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A lot of the locales where commercial is underwater are the same locales where residential prices are through the roof. This is because of decades of regulatory

A lot of the locales where commercial is underwater are the same locales where residential prices are through the roof. This is because of decades of regulatory capture by the housing cartel. Supply has been strangled through various land-use regulations, particularly height and volume limits, byzantine red tape, and the anti-sprawl push. Now many of those municipalities are flirting with residential conversion of commercial buildings. Obviously this only works in the densest areas, but would be a great exit plan for many properties. If the regulations were streamlined enough, it could take a nice bite out of the residential pyramid scheme. Which is why these plans are being sabotaged behind the scenes. Conversion is pretty much guaranteed to be limited to a trickle. Commercial owners have a lot less political leverage than the residential cartel.

underlipton 2y ago
I've noticed quite a bit of astroturfing on this matter, for certain.
bluGill 2y ago
Commercial conversion isn't a bad idea, but it isn't as easy as it sounds. Commercial generally is setup wrong for residential. Residential needs windows in each bedroom (fire code). Residential tends to have a lot more bathrooms. Residential has more plumbing. While you can make it work, the above often means the commercial building isn't setup right and so there is a lot of useless space.
- worstspotgain 2y ago
  Of course it's not trivial but it's typically very cost-effective, particularly because much of the (intentionally-prohibitive) costs of residential construction apply before breaking ground. It obviously depends on appreciation minus conversion cost, but if that figure was negative we wouldn't be talking about this at all. The arguments that you put forth are being used by the cartel to rationalize why there's so little conversion going on. In truth it's mostly because of obstruction.
  - sroussey 2y ago
    It’s not cost effective at all unless you can boost density by several times. An order of magnitude will often do it.

underlipton 2y ago

I've noticed quite a bit of astroturfing on this matter, for certain.

bluGill 2y ago

Commercial conversion isn't a bad idea, but it isn't as easy as it sounds. Commercial generally is setup wrong for residential. Residential needs windows in each bedroom (fire code). Residential tends to have a lot more bathrooms. Residential has more plumbing. While you can make it work, the above often means the commercial building isn't setup right and so there is a lot of useless space.

worstspotgain 2y ago
Of course it's not trivial but it's typically very cost-effective, particularly because much of the (intentionally-prohibitive) costs of residential construction apply before breaking ground. It obviously depends on appreciation minus conversion cost, but if that figure was negative we wouldn't be talking about this at all. The arguments that you put forth are being used by the cartel to rationalize why there's so little conversion going on. In truth it's mostly because of obstruction.
- sroussey 2y ago
  It’s not cost effective at all unless you can boost density by several times. An order of magnitude will often do it.