it will increase the housing supply, and stands a chance to ultimately improve affordability as those who can afford it upgrade to higher-end homes.

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

#56

Post by ghaff »

b112 wrote: post #47
mortenjorck wrote: post #32

Earlier quoted context omitted.

> 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…

This is the real point of opportunity. Is it though? If you take away the offices, and offices close, why do people need to live there? Where will they work? And if it is 100% remote, why not live where the cost of living, and housing, is 1/2 the cost already?

Some people do choose to live in cities even though there's no work-related reason to do so--and even put up with incremental inconvenience to commute out to a suburban office park. But, still, when tallying up the pros and cons, taking easier commute off the plate certainly doesn't help the urban apartment side of the ledger.

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

#57

Post by WalterBright »

anigbrowl wrote: post #37
WalterBright wrote: post #19

Earlier quoted context omitted.

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.

The sewer pipes and vents have to be run everywhere, and they have specific requirements. Sewer pipes, for example, half to have a slope. The vent pipes have to go up. There may be floor loading problems. There's going to need to be a lot more electrical wiring.

It's not impossible, it's just expensive.

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

#58

Post by jltsiren »

thechao wrote: post #40
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.

My impression is that modern office buildings are basically stacks of exhibition halls. You can repurpose them easily and build the infrastructure you need. The biggest obstacle to converting them to residential is not plumbing or elevators but the lack of windows near the core.

Of course, it's not the modern centrally located office buildings that are vacant but the older ones at more remote locations. Converting those is going to be more expensive, and it may be more cost-effective to simply demolish them and build new residential.

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

#59

Post by coding123 »

jedberg wrote: post #16
fny wrote: post #8

Earlier quoted context omitted.

Last I heard there was a housing shortage. Obvious solution would be to turn commercial properties into residential ones.

It's obvious but not easy. Oftentimes commercial spaces don't have a lot of plumbing. They usually just have the one bathroom and kitchen space per floor usually in the middle. A large office space would need walls and a lot of plumbing work to convert to apartments (and probably a lot more electricity to power multiple kitchens full of appliances).

So make that kind of residential space... different.

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

#60

Post by mcguire »

function_seven wrote: post #51
jedberg wrote: post #16

Earlier quoted context omitted.

It's obvious but not easy. Oftentimes commercial spaces don't have a lot of plumbing. They usually just have the one bathroom and kitchen space per floor usually in the middle. A large office space would need walls and a lot of plumbing work to convert to apartments (and probably a lot more electricity to power multiple kitchens full of appliances).

So what makes converting existing structures to residential use harder than building new residential buildings on empty land? I view this as an "outrunning the bear" situation. I.e. you don't need to run faster than the bear, just run faster than your poor friend. The cost to convert an office tower into apartments is high I'm sure, but is it higher than building a similarly-sized apartment tower from scratch? A lot…

The first thing you would have to do would be to remove much of the internal walls and structure, followed by running new electrical and plumbing. The latter two are very skilled-manual-labor intensive.
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