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The Next Crisis Will Start With Empty Office Buildings
One possibility, I'm not sure how feasible, is to convert office space to manufacturing space. I've been reading there is a manufacturing building boom going on so it may not be as bad as perceived if in fact that can be accomplished. It'll also bring people who work there back to the city/wherever to help local businesses.
Or, another alternative: convert to HOUSING units. AFFORDABLE housing units. There's a gigantic shortage here. Instead of addressing the significant psych and drug problems by which a big chunk of the homeless are afflicted, politicians want to "paper it over" with talk of "affordable housing."
That will not solve the homeless problem. The psych and druggies need to be taken off the street, hopefully to get and respond to the help they need. At any rate, providing AFFORDABLE housing is still very much needed, for those whom life has screwed, and need a leg-up.
Barron's this week has a positive Cover story and a positive Q&A on real estate. Suggestion is to start bottom fishing cautiously. Sure, there are concerns and lots of bad news, but when everything is hunky-dory, prices would have moved up already.
SLG stock is up >50% from its low last year! Presumably, each property of a commercial real estate company has its own non-recourse loan and the owner of properties can limit contagion effect if well diversified. Has anybody looked into the publicly traded recourse loans of commercial real estate companies?
@Crash- The only problem with your suggestion is that in most cases it's not economically affordable to convert office space to affordable housing units. Or, usually, even unaffordable housing units. No quick fixes available sir.
I remember during the 70s that the downtown NYC manufacturing spaces were abandoned, leading to a haven for artisans, artists, and performers. It wasn’t long before it became NY’s “SoHo.”
“There is an aging office building on Water Street in Lower Manhattan where it would make all the sense in the world to create apartments. The 31-story building, once the headquarters of A.I.G., has windows all around and a shape suited to extra corner units. In a city with too little housing, it could hold 800 to 900 apartments. Right across the street, one office not so different from this one has already been turned into housing, and another is on the way.
But 175 Water Street has a hitch: Offices in the financial district are spared some zoning rules that make conversion hard — so long as they were built before 1977. And this one was built six years too late, in 1983.”
I firmly believe some of these office space can be repurposed to residential apartments, but this takes time that may take over 10 years or more. Right now there is too many empty offices and there is a slow indication of reversing the trend.
In the meantime, there is still a shortage of affordable single family housing on the west coast. I am concerned for my kids.
Just remember when many of us were in high school'ish in 1976 the population of the USA was ~ 220M, now "officially it is ~ 340M, and let's not BS ourselves with all the illegals etc it has to be more like ~380M. They have to live somewhere, no? I really don't see those CRE in the inner cities being built out...I think the real oppty is in the burbs with the big office parks...lot of land, not high rise but maybe easier to convert to housing? And this one if for you DMoran...I know a guy who just bought 40 acres in Alta WY, the other side of the Tetons, the quiet side....building a house next year, builder offering him a free AR15 as a deal sweetener....
the reasons I am asking questions (sorry about that) is I haver read all about this so called "crisis". will you be sure to wake me when the crisis starts?
@operation_twist: Instead of trying to pick apart the excerpts that Lewis has posted why not try using the provided link, reading the entire report and figure things out for yourself?
Comments
That will not solve the homeless problem. The psych and druggies need to be taken off the street, hopefully to get and respond to the help they need. At any rate, providing AFFORDABLE housing is still very much needed, for those whom life has screwed, and need a leg-up.
“There is an aging office building on Water Street in Lower Manhattan where it would make all the sense in the world to create apartments. The 31-story building, once the headquarters of A.I.G., has windows all around and a shape suited to extra corner units. In a city with too little housing, it could hold 800 to 900 apartments. Right across the street, one office not so different from this one has already been turned into housing, and another is on the way.
But 175 Water Street has a hitch: Offices in the financial district are spared some zoning rules that make conversion hard — so long as they were built before 1977. And this one was built six years too late, in 1983.”
In the meantime, there is still a shortage of affordable single family housing on the west coast. I am concerned for my kids.
Just remember when many of us were in high school'ish in 1976 the population of the USA was ~ 220M, now "officially it is ~ 340M, and let's not BS ourselves with all the illegals etc it has to be more like ~380M. They have to live somewhere, no? I really don't see those CRE in the inner cities being built out...I think the real oppty is in the burbs with the big office parks...lot of land, not high rise but maybe easier to convert to housing? And this one if for you DMoran...I know a guy who just bought 40 acres in Alta WY, the other side of the Tetons, the quiet side....building a house next year, builder offering him a free AR15 as a deal sweetener....
Technological change happens much the same way.” - Tim O’Reilly https://www.oreilly.com/radar/gradually-then-suddenly/#:~:text=There's a passage in Ernest,happens much the same way.
Me thinks we’re seeing it in CRE conversion interest.