San Franciscans seems to have just collectively abandoned downtown. Empty offices, empty retail, empty streets, seemingly no attempt to do anything new down there.
It’s mostly fine with me, I don’t really need to go there and I’m lucky to be able to WFH, but I think 30% doesn’t even begin to describe how far it will fall if nothing changes. The value of that entire area for business is headed to zero.
The real shame for me is Market Street. It’s the main transit artery (Bart, Muni) and bike route through a large part of the city. And most of it is now downright scary. Just hundreds of people in bad situations, not somewhere I’d want to linger.
For anyone genuinely wondering why they don't do the implied thing and convert it to residential, the answer is that the San Francisco permitting process to build even as little as a single-family home on an unused lot can often require paying someone full-time to hassle the city government literally every single day for several years straight, and then if the NIMBYs persuade the board of supervisors against it the project gets denied anyway.
Nonetheless, commercial->residential conversions tend to be pretty popular. All those industrial-themed urban lofts in other cities sell/rent just fine
> If only there were some other high-value use for San Francisco real estate besides office space.
Converting office space to residential space is hard. Not just the zoning issues, these can be solved... the major problem is building technology. The entire HVAC system has to be ripped out and replaced, as people want individual temperature controls, to not smell whatever their neighbor is cooking or smoking and they want to have showers as well, which is problematic because office HVAC systems are not set up to deal with high humidity air and will have instant mold issues. (Side note, that is the reason why many companies, despite offering "bike to work" incentives, won't have showers installed)
Some spaces, particularly high-rises, lack windows that can be opened. A lot of space can't reasonably be rented out as many jurisdictions require a certain amount of direct sunlight for a room to be legally considered residential.
But the worst issue is plumbing: offices generally are set up with centralized loos and the kitchen nearby (if there is a kitchen at all). That keeps the amount of vertical pipes for cold, hot and waste water very low. In a residential building however, unless it's some sort of boarding house, people generally expect to have their own bathroom which means a ton of work to retrofit, more so in a way that doesn't lead to noise complaints.
It's hard to transform many office buildings into residential spaces, unless you demolish them and rebuild.
Office buildings usually have huge floorplans while residential places require windows, so any space within ~5-6meters from the wall is basically useless (bathrooms, elevator shafts, storage spacce, stairways and not much else can be positioned there)
The New York Times had a nice interactive article recently for subscribers showing how some office buildings can be and have been converted to residential. Most of the illustrations that tell the story didn’t seem to get captured by the Wayback Machine, unfortunately:
This is how cities die. If the downtown gets abandoned the heart of the city stops beating. The whole premise of a city is a high density area to get economies of scale on many public goods.
> This is how cities die. If the downtown gets abandoned the heart of the city stops beating.
My office is in a 90+ year old skyscraper in Chicago. Our building is not renewing leases; they’re trying to empty it out to convert to residential. At our last town hall the CEO said he’s hearing talk about incentives to terminate leases early.
In the Chicago Loop, population is up 10% since before the pandemic, and expected to continue to increase faster than new construction can handle, so there is real demand for converting old office buildings. Old buildings typically have ideal floor plates. New office buildings are bad, but there was a story in The NY Times just the other day about a developer who cut a vertical hole in the middle of a newer skyscraper in Manhattan so the giant rectangular floor plate became an O-shape, allowing apartments along the interior of the building to have windows opening to an interior courtyard.
SF really needs to get on the ball before the damage to the city is too great.
> Our building is not renewing leases; they’re trying to empty it out to convert to residential
How do they plan to retro-fit the appropriate sewerage, water, gas and electricity connections? They're the biggest blockers for converting to residential. Not saying it can't be done, but expensive, and interesting to see novel ways of approaching this, as there is going to be a big demand for that in the coming years.
Gas, electricity, and water all seem fairly easy and just a matter of money. (They’re all provided under pressure.) Sewer falls by gravity and so has more physical constraints on routing and access for clean outs.
Yeah - I've never understood this arguement, all the big buildings I've worked in have had electricity, water and sewerage - maybe not plumbed in the dispersed way that you get in residential but available throughout the buildin at any rate.
In addition to what everyone has already written, it might be worth pointing out that office buildings usually have a floor-to-ceiling distance far greater than residential buildings. So you can add in a bunch of piping directly underneath the floor, then create a new ceiling below the pipes, and the result is still very acceptable.
Second, the quirks are part of the charm [*]. Nobody is marketing these conversions as ultra-luxury units. The history of the building is celebrated, not hidden
[*]. For example, our building still has an operating mail chute system and I bet that it will be kept around after conversion.
The photo of the Roosevelt Hotel near the bottom shows what ours looks like on the office floors - floor to ceiling glass so you can see letters from above zip past on their way to the lobby.
The usage rates are vastly different. What do people in an office building use water for? Coffee, dishwashing, toilet flushing. Those will be somewhat dispersed through the day. Compared to a residential building where half of the building is having a shower in the space of an hour or so in the morning. So you need to get more water in and more water out, both of which probably need the pipes replaced, and more space to hold them (even more at the lower levels of the building). Similar problem with electricity if that's what's being used for cooking.
That was a good piece in the NY Times. I'm skeptical about what probably an expensive lower-story apartment with a view out into basically a lightwell would be like. I've had hotel rooms like that but maybe this is better done.
"I'm skeptical about what probably an expensive lower-story apartment with a view out into basically a lightwell would be like."
The key here (I assume) is that it is a 90 year old skyscraper (according to your parent) and those older buildings are, generally, easier to convert and have a smaller floor plate, etc.
Of course I have no idea about this particular building but word on the street is, older office buildings have a better chance of being good candidates.
Perhaps a matter of taste, but the older buildings are more attractive visually which raises their desirability. 1930s Art Deco beats steel and glass.
They are also very centrally located in the inner core.
I would assume older buildings to have larger floor plates? Many of New York's newer skyscrapers, esp. the "one luxury apartment per floor" kind, are really skinny.
Older office buildings tend to be geared towards small offices for smaller businesses, like small law practices. Modern cubicle farms are much larger, open offices even more so.
Also, older regulations on building forms pre-war required more setbacks at taller heights, creating the “wedding-cake” style tower common during that time. The modern glass box is generally wider.
It's hard to describe downtown/fidi as the heart of the city. It was already pretty dead on weekends compared to the rest of the city in 2019. OTOH, rents have been stubbornly flat or growing in other parts of the city. Places like the mission, hayes valley, marina, north beach and polk are very lively now and I'm back to struggling at getting reservations at some of my favorite places outside of downtown. I think what suffers the most is tourism - as places like Union Square, downtown and fisherman's wharf are relatively empty.
The phrase "cities without commercial on street level and residential above, cities where you need to own a car" is adding a condition onto "this is how cities die" to say that the original prediction doesn't apply to SF. Because SF has "commercial on street level and residential above" and you don't "need to own a car", people in the rest of the city depend less on the downtown. While downtown may be abandoned, it's not heart of the rest of the city.
At least that's what Terretta is saying. I haven't even visited SF in over a decade, so I don't know what its current situation is like.
Yep, going to hell in a handbasket. Just terrible. Most certainly going to be a desolate wasteland before long. I'll do you a favor and buy your house.
If the downtown gets abandoned by offices, it can be populated by something else epxloiting lower prices, as has happened countless times throughout the history. Take London's Soho for example: first populated by wealthy families and Huguenots, then abandoned by them and taken over by prostitutes and such, which ultimately made it the centre of entertainment with new theatres and music venues, made cool by gays, and then gentrified again by the wealthy. It's a circle, not a line.
San Francisco's downtown was already deeply unhealthy in 2017. If it wasn't a workday, everything was closed. The only things that existed downtown were offices and office support, like lunch restaurants.
Yep, that’s been my experience as well. This might actually turn downtown around if it’s forced to convert more to residential.
With its hills, access to green space, forests, ocean, waterways and culture it’s a fantastic city to live - up there with the best in the US in my books.
I’ve even grown to love the fog and wind, it feels amazing to come back to in the summer when everywhere inland from the coast is baking in 100+ degree weather.
> love the fog and wind
I think that the original perception of California in general and San Francisco in particular as having good climate is based in the pre-air conditioning era, when no effective artificial climate control existed.
Downtown SF is weird. I love the neighborhoods, but the downtown feels like a movie set without enough extras in the background. Maybe if developers converted more of downtown to residential it could help the city have some night life as well because that was the other odd thing that struck me about SF.
Downtown is also dark and gloomy in an already gloomy city. I’ve been to many cities but have never seen a downtown like SF. Too many tall buildings may be? But other than offices, conference center and office lunch places there’s just nothing to bring people in. The bars were usually empty, not many good dinner places…etc. It was always weird and depressing.
I was on Market street today around 6pm and it was crowded, loud, full of life. And that's even on a slightly rainy Wednesday. You clearly haven't been so recently?
Same way in my city. There are dozens and dozens of parking structures that are just absolute blights on the area, ultrawide streets that discourage and make miserable any form of walking, unmanaged homeless and addict problems, and awful zoning (even mixed use needs to ensure that there are many small tenants, not one massive tenant).
It would actually be pretty poetic. 100 years ago, Detroit was one of the wealthiest cities in the world. It was perhaps the center of the US economy. The Model T was introduced in 1908 and by the 1910s and 20s, there were more than a dozen car companies forming every year, with the biggest ones being located in Detroit. The city was a manufacturing powerhouse and with the immense wealth generated, they built wonderful theaters, funded a world class symphony, and built great museums (many of these things still remain today). It became a cultural hub. If you told someone in Detroit at the time that the city would be in ruins before the turn of the century, they probably would have had a good laugh.
The difference is SF has amazing weather, some of the best in the world. Detroit is a windy frozen wasteland 6 months of the year. I think they need to do a whole order of magnitude more self-destruction before they’ll really be able to keep people away.
That's a bit of an exaggeration but SF has both weather and easy access to a lot of natural beauty, hiking trails, and so forth.
Detroit has a nice Riverwalk and I'm sure any locals can point to other local things of interest.
I will say that I was at a tech event in Detroit in the fall. Things I would do (knowing what I do about the city even today) in SF at night without a second thought felt risky and many other attendees felt the same--and there were some safety incidents. It wasn't even so much the things that might make you feel unsafe in the Tenderloin. It's that if you were walking 1/2 mile to someplace it was just deserted.
I'm guessing you were at Kubecon as well. It was my first time in Detroit and overall thought the city was much nicer than expected. But to be fair, I mostly was just downtown during the day and we ended up staying in a suburb (Royal Oak) because all of the hotels within walking distance were booked by the time I registered for the conference. The drive between Royal Oak (adjacent to the city limits) and downtown Detroit had some areas that looked dilapidated or worse.
> The difference is SF has amazing weather, some of the best in the world.
Uhmm, I don't think I agree here. The Mediterranean has better weather all around. I like mid-west weather more if we are talking about US. SF is also very windy. Annoyingly windy. SF weather is "okay" but nowhere near the best. It does have great scenery nearby though.
SF is foggy before 11am and after 3pm between Apr and August. Then it’s cold from Nov-Feb. There’s literally only two months of good weather in SF proper (Sep/Oct). Certain areas might dodge the fog an hour extra. I found SF and London to have very similar weather. Rest of the Bay Area is a wholly different story. San Francisco has shitty weather.
The GP literally said "...some of the best in the world"?
I just looked things up for SF and I have to say I would not regard it as some of the best in the world. Pretty temperate, with mild annual swings: summer highs of 23C and winter lows of 7C - that's actually a little on the cool side for me hah. But the rain is wrong way round, IMO wet summers and dry winters are better, and it seems like it's also quite humid?
My experience is obviously limited, and weather preference is subjective, so read the above as if it's coming from one idiot on the Internet.
It has the best weather of any "real" city. San Jose and San Diego aren't "real" cities. Parts of LA get too hot. Florida is too humid. Redwood City is the obvious winner for weather, but it doesn't have sports teams, concerts, museums--big city amenities.
Because mass media allows us to replace experiences that previously required physical participation (if only going to a specific location) with consuming those experiences anywhere we want - a trend that is only expanding/intensifying.
Note that, despite the relative decline, Detroit still has a higher absolute population than Milwaukee, which matters if we're to assume that (generally speaking) more population correlates with more potential economic activity (which may be a contentious statement in broad strokes, but these two cities are fairly comparable).
I've lived in SF first time in 1997. Market Street was utterly shit back then already. This was before SoMa became a big thing for internet startups. Scary, shops closed or decrepit. Frankly SF hasn't used it's potential in a long time.
"San Franciscans seems to have just collectively abandoned downtown. Empty offices, empty retail, empty streets, seemingly no attempt to do anything new down there."
I live in the SFBA - quite close to downtown - and I am both optimistic and excited about the tumult, reorganization and rebirth that I predict.
Unlike Cleveland or Detroit or Baltimore, there is an unlimited supply of people who want to live and work in San Francisco and the entire residential and office market will "clear" - given the right price.
I predict an interesting and exciting (and gritty and scrappy) period in SF where artists and projects and spaces re-fill the city.
Remember: New Hack City[1] was not in Oakland or Fremont - it was in the center of downtown financial district - and it was only 20 years ago.
[1] Hacker space belonging to the l0pht / cdc family tree.
The thing is the average duration of those loans is ~5yrs, so the ~15-20% of the portfolio that needs to refinance this year was stuff that got financed five years ago, and probably has pretty decent loan to values given that the property values are in most cases up from where they were 5 years ago.
It’s the stuff that was financed in the past couple of years that is going to be the most risky, but unless rents fell off a cliff, has a bit of runway to play out.
Very well said. Indeed, I think we'll all mostly escape from this unscathed. We as in anyone who didn't take on massive leverage in the last few years to try to become rich off of the pandemic bubble or to try to live it up on cheap money. Jeff Bezos gave excellent advice recently on avoiding large purchases right now if you can, like cars and houses. I think he knows that borrowing costs will go down, and general costs will come down to pre-pandemic levels as things level off and the excess currency floating around in the system from (necessary) pandemic stimulus gets siphoned off by slightly higher interest rates.
Who knows, we may even see a scenario where the fed has extreme confidence in America's economic and military dominance globally and decides to reduce interest rates again once money supply is somewhat tightened again now that the pandemic has ended.
Jeff Bezos gave excellent advice recently on avoiding large purchases right now if you can, like cars and houses. I think he knows that borrowing costs will go down, and general costs will come down to pre-pandemic levels as things level off and the excess currency floating around in the system from (necessary) pandemic stimulus gets siphoned off by slightly higher interest rates.
Can you please share a reference to Jeff's advice. Curious of the context.
"... stuff that got financed five years ago, and probably has pretty decent loan to values given that the property values are in most cases up from where they were 5 years ago."
Yes, that is the hope - and the narrative - but we're not talking about a minor correction here ... like a 10% haircut on building values. I suspect the current market for office space in SF is probably ~40% off and that's for class-A space.
"... but unless rents fell off a cliff, has a bit of runway to play out."
Rents have fallen off a cliff we're just pretending they haven't by refusing to lease the space at the prices the market would actually clear at. Building owners and management, etc., would rather have empty offices than establish new, lower rents by actually renting them.
If they did actually rent the space at the market clearing price they would all get margin calls from their banks because their loan to value (LTV) ratios would blow up and their loans have covenants specifically calling out the LTV.
This cannot last forever.
Eventually someone is going to rent space at the market rates and building owners in SF will either need to show up at their bank with a 5 or 10 million dollar check ... or with the keys to turn in.
From what I've heard, certain real estate enterprises including a substantial portion of commercial real estate can get financing on their nominal asking rent, whether or not they actually have tenants paying that rent.
I'd imagine these enterprises still need to find a way to make their payments on any related loans, but one wonders what happens to banking revenue if a bunch of them get caught in the same crunch.
I have heard that, but I am skeptical. Who (... with money to lend) would be stupid enough to extend credit based on that? There has to be more to the story, if it's not fabrication.
I’ve heard of a few buildings around herein Scandinavia (almost empty with businesses downsizing space as contracts lapse) who supposedly have this, and they can’t reduce rents because valuation would drop too much.
Yeah, they is risk in this type of lending. There's also risk in all lending, and managing risks is what banks do. This is less risky than many think on the surface. The major risk has to do with the asset class as a whole losing value, but that would be the same for any commercial property mortgage.
1. The asking rent has to close to actual market value. These small and medium sized banks have the local expertise to know what properties are actually renting for.
2. Tenets in commercial properties tend to stay around much longer than residential, and often a commercial property will stay vacant longer than residential property. The bank will want to see you have enough cash reserves to cover the loan payment for longer then they expect it to be vacant.
Maybe I'm missing something but weren't there plenty of people "stupid" enough to invest in junk mortgage loans? So many that it ended up causing a crisis?
In that situation, everyone knew they were junk, but the ratings agencies gave them safe ratings when mixed in with others, and so “people” had plausible deniability to pass them off onto buyers who would not know betters
Every month, an outside firm asks for the financials to confirm you are meeting the DSCR, otherwise you could be considered to have defaulted (even if the loan is being paid).
> I'd imagine these enterprises still need to find a way to make their payments on any related loans, but one wonders what happens to banking revenue if a bunch of them get caught in the same crunch.
I imagine the government will bail out commercial landlords.
Arguably, all the many useful real-estate-specific tools those investors have at their disposal to advantage themselves in the tax and accounting systems (a certain former prez's own dealings is an ok example) already amounts to a rolling permanent bailout that will no doubt cushion their losses without the government even needing to act.
A little surprised to see Boston increasing rent activity, but I think Boston has been slowly losing its footing on the tech ladder in favor of Biotech (take a look around Kendall Sq). Can't really WFH in Biotech if you need lab space.
Probably started when DEC was consumed by Compaq ... even YC moved out (maybe it's the weather).
I think the "lab space" requirement is going to drive a lot of the WFH-or-not office space planning among employers that don't fall into the "come in for no reason other than I said so" category.
In my case, I work in robotics. Somebody working on the perception stack software and going to the occasional zoom meeting has little reason to show up at the office beyond random hallway meetings and free micro-kitchen snacks. A machinist in the prototyping lab, on the other hand, needs to be in front of the giant, expensive CNC machine. For me personally, I have a mix of coding days and lab days, and WFH or go in according to the tasks of the day.
Clued-in companies are going to adjust their real-estate mix. I predict a drop in the fraction of commercial space that consists of carpeted offices.
I agree. My role is software engineering, but in industrial healthcare automation - so I come in when I need to make stuff move in meatspace. Mostly a few days a week. We don’t really have standard offices though - it’s either a cube or in the lab 50/50 hoping the magic smoke doesn’t leak out because I coded that thing wrong…
>> I think the "lab space" requirement is going to drive a lot of the WFH-or-not office space planning among employers that don't fall into the "come in for no reason other than I said so" category.
I wonder if there will be a another push for those jobs to go to lower cost countries.
Some of those jobs are already in lower cost countries but some can't be outsourced because they rely on military contracts (can only be worked on by US employees).
I once worked on an offshore company that did staff augmentation for american robotics companies, we did mostly software because the hardware was illegal to export.
There may be a lot of cost savings in labor but there’s a huge risk in technology transfer & following lab protocols. In biotech lab culture and best practices are actually a tighter package than “low” skill factory work. So you get really variable outcomes when you unbundle the lab.
(Sitting in Kendall Square right now). I'm not surprised, though we're saying the same thing. So. Much. Biotech.
This is why the WFH revolution didn't make me panic when I discovered how much it would end up costing to renovate a small house 1.5 miles from here. So much biotech, and for that you need to be in the lab at least some of the time. The MBTA's recent troubles ("global slow zone", anyone?) only make it "better", like I paid them off or something.
I'm sitting just up the street right now, and -- hoping to buy a walkable nice home in town someday -- wholeheartedly counsel the East Cambridge biotech people and the Kendall MSFT/GOOG/etc. outpost people to make a luxurious and convenient commuter rail ride, between work and BFE part of their daily lifestyle.
The commuter rail as-is is too infrequent, too packed and too polluting with all those stops & a diesel train.
Overhead electrification on the commuter rail lines or even battery-electric trains would allow the T to run Green line style trams further out into the 'burbs out to I95 and let the commuter rail trains focus on the I495+ outer burbs/medium distance without having to stop frequently on the inner part.
Reusing the existing commuter rail lines with trams is much cheaper than building new T lines as they did with the Green line into Medford (and if you don't live in Medford, it doesn't help you!).
I don't know about biotech, but my brother works in a lab with lasers and he's still WFH 3-5 days/week. Experiments are done in the office, but planned and analyzed at home.
For the purpose of this conversation, there's no practical difference between "work from home only some of the time" and "never work from home". If you have to be in the office two days a week, that implies both the purposeful existence of an office and a need to live somewhere that's not a zillion miles away from that office.
There definitely is impact. Shops can't survive being only open 2/7 of the time. As in things like coffee shops, restaurants, etc and this cascades. Even malls are impact as people might buy random things at lunch or after work.
Coffee shops and lunch restaurants--the places people going to an office might frequent--sure. But other shops will still exist (or if they don't, it will be because of Amazon, not because of WFH). As for reduced foot traffic, that problem will solve itself if commercial rents plummet; look at the storefronts in any depressed town or dying mall and marvel at the weird, low-traffic uses that empty storefronts get put to when landlords get desperate ("Sure, you want to open a store for bouncy-ball enthusiasts that's only open on Mondays? Keep the pipes from freezing over and it's yours."). And if there are 2/7ths as many Starbucks, that'll still leave two Starbucks within eyeshot at any given moment.
> And if there are 2/7ths as many Starbucks, that'll still leave two Starbucks within eyeshot at any given moment.
It doesn't work. It'll go to 0. None can cover the costs.
> But other shops will still exist
You might be surprised the number of people that sneak out during work or during "breaks" and/or before/after work. Have seen people with all sorts of things from the shop in the office that isn't food.
Boston in general has always had the 128 loop containing a fair number of companies. Especially prior to the Big Dig, where congestion in and directly around the city was beyond heinous. DEC never really was in Boston, but QUITE a ways outside not just Boston, but over 10 miles outside the 128 loop as well.
Though the reality is Boston has a lot of industries. It's not just some computer tech and biotech, but the metro is still a top global education destination, still has a huge medical footprint, still has several massive financial institutions (notably Fidelity and State Street) and a decent banking footprint, as well as insurance. Boston has a lot of industry tentpoles, so it's very resilient to one industry going elsewhere, like when tech heavily shifted to the Valley long ago.
Though the MBTA's shortcomings in the past 5-7 years is starting to take its toll. I feel the T being taken over by the fed to right the ship a la DC is inevitable, and it's likely necessary for Boston and Cambridge to not significantly lose appeal. Though at least it's one of the most walkable metros (particularly Boston, Cambridge, Somerville, Brookline and Quincy) in the country.
Though almost all of the major MA computer industry was out in the suburbs and ex-urbs anyway. Lotus is the main exception I can think of.
Biotech and pharma is obviously huge around Kendall. The big software companies in Boston and Cambridge today are mostly offices of West Coast companies.
One reason building up Biotech and Pharma wholesale in the Kendall Square area was practical was a lot of that was underutilized warehouses and the like from Cambridge's industrial era so you could (and continue to) do massive new constructions for those types of companies (and MIT of course).
No. The building requirements for lab space make it infeasible to retrofit existing offices.
For instance, lab buildings typically require floor-to-floor heights of at least 15 feet in order to accommodate 5+ feet of mechanicals for every floor. They concomitantly require much larger utility risers between floors, and floors that can support much heavier loads than office buildings.
Why would it want to? The heart of biotech in the Bay Area is South SF. Genentech is there. And developers have built several millions of square feet of lab space in the last 5-10 years just West of 101. It's amazing to see 3-4 towers that have gone up in just a few years.
South SF is very business friendly, there is plenty of open land and it's nice to plant your company somewhere where there are dozens of other start-ups/small biotechs within a 10 min walk.
There is some biotech around USCF in Mission Bay (and some venture firms), but it's pretty small at this point.
Armchair opinion: They should sell the properties to make up if they're having a deficit. Not predicting how this market situation would play out sounds like mismanagement.
Yes, and that's what you'd expect in an Econ 101, "land is just like any other commodity" situation.
The problems with this are several:
- The value of a commercial building is a function of rentable value times expected ownership period. If you own a machine that prints $40k/mo for 10 years, then it's value is $4.8m.
- Most landlords do not buy the land outright but instead buy everything with mortgages. This is true for both commercial and residential real estate. And everyone is leveraged to the hilt.
- The reduction in commercial office rentals has caused a reduction in the actual value of the real estate in question[0]. Since landlords are leveraged, they can't sell without going underwater.
The entire real estate market has an interest in keeping land prices high - it's a sort of class collusion. So there's a lot of systems in place to deny the inevitable, kick the can down the road, and so on. For example, banks will actually agree to repayment pauses when a building is between tenants, because it beats having a landlord liquidate a bunch of underwater properties and actually realize losses on something that is literally government-engineered to stay expensive.
[0] There's an interesting wrinkle to this in that normally you actually wouldn't be allowed to do this. When you buy a building to rent it you also agree to a price floor set by the bank. If you rent for less your mortgage explodes - as in, you immediately have to recollateralize (pay back) the building value that you destroyed by undervaluing your rent.
I know, the discussion is US-centric, but last year Europe saw lots of binge buying of corporate office spaces by the local governments in view of conversion into refugee centers.
I don't know if you're asking to be tongue-in-cheek, but this is a salient question.
Normally, government buildings ("Held for public use") don't pay property taxes. This can be a serious issue in municipalities where large portions of the non-residential real estate is held by a higher-level governmental entity, such as Jackson, Mississippi, where the state government makes up a large bulk of the functional real estate, and thus does not contribute to the municipal tax base (while still making substantial infrastructural demands).
The reason you rarely see offices turned into housing is they don’t have enough plumbing or windows to be residences. It’s almost always cheaper to tear the buildings down and start over than try to retrofit.
Sounds like not a real thing and someone trying to make a point on the interwebs. I've lived in buildings that were converted from commercial to residential of various forms as well as having a parent that was in construction doing this very thing.
Yes, by default commercial buildings have centralized plumbing for common facilities. That is easily remedied with a few holes added into the concrete, and new plumbing run.
Enough windows? WhatTheHuh? Commercial => Residential building conversions do often end up with some "unique" floor plans sometimes referred to as "shotgun" layouts due to their long and narrow designs. This ensures each unit has some windows (most often you can't open them as the original design didn't open). Interior spaces get converted into other common area/use spaces without window access.
> This ensures each unit has some windows (most often you can't open them as the original design didn't open).
Could this be a problem for fire codes? Having multiple ways out of a bedroom for example. I've been in commercial buildings that seem like total death traps in a fire. Even if you get manage to break a window you'd have little chance of surviving the jump, and any kind of ladder long enough to reach the ground would be impractical.
While I'm no Fire Marshall Bill, I have some personal experience with getting permits and certificate of occupancy. I would think that if the commercial building's design was good enough to be approved, then it'll probably be okay for residential as well. You'll find out quickly enough if the plans are going to be approved or not. Before you can even get a permit, you have to submit your plans for all of the units. At that point, your plans will be inspected for known issues. For example, there is a formula used for the size of a room and the number of people (max capacity figures) that will determine how many points of egress that room is required to have. For a private residential unit, that number will probably be pretty small and easily within the limits for a single door out of the unit. The permitting stage is also where they will consider the number of stairwells to get to the lower floors. They will look at how far away from those stairwells on average each unit's exit is. Fire extinguishers will probably be required within units as well as the obvious need for sprinklers.
We already have residential high-rises. There's precedent for living in a building you can't jump to the ground from. Plus, I would hope the same fire code would apply to an office people spent 8+ hours of their day in.
I'd say most cities are better off not having homeless shelters. Otherwise you'd become a magnet for homeless. What happened to catering to the actual tax-payers?
The problem is the homeless, not their unhoused/housed status. Never saw so many ambulances on a daily basis as on a hotel that was repurposed for homeless. (Owner was pretty happy having his crummy hotel filled at a $200/night rate ;) )
I’m in Raleigh NC so I saw the chart, sighed, and hit the back button. Commercial space whether Class A office or industrial/warehouse and everything between is outrageously expensive.
I wonder how much of the SF 30% was the closure of so many WeWork clones. My group toured several of them right before the pandemic hit and the prices were redunk. $1000/month for a desk and barely enough space to get in and out of it.
At one space we asked about the speed of the wired network and they didn’t know. Turns out it had been down for an unknown period of time and no one noticed because everyone was working on the beanbags in the common party zone.
We settled on an old office a block away. Ugly and slightly musty. But, 5x the space at 1/2 the price. And, the tiny staff were competent and eager to help. Three months later Covid hit and we never went back :( All still working from home.
I'm in SV, not SF, but similar experience. When pandemic started was looking for remote office space and all these WeWork clones had outlandish pricing. Ended up renting from an individual office building owner, twice the space for 1/4th of the cost. Still there.
I've wondered if there will be emerging business models for medium-sized, amenities-included (AP wiring, coffee, snack service, etc..), short-lease office spaces. Basically for when a company wants to downsize, but also wants to retain a little bit of physical space for meetings, events, and folks that live nearby. Nobody wants to sign a three year lease for their whole company, nor do they want a "we work" space where you'll be surrounded by random people. I think companies will want to hedge on short term accommodations. I don't have the real estate knowledge to know if this is even possible.
One challenge about office space is that it can be a very narrow margin business. It’s often cheaper to not operate than to slash rent to get anyone in. High turnover is even more expensive.
I do like the idea of a No Frills We Work. The Holiday Inn of office space. Clean. Beige. Functional. No “culture.” No common areas. Just shared entrances and hallway like your traditional office complex.
I thought WW-style was mostly hot desks or hot offices? I was thinking something semi-permanent with additional privacy. Maybe that exists and I’m out of the loop.
If you’re not trying to squeeze profits out of every angle to maximize shareholder value then it’s no longer capitalism. That sounds more towards a cooperative model.
The first study is call center employees which is really not relevant to most tech jobs for obvious reasons. In fact, call center employee jobs were being outsourced to people working from home in midwestern states over a decade ago (which shows why this study was able to be conducted in 2015). The second study is during COVID and doesn’t even address productivity.
speak for yourself, I’m way more productive now that I dont have some manager interrupting me for meaningless bullshit every 5 seconds tapping on my shoulder, or being broken out of my flow because some sales bros can’t keep it down across the room while bragging about how drunk they got on the weekend
I wonder if there might be a balancing process here.
puts on rose glasses
might it be that companies start to buy adequate office space and provision for their workers so as to make life in the office bearable again?
I started my career in an open plan office - so not halcyon days or something. But when I started I had a decent area, meaningful partitions and lots of deskspace. I had a cupboard and some draws.
Just before I went remote I was down to a space big enough for a laptop and a mouse and to pull my chair into. I was opposite another worker with no partition and had people on both sides of me. Sure I was paid 5x more in real terms than when I started... but conditions were dreadful.
Considering the general lack of housing and continuing rising prices combined with the WFH revolution, it would seem to me that we are reaching a paradigm shift in urban design and planning.
The smartest thing we could do now is repurpose old office spaces into housing, much like many old warehousing in cities like London and Hamburg were repurposed 30 years ago. It would massively increase the overall housing stock, and the continued WFH would reduce commuting, pollution and help countries better achieve their climate change carbon reduction targets.
Good. I hope the commercial space crashes to $0. Need more space where people can be housed or visit places of interest. Single purpose zoning is a relic of the 1950s suburban experiment.
Yeah, terrible places. You should visit an established one some day.
Helsinki. Stockholm. Berlin. London. Amsterdam. Prague. (Oddly enough, the parts of Madrid I've seen were less mixed.)
You don't have residential and heavy industries lumped next to each other. You instead get multi-use buildings with lower floors dedicated to shops and restaurants, higher floors to offices and homes. And clusters of light industry nearby.
Over a period of decades, locations with somewhat heavier industry may get encroached by residential creep, eventually making their logistics hard to sustain. They move out, leaving their large facilities behind. These in turn get repurposed for lighter industrial use. The old Hartwall[×] bottling plant in Helsinki went from an active industrial site to an abandoned husk, to a repurposed site in about 25 years.
You can mix commercial, medium, high and low density housing without it being nasty. Just because it's multi purpose, does not mean there has to be "factories"
This might not work because now everyone wants an extra bedroom for a home office. If they end up going into the office once or twice per week, this could mean more space is needed.
Concentrating on metro areas seems like it would hide some of the impact. There are properties that were targeted toward industries like call centers, which seem likely to end up fully remote.
It’s mostly fine with me, I don’t really need to go there and I’m lucky to be able to WFH, but I think 30% doesn’t even begin to describe how far it will fall if nothing changes. The value of that entire area for business is headed to zero.
The real shame for me is Market Street. It’s the main transit artery (Bart, Muni) and bike route through a large part of the city. And most of it is now downright scary. Just hundreds of people in bad situations, not somewhere I’d want to linger.