7 ms·

I'm confused. Why is this program necessary? If building owners are sitting on vacant space because the demand for office space has dropped, while the demand fo

I'm confused. Why is this program necessary? If building owners are sitting on vacant space because the demand for office space has dropped, while the demand for housing continues to rise, aren't they already incentivized to convert to residential space just based on the market conditions? Not sure why the city has to subsidize the property owners.

thinkcontext 3y ago
Office space rents for more per SQ ft than residential, so landlords have incentive to keep it vacant in the hopes that markets come back.
- eagleinparadise 3y ago
  I work in CRE - anyone reading this completely disregard this silly comment. it is laughably stupid
  - zarathustreal 3y ago
    In other news: internet rando calls other internet rando an idiot! Fails to recognize irony! More at 11pm.
  - loco5niner 3y ago
    not exactly a thoughtful and interesting commentary, regardless of correctness.
    - SantalBlush 3y ago
      I'll take correctness over thoughtful or interesting. Maybe I don't fit in here.
      - zarathustreal 3y ago
        Unfortunate but true. This is just another echo chamber
      - loco5niner 3y ago
        Oh, I like correctness too. Are you correct? I don't know; you just said something rude and didn't back up your assertion. As far as fitting in here, have you read the guidelines? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html >In Comments >Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes. >Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. >When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."
        SantalBlush 3y ago
        Yes, I've read them. You should probably calm down and maybe take a break from social media.
        bheadmaster 3y ago
        What exactly made you think the other person isn't calm? Their comment seems calm to me.
        SantalBlush 3y ago
        >you just said something rude and didn't back up your assertion. This is a combative tone and suggests they need to calm down. Moreover, they're violating the very rules that they just posted: >Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
        bheadmaster 3y ago
        I don't sense any combative tone - the statement was describing the state of things in a truthful manner. I find your tone ("they need to calm down", "take a break from social media") much more condescending and passive-aggressive. Maybe you are projecting your own feelings onto others? Therefore, maybe the advice you're giving to them is actually advice you want to give to yourself? Note that this is merely an observation - I have no way of knowing as I don't have access to your mind, and I don't care either way, so feel free to label my comment as combative, too, if you wish.
  - Supermancho 3y ago
    under 3$ sq ft for residential in LA (talking about apartments) https://www.apartments.com/blog/what-is-the-average-rent-in-los-angeles-ca https://www.apartments.com/blog/what-is-the-average-rent-in-... around 4$ sq ft for commerical in LA https://www.colliers.com/en/research/los-angeles/2022-q2-downtown-los-angeles-office-research-report https://www.colliers.com/en/research/los-angeles/2022-q2-dow... CRE is WAY higher in the top tier areas of SF, for the obvious reason that historically high startup capital outpaces all other residential price pressures. This differs in other localities.
  - thinkcontext 3y ago
    > Couple that with the fact that office rents are higher per square foot than residential rents are, and you see why developers aren’t champing at the bit to get new projects underway. Van Nieuwerburgh gave me an example from San Francisco, where Juul’s old headquarters—down the block from Twitter’s improvised dormitory—is for sale for $150 million. That’s a lot less than the $397 million the embattled nicotine vape company paid for it in 2019. But at $400 a square foot to buy and another $400 a square foot to renovate, he said, the conversion would still produce a building with rents too high even for San Francisco. In other words, offices may be down, but they’ll have to fall a lot further before adaptive reuse becomes a bargain. https://slate.com/business/2022/12/office-housing-conversion-downtown-twitter-beds.html https://slate.com/business/2022/12/office-housing-conversion...
superfrank 3y ago
I've read that one of the biggest problems is that while the demand for office space has dropped, the cost to convert to residential is so high that building owners can't break even on a reasonable timeline so they have little incentive to convert. I'm not an expert at all, but I think that in addition to building out the new floor plans you pretty much have to redo all the plumbing and electrical and I believe in many places the rules for emergency exits are different between the two building types. I think in some cases it would actually just be cheaper to tear the entire building down and build a new one from the ground up. I think many owners have the mindset that if they're going to lose money either way they'll stick with the devil they know and hope for a miracle rebound. It sounds like this program is offering tax incentives to help offset those conversion costs to make it much easier for building owners to break even after a conversion.
eagleinparadise 3y ago
Most office buildings are not architecturally feasible to convert to residential. In fact, because of zoning laws, many/most can't even be converted. Would you live in an apartment 15 feet wide and 50 feet deep? No. That's why most office buildings dont work You have to redo all the mechanical, plumbing, electric, and then entirely refinish the building. Its literally cheaper to build new than deal with the nightmare that is to convert an office. I work in CRE - every single office to multi deal i have seen the developer has war stories. And the units are 40-100% more expensive in cost than other apartments. Office buildings are like an infectious disease. You could let them die. But if you have an urban infill city environment and more and more office properties become ghost buildings, then that disease will spread. All of the restaurants and other businesses nearby that rely on the foot traffic from office folk, they will die. You will see more riff raff. More homeless. More crime. Many office assets need to go to 0 in asset value before the private market is willing to take the risk of those conversions. Remember, loans are close to 10% for construction. And equity returns are higher.
- 1986 3y ago
  > Would you live in an apartment 15 feet wide and 50 feet deep? Isn't this basically a railroad?
- JustARandomGuy 3y ago
  >Would you live in an apartment 15 feet wide and 50 feet deep? For laughs, I just measured the width of my home's hallways and rooms. I don't see why 15x50 feet apartment isn't doable especially for a bachelor/new couple starting out. Assume an apartment with a 3 foot wide, 50 foot length hallway, subtract another 2 feet width for walls/piping/whatever, and then you can hang 5 rooms that are 10x10 feet from the hallway. Enough for a living room/common area/kitchen/2 bedrooms. Might get a bit cramped but very usable. I assume I'm missing something here since this doesn't seem to be too bad.
  - drozycki 3y ago
    All of your windows are on one of the 15 ft walls. You would need to have the lights on all day in many of the rooms, no opening a window for fresh air, limited escape options in case of emergency. Perhaps some of these concerns should be weighed against the reality of housing shortage and homelessness, but ample windows throughout is the standard for residential today. That’s why modern office tower conversion involves cutting the center out for a light shaft.
anigbrowl 3y ago
Because they're wildly over-leveraged because they were squeezing out every last drop of capital. Landlords are economic parasites who provide very little value to the larger economy. Kinda hoping cities just start eminent domaining the properties, there will never be a better time.

thinkcontext 3y ago

Office space rents for more per SQ ft than residential, so landlords have incentive to keep it vacant in the hopes that markets come back.

eagleinparadise 3y ago
I work in CRE - anyone reading this completely disregard this silly comment. it is laughably stupid
- zarathustreal 3y ago
  In other news: internet rando calls other internet rando an idiot! Fails to recognize irony! More at 11pm.
- loco5niner 3y ago
  not exactly a thoughtful and interesting commentary, regardless of correctness.
  - SantalBlush 3y ago
    I'll take correctness over thoughtful or interesting. Maybe I don't fit in here.
    - zarathustreal 3y ago
      Unfortunate but true. This is just another echo chamber
    - loco5niner 3y ago
      Oh, I like correctness too. Are you correct? I don't know; you just said something rude and didn't back up your assertion. As far as fitting in here, have you read the guidelines? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html >In Comments >Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes. >Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. >When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."
      - SantalBlush 3y ago
        Yes, I've read them. You should probably calm down and maybe take a break from social media.
        bheadmaster 3y ago
        What exactly made you think the other person isn't calm? Their comment seems calm to me.
        SantalBlush 3y ago
        >you just said something rude and didn't back up your assertion. This is a combative tone and suggests they need to calm down. Moreover, they're violating the very rules that they just posted: >Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes.
        bheadmaster 3y ago
        I don't sense any combative tone - the statement was describing the state of things in a truthful manner. I find your tone ("they need to calm down", "take a break from social media") much more condescending and passive-aggressive. Maybe you are projecting your own feelings onto others? Therefore, maybe the advice you're giving to them is actually advice you want to give to yourself? Note that this is merely an observation - I have no way of knowing as I don't have access to your mind, and I don't care either way, so feel free to label my comment as combative, too, if you wish.
- Supermancho 3y ago
  under 3$ sq ft for residential in LA (talking about apartments) https://www.apartments.com/blog/what-is-the-average-rent-in-los-angeles-ca https://www.apartments.com/blog/what-is-the-average-rent-in-... around 4$ sq ft for commerical in LA https://www.colliers.com/en/research/los-angeles/2022-q2-downtown-los-angeles-office-research-report https://www.colliers.com/en/research/los-angeles/2022-q2-dow... CRE is WAY higher in the top tier areas of SF, for the obvious reason that historically high startup capital outpaces all other residential price pressures. This differs in other localities.
- thinkcontext 3y ago
  > Couple that with the fact that office rents are higher per square foot than residential rents are, and you see why developers aren’t champing at the bit to get new projects underway. Van Nieuwerburgh gave me an example from San Francisco, where Juul’s old headquarters—down the block from Twitter’s improvised dormitory—is for sale for $150 million. That’s a lot less than the $397 million the embattled nicotine vape company paid for it in 2019. But at $400 a square foot to buy and another $400 a square foot to renovate, he said, the conversion would still produce a building with rents too high even for San Francisco. In other words, offices may be down, but they’ll have to fall a lot further before adaptive reuse becomes a bargain. https://slate.com/business/2022/12/office-housing-conversion-downtown-twitter-beds.html https://slate.com/business/2022/12/office-housing-conversion...

superfrank 3y ago

I've read that one of the biggest problems is that while the demand for office space has dropped, the cost to convert to residential is so high that building owners can't break even on a reasonable timeline so they have little incentive to convert. I'm not an expert at all, but I think that in addition to building out the new floor plans you pretty much have to redo all the plumbing and electrical and I believe in many places the rules for emergency exits are different between the two building types. I think in some cases it would actually just be cheaper to tear the entire building down and build a new one from the ground up. I think many owners have the mindset that if they're going to lose money either way they'll stick with the devil they know and hope for a miracle rebound. It sounds like this program is offering tax incentives to help offset those conversion costs to make it much easier for building owners to break even after a conversion.

eagleinparadise 3y ago

Most office buildings are not architecturally feasible to convert to residential. In fact, because of zoning laws, many/most can't even be converted. Would you live in an apartment 15 feet wide and 50 feet deep? No. That's why most office buildings dont work You have to redo all the mechanical, plumbing, electric, and then entirely refinish the building. Its literally cheaper to build new than deal with the nightmare that is to convert an office. I work in CRE - every single office to multi deal i have seen the developer has war stories. And the units are 40-100% more expensive in cost than other apartments. Office buildings are like an infectious disease. You could let them die. But if you have an urban infill city environment and more and more office properties become ghost buildings, then that disease will spread. All of the restaurants and other businesses nearby that rely on the foot traffic from office folk, they will die. You will see more riff raff. More homeless. More crime. Many office assets need to go to 0 in asset value before the private market is willing to take the risk of those conversions. Remember, loans are close to 10% for construction. And equity returns are higher.

1986 3y ago
> Would you live in an apartment 15 feet wide and 50 feet deep? Isn't this basically a railroad?
JustARandomGuy 3y ago
>Would you live in an apartment 15 feet wide and 50 feet deep? For laughs, I just measured the width of my home's hallways and rooms. I don't see why 15x50 feet apartment isn't doable especially for a bachelor/new couple starting out. Assume an apartment with a 3 foot wide, 50 foot length hallway, subtract another 2 feet width for walls/piping/whatever, and then you can hang 5 rooms that are 10x10 feet from the hallway. Enough for a living room/common area/kitchen/2 bedrooms. Might get a bit cramped but very usable. I assume I'm missing something here since this doesn't seem to be too bad.
- drozycki 3y ago
  All of your windows are on one of the 15 ft walls. You would need to have the lights on all day in many of the rooms, no opening a window for fresh air, limited escape options in case of emergency. Perhaps some of these concerns should be weighed against the reality of housing shortage and homelessness, but ample windows throughout is the standard for residential today. That’s why modern office tower conversion involves cutting the center out for a light shaft.

anigbrowl 3y ago

Because they're wildly over-leveraged because they were squeezing out every last drop of capital. Landlords are economic parasites who provide very little value to the larger economy. Kinda hoping cities just start eminent domaining the properties, there will never be a better time.