34 ms·

San Francisco braces for commercial real estate crash

• bragr 4y ago
  Give the corresponding housing crisis in the Bay Area, one wonders if the solution is to "simply" start converting office space to living space until the corresponding demand for office space recovers from a combination of increased demand and decreased supply. Now I'm sure there are all kinds of challenges to doing that, engineering, zoning, other practicalities, but it seems overall reasonable to me, though perhaps someone with a better understanding of the situation might enlighten me.
  • downrightmike 4y ago
    The only way SF will be fixed is if there is massive earthquake to take care of all the nimby concerns. Can't be concerned and stop construction if you don't have a back yard anymore.
    • orangepurple 4y ago
      Blockbusting is a "thing" as well
    • coding123 4y ago
      People in SF have backyards? I can see NIMBY as a concern in the rest of the bay area, but SF, it's already stacked housing.
      • jeffbee 4y ago
        Nope. On an area-weighted basis most of SF is wasted on detached single-family homes. https://www.google.com/maps/@37.7470676,-122.4914956,314m/data=!3m1!1e3 https://www.google.com/maps/@37.7470676,-122.4914956,314m/da...
        • FartyMcFarter 4y ago
          Why "wasted" ? Does everyone need to live with the least amount of space possible?
          • jeffbee 4y ago
            There is a large difference between a preference and a mandate. The city of San Francisco requires this development pattern. It is not known whether the owners prefer it or not. The existence of pre-down-zoning apartment buildings in this area of town suggests that the preference is not universal.
            • lokar 4y ago
              The majority of voters and neighborhood groups strongly prefer the current policy. Prevent new housing and complain about prices is the dominant position. And elected officials comply. Democracy is functioning.
          • lokar 4y ago
            They don't. But if you want only detached single family homes you don't get to complain about prices.
            • echelon 4y ago
              Those with the homes are not the ones complaining.
              • lokar 4y ago
                But they are! It's truly bizarre. Somehow the accepted narrative is that prices are high because greedy developers focus only on luxury condos. I often see new buildings criticized because they will raise the average rent in the area. And people accept that argument. Think about that for a moment.
                • 4y ago
      • thatfrenchguy 4y ago
        Yeah most historic apartment buildings in SF actually have a rear yard.
    • treeman79 4y ago
      Not again… last time was such a mess.
      • downrightmike 4y ago
        Might get a few covers of this https://www.youtube.com/watch?v=XoC_Kvel_vQ https://www.youtube.com/watch?v=XoC_Kvel_vQ
  • ptmcc 4y ago
    Most offices have physical layouts that make conversion to residential difficult to impossible. Big things like lots of interior square footage without windows and plumbing only to a few central locations. And while some or even most of this is fixable, major renovations are a ton of cost and effort to convert them to something that will still be expensive and weird, if even possible to meet the legal requirements of residential space. https://sfstandard.com/housing-development/turning-downtown-offices-into-housing-isnt-the-solution-you-think-it-is/ https://sfstandard.com/housing-development/turning-downtown-...
    • ethbr0 4y ago
      Maybe SF should relax the legal requirements of residential space, then? If they choose not to build sufficient housing... they can at least choose to use what they have. A windowless room with a community bathroom doesn't sound appealing, but at a certain price point it's better than nothing.
      • s0rce 4y ago
        As long as its safe to occupy for permanent living it should get permitted, not sure how its much different than a hostel/rooming house-like arrangement. You don't need a kitchen and bathroom in your unit to live.
        • notch656a 4y ago
          Safety will always be a top argument to constrain and block off new housing. Look at current building codes. Sure all those things make us safer -- if you ignore the homeless left on the streets and the people who no longer have money left over for good food, education, and healthcare after paying the high price it costs to build an up-to-code house in America. You can restrict housing practically as tight as you want by raising permitting requirements, safety assessments, and safety factors and other safety features until it's practically impossible for anyone but the rich to build. There are people out there that would be safer in a run-down tinder-box shack than an up to code and zoned house. Not because the house is safer, but because it allows them to have an affordable roof over their head and round out their finances for other things that bring them wellbeing. Building and zoning codes fail to account for this.
  • hollywood_court 4y ago
    Those commercial spaces make it incredibly easy to build them however you like. The access to plumbing and electrical would make it simple to convert them into small dwellings.
    • yodon 4y ago
      Modern office buildings only have plumbing available in the center of the building. The flooring is designed to function as a highly efficient membrane. If you start punching holes in the flooring to place plumbing and toilets away from the central core you weaken the floor membrane to the point where it loses the required structural integrity. If you try to build raised flooring to provide space for the plumbing the cost of the raised flooring becomes prohibitive. For most large modern office buildings it is cheaper to take them down and build new than to try to retrofit them for residential use.
      • hn_version_0023 4y ago
        Every place I've ever lived had plumbing in the walls. Now, it also had it in the floors, so your point is well taken. But I seriously doubt that a central plumbing stack is a serious holdup on plumbing out an entire floor. Then again, I don't have any real experience, so I'm very much being optimistic here without actual hands-on knowledge. I could be very wrong, and would love to hear why!
        • tcmart14 4y ago
          So, this is me reaching back aways in memory. Walls with plumbing through them are held to different standards to other walls. Walls with plumbing use 2 by 6s. Builders and architects try to optimize by making as few walls as possible walls with plumbing because they are more expensive. Your regular walls use 2 by 4s. So yes, some walls have plumbing running through them, but not all. Any architect and contractor will try to optimize cost by having as few walls as possible with plumbing. Which is why in some apartments, neighboring bathrooms in units will be close or share some wall space.
  • 121789 4y ago
    From my understanding, it’s just like a legacy code base. It is just easier/cheaper to start from scratch than converting the entire thing a piece at a time.
    • GekkePrutser 4y ago
      Cost isn't the only thing. Tearing down and rebuilding is probably much slower than conversion.
    • nemo44x 4y ago
      That's mainly how renovations go. Just easier to have the demo team demo and then have the trades come in and do their thing. Working around existing infrastructure and integrating with it is unpredictable and messy. Not to mention, once you touch something you have to bring it up to code so best to leave it alone or replace it entirely. I did a renovation once where the idea was to preserve a few of the old wood windows that would be lost due to the nature of the renovation. The original idea was to reuse them and move them into the new renovated space and install them. Turned out it was going to cost more to carefully remove them, fit them, etc than just buying the highest end Marvin windows. So new windows were purchased and the old ones are used for parts now.
  • lizknope 4y ago
    It seems like a logical thing to do. A few articles on why it is difficult. https://www.nbcnews.com/business/real-estate/why-empty-offices-aren-t-being-turned-housing-despite-lengthy-n1274810 https://www.nbcnews.com/business/real-estate/why-empty-offic... https://www.washingtonian.com/2022/07/28/should-dcs-empty-office-buildings-get-turned-into-apartments/ https://www.washingtonian.com/2022/07/28/should-dcs-empty-of...
    • JumpCrisscross 4y ago
      > why it is difficult The argument in the Washingtonian hints at a policy solution. It cites a "lack windows on at least two sides" with cavernous floors making "direct natural light" rare. The "complexity of adding hundreds of bathrooms and kitchens (not to mention the accompanying venting and plumbing)" is real. "Turning rooftops into amenity spaces" is not. So yes, these aren't going to become luxury apartments. Will they have less direct sunlight and no rooftop garden? Yes. Are those remotely necessary? Of course not. Fewer windows doesn't mean no windows; this isn't a safety issue. We will probably need code amendments. But that would require political will to legalize affordable housing.
  • guywithahat 4y ago
    The underlying issue is government preventing development of both houses and office space. If you were to build more housing in any capacity that would risk lowering housing values and people (including politicians) would lose tens or even hundreds of millions in assets. This would be incredibly unpopular and won't happen anytime soon
    • onlyrealcuzzo 4y ago
      > The underlying issue is government preventing development of both houses and office space. We live in a democracy. The underlying problem of government is voters. Most home owners (especially in The Bay) refuse to allow anyone to build anything because they see that as a threat to their home value.
      • tcmart14 4y ago
        This guy gets it. It is NIMBYism at work. Whether it is keeping those ugly affordable apartments out of my neighborhood or wanting the housing supply restricted so I can keep my home value at peak value.
        • woah 4y ago
          Building with no affordable units in it? Beyond the pale, the evil developers hate poor people and the units will all be bought be foreign billionaires who won't live there. Building with x% percentage affordable units in it? Not enough affordable units and the units are not affordable enough. This will not offset the gentrification caused by the market rate units. Building with high percentage of deeply affordable units in it? You can't just solve societal problems by throwing housing at it. The residents who will live in these deeply affordable units need social services to get their lives back on track. Building with 100% deeply affordable units with on site social services? You can't put a homeless shelter in our neighborhood! The honest working class residents of this neighborhood have suffered enough from gentrification without having the homeless problem dumped on them too!
      • ErikVandeWater 4y ago
  • paxys 4y ago
    Sure the Bay Area housing crisis can be pretty easily solved if you throw zoning laws out of the window. Don't need to convert office space for that.
  • evr1isnxprt 4y ago
    But doing reasonable things without deference to “how things have always worked in our society” is unconscionable. Think of the loss of figurative identity a minority of landlords might incur!
  • niffydroid 4y ago
    Where I live in the UK, they've converted multiple office blocks to student accommodation. They are also tearing down block of flats due to other structure issues. Generally it's easier to build housing on green field rather than brown sites due to contamination etc. Once you convert the office to housing, when you need office space you'll have to build it somewhere
  • cjrp 4y ago
    They started promoting this in the UK in ~2013 when the planning laws were relaxed[0]. The early conversions were pretty poor I think; badly-sized and without enough natural light. [0] https://www.gov.uk/government/news/planning-measures-will-make-best-use-of-underused-buildings-for-providing-new-homes https://www.gov.uk/government/news/planning-measures-will-ma...
  • chrisseaton 4y ago
    They’re doing this in the UK, and there’s something seriously dystopian about the space it ends up creating somehow. I’m sure it’s better than nothing, but it’s not ideal.
  • asveikau 4y ago
    During the summer I heard a KQED segment of some prominent examples of this from SF and why it's very expensive to do, rare to be able to pull off. Maybe it was this one: https://www.kqed.org/forum/2010101889483/what-would-it-take-to-revive-san-franciscos-deserted-downtown https://www.kqed.org/forum/2010101889483/what-would-it-take-... Just to pick one example out of a hat, the discussion of elevators was one that made an impression on me. They said the allocation of elevators for residential vs office space is very different, and in some SF examples they had to put in entirely new elevators and staircases. Seems there's lots of these things you wouldn't think about unless you're in that industry...
  • innagadadavida 4y ago
    Agree, but will never ever happen thanks to commercial RE mafia errrr lobby... Most of the commercial RE is vacant but still somehow get tax breaks and they also keep the rents very inflated. I don't buy this argument of "this is not fit to be a home" - neither are the streets, parks and sidewalks. The commercial RE mafia err the lobby is very powerful and they will protect their interests no matter what. These spaces are already up to code for fire and habitability. They have bathrooms. All you need to do is put more bathrooms and have small 10x10 rooms like they have in Japan with a bed, coat hanger, table and chair. This is just temporary to house the homeless and get them off the streets. Give preference to folks that have a job. To make is sweeter for the owners, the city can keep the tax breaks that they already get for keeping the place vacant and get rid of all other tax breaks given to the commercial RE folks.
    • pessimizer 4y ago
      > I don't buy this argument of "this is not fit to be a home" - neither are the streets, parks and sidewalks. Are you proposing that the city rent out licenses to live in the streets, parks and sidewalks, or are you just pooh-poohing the entire idea of housing standards? How do you feel about food standards?
      • innagadadavida 4y ago
        I’m proposing new standards to house the homeless who sleep on the streets. Specifically if a building is empty and already fit for humans to occupy, it should be ok to put some beds there and allow people to be moved from the streets. This post is not about food.
  • deleted 4y ago
    [deleted]
  • foobiekr 4y ago
    The real solution to the housing crisis in the bay area is to shift the center of jobs to the south - san jose. There is more land there, the city is willing to build highrises, and so on. The "crisis" is because people went from a focus on the already-crowded peninsula to the ultra-limited-space SF.
  • coryfklein 4y ago
    What kind of imaginary universe would allow for converting downtown SF office space into residential, but not let you simply build new houses? Both are impossible for the same reason, doing just about anything in SF is impossible.
• newaccount2021 4y ago
  Not just SF I see For Lease signs on commercial real estate at all price points everywhere I go. WFH has been a paradigm shift and commercial real estate hasn't caught up to the reality yet. Companies that embrace WFH will have access to an entire nations' worth of talent and will end up with a competitive advantage. Requiring RTO means employees must be within thirty miles or so of campus, and lots of talent won't go for that anymore. I don't recommend anyone relocate for a job unless they are very young and its just a matter of renting. I'm not selling my house for any employer at this point. Many tech companies also overbuilt. I predict Google will pull the plug (or massively downscale) on their San Jose "transit" campus...there's no way that Google needs another 25k desks in addition to their existing real estate building/buying binge, particularly with recent talk over headcount. Fortunately for Google, simply by virtue of announcing the San Jose campus, they've raised the value for the undeveloped real estate and will be able to sell it at a profit. WFH is going to be a defining trend...I predict it will be a survive/die issue for companies.
  • jdhn 4y ago
    To piggyback off of this, for those companies where WFH doesn't work (lab equipment, etc), now is a fantastic time to negotiate a deal.
  • hollywood_court 4y ago
    I’m not near a big tech center, but I know of exactly 3 businesses in my town that no longer exist because they would not allow their employees to work remotely. Two of them were owned by former clients of mine. They allowed themselves to fail because they wanted to make their employees’ lives more difficult. It was that simple. There was no need for either business to have a brick and mortar location at all. No need for all the overhead. But as the saying goes: “the cruelty is the point.”
    • unethical_ban 4y ago
      We as an industry are still sailing through the air thinking things are fine with WFH, but in reality the engines have stalled and we're gliding. What I mean by that is that the industry has all the benefits of in-person work, having social connections, having gotten jobs through networking, and of knowing the ins and outs of a domain from pre-covid standards. As time goes on, I think the working population will have more trouble networking for jobs, have less enjoyment from their work, less interaction with other human beings, and fewer people will be able to "break in" from college or from non-IT roles into technology. We are insulating ourselves from spontaneous interactions, and that's a bad thing for evolution. TLDR - Not all RTO is about cruelty.
• ryandrake 4y ago
  Residential crash is potentially already upon us, at least in the outskirts (East Bay for me). We've had our house on the market for over a month now, and nobody else in the neighborhood is selling either. Big changes from only 3 months ago, when sellers were closing in days.
  • onlyrealcuzzo 4y ago
    I'd argue that a "crash" isn't really a "crash" if it comes after a 50% increase in 2 years. Anything short of a 20% correction is simply a reversion. If prices shot up 100% in 1 year, and then were down 3% in two months - no one would be talking about a crash.
    • cjbgkagh 4y ago
      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.
      • nikanj 4y ago
        A 20% reversion is back to early 2021 prices..
        • cjbgkagh 4y ago
          Given the long history of ever increasing housing prices people have become accustomed to treating asset price inflation on property as income. Why work a 9-5 when your house can make your money (and your banks money) go to work for you. A lot of that money is spent - it's very difficult to un-spend it for a downturn. Plus a chunk of the recent nominal price inflation is due to general inflation and regressing to the same price 2 years ago is a loss in absolute real terms. Plus going forward people who could assume a $100K yearly increase in wealth from a property have lost that $100K in 'income' and must make up the shortfall from elsewhere. It's a huge marginal difference. Then there is the erosion of the tax base; governments make a percentage of the capital gains on nominal inflation as kind of a wealth tax. During a deflationary period this money disappears and can take a very long time to come back. The shortfall again must be made up for by further taxing the taxpayers or by borrowing with the expectation that the same taxpayers will pay it off later. These are the same taxpayers who lost their $100K in 'income' so they're not exactly flush with money.
• TedShiller 4y ago
  • guywithahat 4y ago
    Don't forget all the free needle "exchange" subsidy programs https://endhepcsf.org/san-francisco-needle-exchange-schedule/ https://endhepcsf.org/san-francisco-needle-exchange-schedule.... Crazy how amped even the homeless are about getting their covid boosters
  • geoffeg 4y ago
    Is the use of just the space free or are the drugs free too?
    • TedShiller 4y ago
      Free drugs of course, supported by the tax payer
      • yazaddaruvala 4y ago
        I can't tell if you're being serious or not, but I feel it needs to be clarified. The reality is free drugs at safe injection sites, supported by the tax payer, is cheaper for the tax payer. Overdoses and emergency services for overdoses cost a LOT of money. "a period of 2 years and 3 months", "with a savings of over $2.3 million for the lifetime of the program"[0]. Roughly $1 MM per year for just the 1 city in this study (and the population of the city is relatively small). Additionally, there is a reduction in overall costs funded by the tax payer of rehab, help programs, etc because of benefits from colocation with the safe injection sites. Additionally, this study doesn't even include the long term savings from reduced police/boarder patrol workload. Not only do free drugs reduce the need for petty theft to fund an addiction (costing tax payer time to file insurance claims - let alone the improved safety of no more petty theft), but when drugs are free, there is no longer a profit for organized crime and smuggling. Reducing the overall tax payer burden for the city / country. [0] https://harmreductionjournal.biomedcentral.com/articles/10.1186/s12954-022-00609-5 https://harmreductionjournal.biomedcentral.com/articles/10.1...
• baggy_trough 4y ago
  You would have to be stark raving mad to open a business in San Francisco. Not only is the downtown filthy and unsafe, but the government, when it can stir itself from its torpid incompetence, is absolutely malevolent towards businesses.
  • CTmystery 4y ago
    > but the government ... is absolutely malevolent towards businesses. How so?
    • x0x0 4y ago
      It kind of depends. Opening a restaurant is an absolutely hostile experience -- there are numerous articles discussing people's experiences. Opening a tech company in SF is very smooth sailing in the small (interaction with the government, registering, paying taxes, etc). Source: did it. Where SF fucks tech companies extraordinarily hard is housing costs (insane), commute times / options (even more insane, shockingly incompetent), and the horrible provision of education, a major concern for parents.
      • dopeboy 4y ago
        Given this experience, would you start a company in SF again? If not, where?
        • x0x0 4y ago
          I'd definitely do it in sf again. I'd have a 4 person + one large conference room office for sales and meetings. Everybody else would be remote, with individual teams roughly colocated, and hence capable of 3-5 days/month in person. The problem with sf is good fucking luck convincing anybody to move there if they're over, say, 25; or are married; or have kids; etc. One glance at the housing prices and they're gone. If they can work through the housing prices they glance at the school situation, price in $30k/year of private education, and then they're really gone.
    • 4y ago
• renewiltord 4y ago
  I can't wait. Could use some downward pressure on commercial real estate so that we can get good startup-sized offices here. Not seeing any big movement on loopnet yet.
• sidvit 4y ago
  How's this compare in other cities? Just annecdotally speaking, I feel like I know a lot more people who used to live and work in San Francisco who don't anymore post pandemic, as opposed to friends of mine who left and came back to Austin/New York/Seattle
  • brandur 4y ago
    Linked from the article, the Urban Displacement Project's recovery ranking dashboards [1] place San Francisco dead last amongst 60 major North American cities. [1] https://www.downtownrecovery.com/dashboards/recovery_ranking.html https://www.downtownrecovery.com/dashboards/recovery_ranking...
    • samsolomon 4y ago
      Whoa, not only last, but last by a long shot. Most of the cities toward the bottom in that list are in the lower 50s and upper 40s. Then you have the bottom 3—Portland at 41%, Cleveland at 36% and San Francisco at 31%. That's quite a drop off.
      • thatfrenchguy 4y ago
        That's mostly looking at downtown though?
        • YeBanKo 4y ago
          SF is small and its downtown has an oversized impact on its financials. There couple of relatively large areas with older residential buildings that pay fairly low property tax and have mostly small businesses. Business related revenue from relatively small area is what allows San Francisco its breathing space in the budget.
    • xrd 4y ago
      Really interesting that Salt Lake is at the top, and that's the only city I know of that (at least reportedly) had an innovative solution to tackling homelessness. I just tried to search for their solution, but was overwhelmed by links from the past few months talking about how homelessness is swelling in that city. Perhaps every city is just dying of homelessness right now. Makes me wonder if those numbers for downtown recovery are manipulated or accurate. How to tell?
• Animats 4y ago
  This could work out. Most of the emptying buildings are in low-lying fill areas. Those will need to be demolished as the glaciers melt.
  • fundad 4y ago
    It's definitely overbuilt and many areas are not built on solid ground.
  • hadlock 4y ago
    Most of downtown is a dozen+ feet above sea level, new waterfront construction (the new ferry docks in particular) are all built to the new standard, by ~2077 or whatever the waterfront will be ready for new sea level standards. There's a plan in place to put a tidal lock in front of mission bay canal. Downtown is on a fill, but you're talking less than six inches next to the transamerica building, and less than two meters heading east toward the ferry building. The big fill area is south of Oracle Park which is sitting on 8-12 feet of poor-grade fill like trash and random construction debris, although most (all?) of those buildings are sitting on stilts going down to bedrock, in particular those in the 3 blocks closest to the water.
• ThePadawan 4y ago
  Worked for a company once who boasted surviving the hard times of the dot com bubble by selling their headquarters and renting it back until things got better. Has this happened yet or are owners still holding onto their real estate for own use?
  • diebeforei485 4y ago
    There are no buyers. Nobody wants San Francisco office space.
    • ThePadawan 4y ago
      The point isn't that a buyer wants office space, the buyer wants an investment that goes up in value. That's the core issue, right?
  • swearwolf 4y ago
    It’s very unusual for companies to own the buildings they have offices in, so this strategy would be non-applicable in most cases.
  • fosk 4y ago
    Zynga did this a few years ago.
• paxys 4y ago
  In a way I'm glad that a large chunk of San Francisco's population is getting exactly what they have wanted for years – to get rid of big tech takeover of the city. Maybe they will actually fare better with a significantly reduced number of tech workers and jobs, or maybe they won't. At least we'll know for certain now, and can stop all the whining.
  • trident5000 4y ago
    Worked well for Detroit
    • georgeecollins 4y ago
      I was born in San Francisco (so was my Dad, my Mom was born in Oakland and so were her parents etc.) and my family has been through many ups and downs in the Bay Area over many generations. SF used to actually be a cheaper place to live than a lot of parts of Los Angeles. There is no way it will be Detroit though. It's just too desirable of a place to live.
      • fmajid 4y ago
        Don't underestimate the possibility of a death spiral. It's already happened once. Read Gray Brechin's excellent book Imperial San Francisco. SF used to be the undisputed capital of the entire North American West Coast, and arguably even the entire Pacific. In the aftermath of the 1906 earthquake, it lost that position to LA. I lived in SF for 19 years, moved to London (family reasons, elderly parents with health issues) and are planning to return to the US. My wife put an absolute veto on returning to SF itself because of how dire the law and order situation has become. Sad to say, but the city really needs a 1990s vintage Rudy Giuliani to clean house. Otherwise what it will get is Bernie Goetz (yes, I know, I am showing my age with my references). It seems unthinkable today, but in the 1950s and 60s SF was actually a fairly right-wing city, all mayors from 1912 to 1964 were Republicans.
        • riizade 4y ago
• fundad 4y ago
  How many times has this been predicted in my lifetime?
  • carlivar 4y ago
    How many pandemics in your lifetime?
• trident5000 4y ago
  I had a cab driver that was from Brazil last week. He said SF was a shit hole and more dangerous than any place in Brazil which is why he left and moved to another state. Thought that was interesting.
  • pcbro141 4y ago
    Brazil's murder rate is ~10x SF.
• denimnerd42 4y ago
  I have some knowledge of companies that went to WFH and are trying to sublease at a quarter of what they're paying in rent and they can't find a tenant.
• Apocryphon 4y ago
  I had always thought the supposed end of automaker dominance Detroit-style doomsday scenario was impossible for S.F., but turns out the normalization of remote work was all it took. The American software industry didn't need to end, it just had to go home.
  • throwayyy479087 4y ago
    NYC is doing great, as are quality-of-life focused cities like KC, Miami and Columbus. Maybe calling every critic in your town names and letting QoL go to absolute crap is the real driver of movement.
    • thegjp210 4y ago
      By what metrics is NYC doing "great"? The amount of crime and visible urban decay/blight seems just as pronounced (in Lower Manhattan) as it does in San Francisco
      • onlyrealcuzzo 4y ago
        By rent inflation?
      • nemothekid 4y ago
        >The amount of crime and visible urban decay/blight seems just as pronounced (in Lower Manhattan) as it does in San Francisco The crime/urban blight angle is a red-herring; It implies that there was anytime in the last 30 years that New York/San Francisco was anywhere nearly comparable to a city like Tokyo. Manhattan is already seeing a net influx in people moving back into the city.[1] [1] https://www.sfchronicle.com/sf/article/sf-covid-recovery-nyc-17365339.php https://www.sfchronicle.com/sf/article/sf-covid-recovery-nyc...
      • throwayyy479087 4y ago
        Name an intersection- I’m all over town and things seem normal downtown. Times Square has gotten worse I suppose.
    • 4y ago
• Cupertino95014 4y ago
  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")
  • Night_Thastus 4y ago
    What? I've seen both of those used plenty before outside of headlines. I've also heard them used in television, movies and songs. Those aren't uncommon. "Brace" especially.
  • hahaxdxd123 4y ago
    brace yourself brace for impact you need to brace before squatting
    • svnt 4y ago
      If these are in frequent use around you may I suggest driving lessons or an increase in dietary fiber?
      • hahaxdxd123 4y ago
        Perhaps instead I can suggest to you airline travel or an exercise regimen?
        • svnt 4y ago
          I know, it was just a funny collection of words.
  • ketzo 4y ago
    https://xkcd.com/2584/ https://xkcd.com/2584/ a few delightful examples.
    • Cupertino95014 4y ago
• rr888 4y ago
  What about residential? I thought prices were high but manageable. New mortgages are all over 5% now, that makes those all too common $2-4 mil house prices insane.
  • jollyllama 4y ago
    All the people I talked to today are now over 6% on a 30 year.
  • hadlock 4y ago
    A lot of people who own residential property in SF can afford to take a loss indefinitely on the assumption that prices/buyers will eventually return. Especially if those same people's wages keep up roughly with inflation.
• jelliclesfarm 4y ago
  This is a labour union issue and not a prop 13 or even a NIMBY issue. https://sfstandard.com/housing-development/labor-unions-have-a-week-to-agree-on-state-housing-bills-can-they-do-it/ https://sfstandard.com/housing-development/labor-unions-have... Those commenting here don’t understand how labour unions in CA have the Senate and Assembly by the balls. As long as the public keeps focusing on imaginary enemies amongst themselves and we keep lobbing ‘prop 13’and ‘nimby’ balls at each other, we lose. Nobody here on HN is going to be able to live in the new high density housing. It is meant for affordable housing and to move vote banks from other counties. Oldest universal political trick from the books to stay in power. Who benefits from high density subsidized housing homes for those who can’t afford living in the most expensive cities in the state? How is it helping the homeless or the economically vulnerable? Who is being served here? There is a bigger picture. There are more powerful forces. They just want the voters fighting amongst ourselves while they decide our fate.
  • JumpCrisscross 4y ago
    > is meant for affordable housing and to move vote banks from other counties We have this in New York. It's far from as cancerous as the situation in California. When Marc Andreessen is talking about building housing in California while screaming about it in his backyard, you have the poster child for the problem [1]. [1] https://www.bloomberg.com/news/articles/2022-08-18/atherton-multifamily-homes-plan-draws-ire-from-andreessen https://www.bloomberg.com/news/articles/2022-08-18/atherton-...
    • jelliclesfarm 4y ago
      Cities should have capped populations for efficiency. There has to be high income, medium income and low income housing ratio to have a balanced and economically diverse population. We just have to build another city with great infrastructure and network it to other cities when we have an influx of population due to jobs or organic population growth. It’s like how they say.. When there is a surfeit of sardines, we buy more cans to fill..we don’t not overstuff the same limited number of already overstuffed sardines to deal with the abundance. Our schools, our public transport, our roads, our hospitals, our basic facilities are all over stretched because we keep stuffing the same cities with more and more people. In America, everyone deserves to live in sustainable housing. And high density isn’t sustainable. It is a cope when resources are limited and population surges. The demand for high density in the Bay Area is artificial and politically motivated. This will implode. Time will tell that I am right.
• seibelj 4y ago
  Boston is recovering quite well, as biotech, healthcare, and education need physically present people (for now at least). SF was so insanely focused on tech that it collapsed quite suddenly. If I owned a $1 million+ property in SF I would be selling ASAP - the pain is just getting started
• arberx 4y ago
  Companies will force their employees back in person. Already seeing it happen. Companies will have power to do this in a downturn.
  • delecti 4y ago
    To what benefit though? Surely they're not better off by having to pay power/water costs in the office when people come back, right?
    • denimnerd42 4y ago
      They'll crush employee moral with return to office and blow up productive teams as the technical leaders leave. They'll say to their shareholders they are trying to downsize but they'll be left with an unproductive shell of mediocre/bad unhappy workers. Seeing this here at my work. Everyone good left. Talking about technically excellent peer leaders making 180k but providing millions in value.
      • delecti 4y ago
        Yes, that's the likely outcome, but what's the intended outcome? What's the steelman argument for making people come back to an office they'll have to pay bills for?
  • throwaway675309 4y ago
    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.
• bearjaws 4y ago
  As much as this is going to hurt, it needed to happen. Prime realestate has resulted in square footage being more valuable than peoples time. Worse so, not renting out that 'square footage' can also be valuable by driving down supply. This is a toxic cycle that produces nothing for society other than big numbers going up. America needs to eliminate rent seeking entirely, its toxic and prevents businesses from forming if they have the audacity to require space... My only hope is we don't bail out these cancerous REIT groups and let them burn to the ground, even if it takes my 401k with it.
• darth_avocado 4y ago
  The city officials are asleep at the wheel. Blame it on remote work and pandemic as much as you want, but the reality is that the city was in decline even before that. It is too expensive to live in the city. It is too expensive to commute to the city. It is too expensive to feed yourself in the city. Crime is rampant. Drug use and filth is everywhere. Most importantly city has been hostile to tech and business owners. None of this makes it lucrative for individuals and businesses to go there, which creates this feedback loop that makes it even worse for few that want to.
  • JumpCrisscross 4y ago
    > city officials are asleep at the wheel Eh, San Francisco's voters have been drinking crazy water for some time. New developments blocked by renters. Stringent building codes and environmental reviews defended by those who think they're being compassionate to the poor. Scolding tech companies for hiring in the city and then panicking when they stop hiring in the city. This obviously isn't all of them. But it's not like this wasn't predictable over the past decade.
    • pixl97 4y ago
      Yea, people love blaming (elected) city officials but NIMBYism and "Housing is an investment that should only go up in price" will eventually kill any market.
      • JumpCrisscross 4y ago
        > "Housing is an investment that should only go up in price" will eventually kill any market It doesn't have to. Housing can be affordable while going up in nominal terms. Neither do I think most San Francisco homeowners think about housing supply strategically. They're pissed off about a specific view being blocked. Or construction noise. Or their area's average rent going up. (?!?) Alternatively, they're comfortable and can't imagine someone might be better off housed in worse conditions, cheaply, than struggling to make rent in a decked-out flat.
• mistrial9 4y ago
  for added consternation, check out "Millennium Tower" https://en.wikipedia.org/wiki/Millennium_Tower_(San_Francisco) https://en.wikipedia.org/wiki/Millennium_Tower_(San_Francisc...
  • Magi604 4y ago
    It's hard to believe that anyone would want to live in any building, much less a freaking ultra high rise, with any sort of foundational issues, especially after the Miami condo collapse.
• tapatio 4y ago
  Can they repurpose these dead offices as homeless shelters?
  • YeBanKo 4y ago
    It may happen naturally.
• sf4lifer 4y ago
  If housing is not an option for reasons articulated comments, could all this empty very (eventually) cheap high rise real estate become vertical farms? At what price point do the economics work for this?
• bvanderveen 4y ago
  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 off at 1-2pm when the east coast people are definitely logged off. Probably the east coast people are doing the same thing, but in the morning. Lots of happily phoning it in. And many of these same folks have a propensity to being shut-ins. A few of the more outdoorsy types are out there living their best lives. But from a large-scale, long-term economic competitivity standpoint, this arrangement doesn't feel sustainable. I pose myself the question: What will be the confluence of circumstances that will demand that we take our jobs more seriously? Edit: speling
  • anthonybsd 4y ago
    >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 off at 1-2pm when the east coast people are definitely logged off. Probably the east coast people are doing the same thing, but in the morning. Lots of happily phoning it in. That hasn't been my experience at all. I work for a multinational company with teams spread across the globe - daily meetings with West Coast, London, and Mumbai and productivity has been fantastic in the past 2 years across all R&D teams (can't speak for others). Are you sure this isn't just an issue with your internal culture?
    • bvanderveen 4y ago
      To be sure, my (observationally biased) sample set includes ~3x more "friends working in tech for multinationals" than coworkers.
    • hahaxdxd123 4y ago
      Can confirm like 80% of my Google friends are 3 hour/day types. But then again, it was only 5-6 hours/day before COVID anyway.
• galkk 4y ago
  I was half-way ready to expect that this article is about about Millennium Tower
• sam0x17 4y ago
  Remote work has made cities largely obsolete anyway for pretty much any desk job. Good time to have a long bet against CRE.
• purim 4y ago
  Still waiting for Vancouver real estate to follow suit but feels weird that in Vancouver its' socially acceptable for people without homes single out a certain ethnic group every cycle. Used to Japanese in the 1980s, Hong Kongers in 90s, Taiwanese in 00s and Chinese in 10s. This type of scapegoating doesn't seem prevalent in other real estate markets like California, their money is correct on high wage disparity between tech workers and those with stagnating wages. In both markets there is surprising silence on REITs and corporations buying up residential living spaces and flipping it. Wouldn't be surprised if those special interest groups also own/influence local media as well.
  • pessimizer 4y ago
    > In both markets there is surprising silence on REITs and corporations buying up residential living spaces and flipping it. Wouldn't be surprised if those special interest groups also own/influence local media as well. I imagine that they're all financing YIMBY organizations, whose aims would do nothing but increase the value of their holdings.
    • purim 4y ago
      Makes sense, buy wholesale, arbitrage, and deflect blame by creating scapegoats through mass media.
    • nikanj 4y ago
      Hold up, since when do YIMBY organizations increase the values? Isn't NIMBY all about protecting home values, and YIMBY about actually building more homes?
      • akavi 4y ago
        YIMBYs increase land values, decrease property values.
    • hahaxdxd123 4y ago
      Yes, YIMBYs are notorious for wanting housing to be scarcer and more expensive...
• huevosabio 4y ago
  The political class and a big section of the electorate (mostly boomers that have been living here for a while) have been hell-bent to squeeze all the juice out of the tech boom while providing little value to the rest of society. This mostly came in the form of insane real estate prices due to restricted supply, making the city residential market essentially an oligopoly and filling the pockets of the landowners. But it also came in outright extortion of the tech scene: gross receipt taxes, income taxes, etc. Every time they try to squeeze wealth out of tech they end up hurting the city. The most recent one was the so-called Amazon tax, where TODCO's John Elberling (a local crony) drafted a bill to tax large e-commerce companies. His motivation was to "tax Jeff Bezos' ass"[0]. But instead the bill would tax small and medium retailers in SF... and would not tax Amazon because the guy was dumb enough to spend $400k on the bill without actually estimating the intended impact of the bill, let alone secondary effects. Mike Solana writes about the extractive tendencies of the SF establishment quite clearly in his "Extract or Die" blog post [1]. I love San Francisco, and hate what the local establishment has done. I have hopes that the crisis will crater support for the establishment (perfectly represented by supervisors Aaron Peskin and Dean Preston) and boost support for serious organizations (e.g. GrowSF [2], Yimby Action [3]) trying to make this city as functional as it is beautiful. [0] https://sfstandard.com/politics/san-francisco-housing-todco-amazon-tax-prop-k-guaranteed-income/ https://sfstandard.com/politics/san-francisco-housing-todco-... [1] https://www.piratewires.com/p/extract-or-die https://www.piratewires.com/p/extract-or-die [2] https://growsf.org/ https://growsf.org/ [3] https://yimbyaction.org/ https://yimbyaction.org/
• PKop 4y ago
  "The root of this—of course—is the pandemic and the way that it has completely transformed work patterns in the city.." And, of course, insane delusional liberal policies that allow degradation of quality of life, violence and property crime, drugs, filthy streets, etc. The media never wants to address the elephant in the room.
  • diebeforei485 4y ago
    The pandemic was a precipitant. The root is the insane delusional liberal policies.
  • indil 4y ago
    I feel sorry for individuals that struggle because of this, but collectively, the schadenfreude is delicious. You get what you vote for.
    • YeBanKo 4y ago
      > You get what you vote for. Not often the case, economic and social maps don’t align with voting maps. Especially in landlocked environment like the peninsula can be totally dominated by SF, where you have to go for services, business, jobs, school, etc. Another point of influence is SFO – owned and operated by San Francisco. They can screw the air travel for many of their non-constituents.
• abeppu 4y ago
  So the commercial real estate problem is real, but this article also is concerned with the impacts to the municipal government. How important are those really? > The city’s budget office expects property tax revenues to continue to grow. But Howard Chernick, an economics professor at Hunter College and co-author of the report that forecast an up to 43% decline in SF’s property values, paints a much worse picture: His team sees a decline of up to 15% in property tax collections amounting to a roughly 4% drop in total revenues. This data is several years old, but in a ranking of large American cities by budget per citizen, SF was at #2 only behind DC which is a kind of special case. At that time, the SF budget was 7.9B, whereas now it's 14B, which put it near $15.8K per person. I have to believe that our problem isn't actually fluctuations in property tax revenue but how we spend. https://ballotpedia.org/Analysis_of_spending_in_America%27s_largest_cities https://ballotpedia.org/Analysis_of_spending_in_America%27s_... https://sf.gov/sites/default/files/2022-07/AAO%20FY2022-23%20%26%20FY2023-24%20-%20FINAL%2020220727.pdf https://sf.gov/sites/default/files/2022-07/AAO%20FY2022-23%2... https://sf.gov/news/mayor-breed-signs-balanced-budget-sets-san-francisco-path-recovery https://sf.gov/news/mayor-breed-signs-balanced-budget-sets-s...
  • inferiorhuman 4y ago
    This data is several years old, but in a ranking of large American cities by budget per citizen That is an incredibly disingenuous metric and it's not surprising at all that DC and SF are at the top of the list. Washington DC is a quasi-state masquerading as a city and San Francisco is a consolidated city and county. The budgets of those two cities encompass things that are externalized in other cities.
    • abeppu 4y ago
      Ok, but San Francisco also seems to be spending a lot more per person than any other consolidated city and county, so while that may explain part of SF's budget, it doesn't seem like a complete explanation. In that list, the next consolidated city/county is Honolulu, and SF was at that point spending close to 50% more per person. (I think that specific example also suggests that SF's spending is not just because local cost of living is high.) Other large city/county examples like Denver, Philadelphia and New Orleans are nowhere close.
• fakethenews2022 4y ago
  At least for residential, you can reassess every year, not on sale as attested to by the article. I know because I did that during the Great Recession.
• Taniwha 4y ago
  Part of this is tying property taxes to real property values (yes I know SF's hands are bound by CA law and prop 13 in particular). These days I live in NZ here rates (the local name for our property tax equivalent) are determined by relative property values. Effectively the City decides it needs to raise $N this year - your property tax will be the fraction of this determined by the value of your land divided by the value of all the land in the city - times that $N. What this means is that if all property values double (or halve) your property tax doesn't change. If you're worried that cities will raise property tax too much - limit increases in that $N (you'll have to allow for simple inflation).
  • intrasight 4y ago
    My understanding is that that is the rule in most states. Is where I live. I don't know about CA.
    • onlyrealcuzzo 4y ago
      States and counties are starting to move away from this. Michigan essentially has a prop 13 that limits property tax increases to below what the average inflation rate is (far below average home price appreciation). Counties like Allegheny in Pennsylvania (Pittsburgh) simply just haven't reassessed properties since 2012 - which is actually even more regressive than Prop 13 in CA and the equivalent in Michigan. I imagine in the near future Prop 13 equivalents will become more common, not less. Voters vote for what's good for them, not what's fair.
      • intrasight 4y ago
        In Allegheny myself (perhaps you saw that). You are right that having such a law doesn't mean that it will be enforced. That's what the courts are for. https://www.publicsource.org/allegheny-county-property-tax-appeal-assessment-lawsuit-unbalanced/ https://www.publicsource.org/allegheny-county-property-tax-a...
        • onlyrealcuzzo 4y ago
• buss 4y ago
  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 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! https://growsf.org/donate https://growsf.org/donate
  • fmajid 4y ago
    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 Commissioner sooner, I would have voted against the incumbent.
    • chrismcb 4y ago
      Is this actually legal?
      • fmajid 4y ago
        Yes, of course, if you register as an overseas voter. You get to keep voting in the last place you lived. I couldn’t transfer my vote to Texas where it would do more good, for instance. https://sfelections.sfgov.org/military-and-overseas-voting https://sfelections.sfgov.org/military-and-overseas-voting When my daughter turns 18 and if we haven’t returned to the US by then, she’ll also get to vote in her hometown of San Francisco.
        • urthor 4y ago
          This makes sense in the same vein that a 2 ASCII character maximum variable length to save space made sense in 1978.
• intrasight 4y ago
  The lawyers will do well - with work challenging assessments. The city will be fine - they'll extract their pound of flesh. The owners will do fine - they play a long game. I think the state will have issues. They can't tax workers who don't live in the state. Also businesses in SF who cater to office workers will have issues.
• gumby 4y ago
  NYC is already starting to see office-to-residential (apartments) conversions, even down near Wall Street. Sad that this article doesn't even consider that (I searched for "residen" and found only a single match, for "president". If SF has a surplus of office space and a shortage of housing stock, well the buildings are already built. I don't see why you couldn't do both: Saleforce tower could have some residential floors and office floors.
  • diebeforei485 4y ago
    What % of office buildings do you think can be converted into residential?
    • gumby 4y ago
      Seems to me the main constraint would be floor/window ratios. Apartment buildings often have windows just along one wall, and that works. So I don't see why 100% of class A office space couldn't be converted, not that I'm any kind of expert. Actually that's extra optimistic. Perhaps most skyscraper office buildings, but not the "strip mall style" office buildings common in the Valley. Other commercial space (retail, warehouse, etc) I would guess very little. For example enclosed shopping malls don't have many windows and it would probably be cheaper just to tear them down. Ditto big box stores. But those vast acres of shopping malls and big box shops could be redeveloped into mixed-use developments.
      • acchow 4y ago
        > Seems to me the main constraint would be floor/window ratios Also the location of plumbing. The buildings with smaller floors can convert fine (for example, see 100 Van Ness). The ones with larger floors much harder
        • gumby 4y ago
          Good point — few people want to leave their apartment and use a communal facility! I can imagine you could easily retrofit the water supply, but the drains sound harder. Still, these projects in NYC think they can pull it off — will be interesting to see. There is a precedent: many of the lower Manhattan residences (LES, SOHO etc) were factories. I just did a quick DDG search for “commercial to residential conversion” and to my (unjustified surprise) there were a lot of links from architects and contractors. NYT article from a few months ago: https://www.nytimes.com/2011/04/10/realestate/10posting-financial-district.html https://www.nytimes.com/2011/04/10/realestate/10posting-fina...
• chrisbrandow 4y ago
  in June 2022, i was in SOMA for the first time since Feb. 2020. it was like a ghost town compared to back then. absolutley wild.
• honkycat 4y ago
  Americans has been priced out of America. We're all paying our wages / rent to mega-corps who own everything and don't have to lower rent to become competitive. I do empathize with the comments complaining about the homeless in Downtown SF. We have a similar problem in PDX and it really does kill any motivation to go downtown. I also visited SF last June and the homeless issue there was INSANE. It is all anyone can talk about! Everybody is pissed off about it! And for good reason, it is miserable for everyone involved! But nothing is being done about it. The other day i saw a woman covered in filth sitting on the sidewalk with no pants on, staring blankly in front of her. I walked a few more blocks and saw a man writhing on the ground clearly high. I'm not a "tough on crime" guy. I have a massive amount of empathy for these people who are likely developmentally disabled, or somewhere in life made the decision to do drugs that lead them to living on the street, concerned with nothing but getting the next hit. But the current state of affairs cannot go on. I'm at a loss of what to do. On one hand, being poor and disabled ( through birth or drugs ) should not be a crime. Locking them up doesn't help at all. Besides: our jails and prisons are already full of people. We see that with news stories of dangerous people being allowed to leave jail and go on to immediately do more crimes. On the other hand: are these people entitled to rule the streets? Shooting up junk and leaving their shit anywhere they please? Setting up tents and piling their junk up blocking sidewalks? Raving mad, starving hysterical naked at anyone who slouches by? Are we not entitled to protecting my city's prosperity from being bled before my eyes? And if so: How? Arresting them and placing them into FEMA camps? Where? With what workforce? Who is going to cook and clean and counsel these people? Or give them housing. I'm not opposed to this either, but we've kind-of seen the bad side of this before with cabrini green. And again: Where. With whose buildings. In whose neighborhood. With what workforce to maintain them. People hiss and spit at their local government but in my eyes, we are backed into a MUCH more dangerous corner than a lot of people realize. The holocaust started well before 1939. People all over Europe were shipping the people they don't want around to the next country over. We need federal action, leaving it up to the states isn't working.
  • swearwolf 4y ago
    Very nicely put.
• RickJWagner 4y ago
  San Francisco can still make a turnaround and bring things back. But they'd better prioritize crime and homelessness ASAP. Without a 'broken windows' cleanup a speedy recovery seems unlikely.
• dredmorbius 4y ago
  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.
• panick21_ 4y ago
  That would actually be great and all that could be used for infill mixed use development. See: https://www.youtube.com/watch?v=fUtdFbK4YG4 https://www.youtube.com/watch?v=fUtdFbK4YG4
• elina123 4y ago
  Thanks