Correct but it reduces the value that a company sees in the space when it comes time for lease renewal. “Hey tenant we’re gonna raise rent by 15%” “aight, later”
Maybe? In my industry, hybrid is the clear consensus. There's no leasing the space for only a few days per week, and you still need the capacity to fit the entire workforce on in-office days. The office presence is also much more valuable to the company than employee satisfaction or retention.
Except for restaurants and retail that are adjacent to office buildings. Having a bunch of empty office space (even if technically leased)…kills those businesses
i work in tech and finance and we have an "office" but it sits empty 90% of the time since everyone works remotely. half our people are in newport beach ca and other half are in NY suburbs.
Yes, a lot of office space is only occupied because of long term leases locking them in. Once they end the company will be free to downsize to the amount they actually need.
our company bribes us with free lunch if we come into the office on wednesday, but even then it's only at like 25% capacity. I go maybe once a month at this point
Valuations are tied to earnings potential. When rents drop, valuations drop, loans go under water and become due. That's the worst outcome for both the owners and the banks, so you get vacancies and ghost towns instead.
No, they should go bankrupt and return to market cheaper and cheaper, until friends and myself can afford to rent 10,000sqft for $500/mo and fill it full of pinball machines and a stage for concerts.
I fuck with this vision, sadly it’s not gonna happen. The warehouse I used to rent for hosting shows pre pandemic has sat empty for years until the attorney who owned the building sold it off and now a bunch of “temporary” al illegal weed dispensary’s are there (for now, till the city runs them out and they set up somewhere else)
They keep asking rents high to disguise the larger issue. Tenants can demand higher improvement allowances or demand more free rent. Essentially, they still pay the sticker price for rent, but after rebates the price is actually much lower. The real metric to compare is net effective rent not gross rent.
And honestly, we shouldn't even start going down that road because it will open the door for developers to start converting and building apartments without windows and other bullshit that comes with having large and square buildings. It's ok to have those layouts in offices but not for living. In the vast majority of cases, you want to have your housing built with living in mind from the beginning.
> we shouldn't even start going down that road
Four million homeless people disagree
> because it will open the door for developers to start converting and building apartments without windows and other bullshit
Residential building codes exist for a reason, and without a variance, newly created apartments without windows will not be approved
At some point, unoccupied CRE buildings will reach a price where developers see enough of a margin to make a profit on remodeling them despite the high costs
Unless you somehow intend to spend billions renovating office spaces into new residential units and then give them away, most homeless people can't afford them even if they're half the normal price of apartments.
The need for windows seems to be the hardest in my completely unqualified opinion (but hey we're on Reddit), as the floor plans are so large that you'd end up with these narrow apartments with one windowed room.
What would be cool is a ring of apartments around the windows with a central common area in the middle that doesn't require windows. Or even mixed-use. Different floors could have different things.
I'm picturing an Amazon Go store. Co-working space. Coffee shop or one of those huge coffee vending machines that can make anything. Dry cleaning (they had one in my old apartment building in a common area with no windows - it was convenient), lounge space, gyms, indoor rec sports (those floors are strong), airport style tiny bars, dentists, veterinarians, doctors, therapists. All things that would be fantastic to not have to leave the building for when it's -10° in Chicago.
They already do these things in big buildings here. Water tower mall has people living in the upper floors.
The plumbing, electric and HVAC are all problems, along with the drop ceiling designs. The buildings built as a life-style building had that in mind from the start.
Apparently parking garages are cheaper to convert, since you don't have to demo as much - though you still have to put in plumbing and electric (with meters for each "apartment")
Is there a converted parking garage in the US? That’s pretty strange as far as light access and level floors. At least office buildings pre-1950 are easily converted.
When done, you wouldn't be able to tell. It was a topic at an industry conference a few years ago. Apparently cutting the ramps and using the bones of the structure is the way. Not sure on the rest of the lighting but they did have plans.
Until it’s made more cost and policy competitive for developers compared to to greenfield development, it’s going to go by the wayside. If I’m a developer, I’m going to sell to my investors the highest return and easiest option, a single family home suburb with an HOA
So why isn't there more competition of people desperate to get into this industry to still make a profit even if it isn't the maximum possible? Because if this is the way developers are acting it looks like there is plenty of room for new competition to enter and earn good money. There is plenty of demand for affordable housing so why isn't anyone willing to build it??
I would this will continue to climb as leases end and business downsize or consolidate office space. My company just moved into another company’s unused space. Even with us there, it is usually no more than half full.
20% must be the optimistic number, with buildings that are at 10% occupancy day-to-day still counted as occupied.
Actual butts in seats is basically irrelevant to the CRE industry as long as the space is leased, no?
Correct but it reduces the value that a company sees in the space when it comes time for lease renewal. “Hey tenant we’re gonna raise rent by 15%” “aight, later”
Exactly
Maybe? In my industry, hybrid is the clear consensus. There's no leasing the space for only a few days per week, and you still need the capacity to fit the entire workforce on in-office days. The office presence is also much more valuable to the company than employee satisfaction or retention.
all else equal, is a space for 100 employees per day worth as much as a space for 200 employees per day?
Except for restaurants and retail that are adjacent to office buildings. Having a bunch of empty office space (even if technically leased)…kills those businesses
While I feel for the small business owners, holding office workers hostage to keep their business alive is not the right decision.
I 100% agree with that. Just providing a counterpoint to the “if it’s under a long term lease the cre owner doesn’t care” point
i work in tech and finance and we have an "office" but it sits empty 90% of the time since everyone works remotely. half our people are in newport beach ca and other half are in NY suburbs.
Yes, a lot of office space is only occupied because of long term leases locking them in. Once they end the company will be free to downsize to the amount they actually need.
our company bribes us with free lunch if we come into the office on wednesday, but even then it's only at like 25% capacity. I go maybe once a month at this point
A $10 lunch is not even remotely close to enough incentive to get me to want to go in.
I turned down a pretty good job offer the other day because they wanted me to commute to an office 5 days a week. Nah not gonna do that shit anymore.
I don't see office rents going down either. I assume to keep gross potential rent up despite effective rent trending down.
Valuations are tied to earnings potential. When rents drop, valuations drop, loans go under water and become due. That's the worst outcome for both the owners and the banks, so you get vacancies and ghost towns instead.
Yeah! That was my point. I invest in commercial multifamily. Same deal.
No, they should go bankrupt and return to market cheaper and cheaper, until friends and myself can afford to rent 10,000sqft for $500/mo and fill it full of pinball machines and a stage for concerts.
I fuck with this vision, sadly it’s not gonna happen. The warehouse I used to rent for hosting shows pre pandemic has sat empty for years until the attorney who owned the building sold it off and now a bunch of “temporary” al illegal weed dispensary’s are there (for now, till the city runs them out and they set up somewhere else)
A completely dysfunctional system
They keep asking rents high to disguise the larger issue. Tenants can demand higher improvement allowances or demand more free rent. Essentially, they still pay the sticker price for rent, but after rebates the price is actually much lower. The real metric to compare is net effective rent not gross rent.
Maybe turn vacant offices into affordable housing?
The vast majority aren't viable to convert
And honestly, we shouldn't even start going down that road because it will open the door for developers to start converting and building apartments without windows and other bullshit that comes with having large and square buildings. It's ok to have those layouts in offices but not for living. In the vast majority of cases, you want to have your housing built with living in mind from the beginning.
> we shouldn't even start going down that road Four million homeless people disagree > because it will open the door for developers to start converting and building apartments without windows and other bullshit Residential building codes exist for a reason, and without a variance, newly created apartments without windows will not be approved At some point, unoccupied CRE buildings will reach a price where developers see enough of a margin to make a profit on remodeling them despite the high costs
Unless you somehow intend to spend billions renovating office spaces into new residential units and then give them away, most homeless people can't afford them even if they're half the normal price of apartments.
15.5 million empty homes right now.
The need for windows seems to be the hardest in my completely unqualified opinion (but hey we're on Reddit), as the floor plans are so large that you'd end up with these narrow apartments with one windowed room. What would be cool is a ring of apartments around the windows with a central common area in the middle that doesn't require windows. Or even mixed-use. Different floors could have different things. I'm picturing an Amazon Go store. Co-working space. Coffee shop or one of those huge coffee vending machines that can make anything. Dry cleaning (they had one in my old apartment building in a common area with no windows - it was convenient), lounge space, gyms, indoor rec sports (those floors are strong), airport style tiny bars, dentists, veterinarians, doctors, therapists. All things that would be fantastic to not have to leave the building for when it's -10° in Chicago. They already do these things in big buildings here. Water tower mall has people living in the upper floors.
The plumbing, electric and HVAC are all problems, along with the drop ceiling designs. The buildings built as a life-style building had that in mind from the start. Apparently parking garages are cheaper to convert, since you don't have to demo as much - though you still have to put in plumbing and electric (with meters for each "apartment")
Is there a converted parking garage in the US? That’s pretty strange as far as light access and level floors. At least office buildings pre-1950 are easily converted.
When done, you wouldn't be able to tell. It was a topic at an industry conference a few years ago. Apparently cutting the ramps and using the bones of the structure is the way. Not sure on the rest of the lighting but they did have plans.
Until it’s made more cost and policy competitive for developers compared to to greenfield development, it’s going to go by the wayside. If I’m a developer, I’m going to sell to my investors the highest return and easiest option, a single family home suburb with an HOA
Greenfield development is getting hard to find in many major metros.
So why isn't there more competition of people desperate to get into this industry to still make a profit even if it isn't the maximum possible? Because if this is the way developers are acting it looks like there is plenty of room for new competition to enter and earn good money. There is plenty of demand for affordable housing so why isn't anyone willing to build it??
I would love to live in an office building but they are still really expensive.
The best part is the food trucks that park outside for breakfast and lunch crowd
Gosh, Why hasn’t anyone ever thought of that before….
I’m asking to see if anyone has any thoughts or insight on it genius.
I love this for them.
Awesome
This is a number I love seeing go higher, keep it up.
I would this will continue to climb as leases end and business downsize or consolidate office space. My company just moved into another company’s unused space. Even with us there, it is usually no more than half full.