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San Francisco braces for commercial real estate crash

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Re: San Francisco braces for commercial real estate crash

#571
For those who've been wondering what's behind the constant drumbeat of "back to the office" stories, thinkpieces, and harangues, this is the motivator.

Office real estate represents a tremendous financial investment and asset class. Its disruption portends tremendous shifts in wealth, power, and influence. The full realisation of those impacts could be held off for a time, but that capacity seems to be burning thin some 30 months or so into the Covid-19 era.

What will be interesting is how widely this spreads --- San Francisco is exposed, but not uniquely so --- and where and how far the impacts will fall elsewhere. Given the significance of these asset classes in bank and investors' balance sheets, this will also play a role both in wider asset-class values (see John Kenneth Galbriath's The Great Crash: 1929, for a pithy observation on how bad assets can wipe out good in a rush to liquidity), as well as central banks' efforts at containing inflation --- the falling bank balance sheets will wipe out much of the monetary supply.

Re: San Francisco braces for commercial real estate crash

#572

Trivia note: there are certain words that only appear in headlines. Like "brace" to mean "prepare." (Although I think that one might occasionally show up in normal text.) What else? "eye" as a verb. ("Supervisors eye relaxing building codes")

https://en.wikipedia.org/wiki/Headline#Headlinese

Re: San Francisco braces for commercial real estate crash

#573

I do ask myself how long the WFH trend is going to last. My hypothesis is that at some point in the next 5 years we're going to starting seeing articles on HN promoting the productivity and well-being benefits of in-person interaction with your co-workers. From where I'm standing, productivity doesn't look so great. It's an open secret in my remote-heavy, North American west-coast social circle that everyone knocks o…

I can only add my own anecdotal data but this is certainly not been the situation at my midsized tech company. We were already starting to transition to a permanent work from home situation well before Covid struck so maybe that had something to do with it, but our metrics in terms of deliverables for our projects have never looked better and the engineering department is certainly a lot happier being able to work comfortably from home and without the drudge of a commute.

Re: San Francisco braces for commercial real estate crash

#574
post #107

Companies will force their employees back in person. Already seeing it happen. Companies will have power to do this in a downturn.

Really depends on the nature of the work, I'd say on the order of at least 90% of my friends in the tech industry are making the "work from home benefit" a line in the sand.

And honestly, they've got the collective clout to force the issue.

Re: San Francisco braces for commercial real estate crash

#575

Earlier quoted context omitted.

I see plumbing exposed in the ceiling in some of the cool fancy new lofts that were converted from offices (in NYC).

Yeah but your ceiling is the next level's floor. If drilling a 4" hole in the floor/ceiling to accomodate a toilet drain is too damaging to the structural integrity (not sure I believe that, but I'm not an engineer) then it's a non-starter. Maybe you could build the bathrooms and kitchens along partition walls that have space behind them, so pipes could run above the floor, between walls, to the building core where a…

> Yeah but your ceiling is the next level's floor. If drilling a 4" hole in the floor/ceiling to accomodate a toilet drain is too damaging to the structural integrity (not sure I believe that, but I'm not an engineer) then it's a non-starter.

It isn’t, it’s called core drilling and it’s extensively used in commercial buildings with concrete decks for electrical conduits, electrical poke-thru devices, plumbing pipes, hot water/chilled water piping for HVAC, data cable sleeves, fire sprinkler piping, etc.

A typical commercial building floor is concrete in a metal pan that has tensioned cables in the concrete to reinforce it. A few holes aren’t going to ruin the structural integrity. A ground penetrating radar scan should be performed prior to drilling to avoid cutting the cables, if you cut one of those, then the structural integrity is affected and repairs get expensive.

Re: San Francisco braces for commercial real estate crash

#576

I do ask myself how long the WFH trend is going to last. My hypothesis is that at some point in the next 5 years we're going to starting seeing articles on HN promoting the productivity and well-being benefits of in-person interaction with your co-workers. From where I'm standing, productivity doesn't look so great. It's an open secret in my remote-heavy, North American west-coast social circle that everyone knocks o…

Eh, some people are working way way more. It was always easy enough to only work an hour or two in a office anyway.

Re: San Francisco braces for commercial real estate crash

#577

I do ask myself how long the WFH trend is going to last. My hypothesis is that at some point in the next 5 years we're going to starting seeing articles on HN promoting the productivity and well-being benefits of in-person interaction with your co-workers. From where I'm standing, productivity doesn't look so great. It's an open secret in my remote-heavy, North American west-coast social circle that everyone knocks o…

People were "working but not working" when we were all in offices as well. WFH just made it easier / more efficient I guess.

Re: San Francisco braces for commercial real estate crash

#578

Earlier quoted context omitted.

They are living The American Dream that Homer Simpson made us all aspire to. It may not last but at least they were fortunate enough to experience it for now. (I wanna be there :/ )

Homer was kind of a nuclear reactor SRE if you think about it.

He was ahead of the curve in so many ways including quiet quitting.

[1]:https://www.youtube.com/watch?v=jYXzHjbfMDk

Re: San Francisco braces for commercial real estate crash

#579
post #551
post #330

For everyone that lives in San Francisco: the only way we'll be able to fix our city is if we get involved. That means voting and donating to pro-growth and pro-competence political groups. That's why a4agarwal ( https://news.ycombinator.com/user?id=a4agarwal ) and I started GrowSF — we can build a better city, but only if the tech industry supports pro-growth policies and elected officials. We'd love your support! h…

I'm a US expat (live in the UK) who is thus still registered to vote in San Francisco. Do us expats a favor and post your endorsements at least 2 months early. Our postal ballots are sent early and most sites procrastinate on their voter guides. For instance I filled and mailed my ballot for the June 2022 elections on April 28th, and I wish SFGate had published their analysis of the primary race for Insurance Commiss…

Is this actually legal?

Re: San Francisco braces for commercial real estate crash

#580

Earlier quoted context omitted.

I generally have the same rule of thumb; not a crash until down 50% from peak. But housing is leveraged. It’s not like stock where few people have margin accounts, a 20% reversion sends most people who bought recently underwater. Plus the size of the real estate market is much bigger than the stock market. The flow-on reverse wealth effect will feel like a stock crash to many people.

For the USA specifically, does being underwater actually matter as long as you can afford the repayment? It's my understanding that most mortgages are fixed for 30 years so your interest rates won't be changing?

It makes it difficult to move
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