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.
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.
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
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.
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.
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.
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...
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.
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.
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.
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
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.
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.
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) and I started GrowSF — we can build a better city, but only if the tech industry supports pro-growth policies and elected officials.
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.
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?
>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?
I can only add my own anecdotal data but this is certainly not been the situation at my midsized tech company. We were already starting to transition to a permanent work from home situation well before Covid struck so maybe that had something to do with it, but our metrics in terms of deliverables for our projects have never looked better and the engineering department is certainly a lot happier being able to work comfortably from home and without the drudge of a commute.
I'm pretty sure a lot of people zone out at work too. Office breaks, lunches, and general chit chat probably take a lot of time away from work too. We are after all, not machines.
> What will be the confluence of circumstances that will demand that we take our jobs more seriously?
I can think of one "confluence of circumstances" that would make me take my job more seriously: Higher salaries
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.
Turns out prices have to go down when the fed doubles rates. By my math, a 30% correction is needed to make up the difference in terms of monthly affordability - meaning a $500k house at 6% is the same as a $750k house at 3%.
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.
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.
"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.
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.
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
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.
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.
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.
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")
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.
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 $1 million+ property in SF I would be selling ASAP - the pain is just getting started
Still waiting for Vancouver real estate to follow suit but feels weird that in Vancouver its' socially acceptable for people without homes single out a certain ethnic group every cycle. Used to Japanese in the 1980s, Hong Kongers in 90s, Taiwanese in 00s and Chinese in 10s. This type of scapegoating doesn't seem prevalent in other real estate markets like California, their money is correct on high wage disparity between tech workers and those with stagnating wages. In both markets there is surprising silence on REITs and corporations buying up residential living spaces and flipping it. Wouldn't be surprised if those special interest groups also own/influence local media as well.
> This type of scapegoating doesn't seem prevalent in other real estate markets like California
At least from 2012-2018 - in my circles - everyone was blaming "Chinese cash-buyers" for a lot of problems.
I think 3 things:
1) Vancouver has a MUCH higher ratio of immigrants - especially immigrants that feel comfortable enough with their long-term situation - to purchase than in LA or San Diego. The Bay area might be close.
2) Although the percentage of foreign buyers is less than 10% in Vancouver and not the actual reason for the problem - that ratio is a lot higher than in LA, San Diego, or The Bay. It's closer to 1% in CA.
3) Most importantly, Vancouver's price to rent & income (after taxes) are BAT$HIT insane compared to California.
So although it's not the reason for Vancouver's high prices - and no one should be talking about it - it's not surprising that people talk about it more in Vancouver than in LA.
The impact of foreign investment has been much greater in Vancouver, though. 40% of the population was born outside of Canada.
Not saying it’s a bad thing, but it’s not just seething racism at play, there were major waves of immigration into the city, which drove up housing prices.
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.
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.
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).
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.
[+] [-] bragr|3 years ago|reply
[+] [-] ptmcc|3 years ago|reply
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-...
[+] [-] lizknope|3 years ago|reply
https://www.nbcnews.com/business/real-estate/why-empty-offic...
https://www.washingtonian.com/2022/07/28/should-dcs-empty-of...
[+] [-] paxys|3 years ago|reply
[+] [-] guywithahat|3 years ago|reply
[+] [-] innagadadavida|3 years ago|reply
[+] [-] foobiekr|3 years ago|reply
[+] [-] 121789|3 years ago|reply
[+] [-] asveikau|3 years ago|reply
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...
[+] [-] hollywood_court|3 years ago|reply
[+] [-] chrisseaton|3 years ago|reply
[+] [-] cjrp|3 years ago|reply
[0] https://www.gov.uk/government/news/planning-measures-will-ma...
[+] [-] niffydroid|3 years ago|reply
[+] [-] coryfklein|3 years ago|reply
[+] [-] evr1isnxprt|3 years ago|reply
Think of the loss of figurative identity a minority of landlords might incur!
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] downrightmike|3 years ago|reply
[+] [-] buss|3 years ago|reply
That's why 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
[+] [-] fmajid|3 years ago|reply
[+] [-] bvanderveen|3 years ago|reply
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|3 years ago|reply
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?
[+] [-] throwaway675309|3 years ago|reply
[+] [-] mderazon|3 years ago|reply
[+] [-] strikelaserclaw|3 years ago|reply
[+] [-] axxto|3 years ago|reply
[+] [-] kansface|3 years ago|reply
[+] [-] ryandrake|3 years ago|reply
[+] [-] onlyrealcuzzo|3 years ago|reply
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.
[+] [-] ryanSrich|3 years ago|reply
[+] [-] jeffbee|3 years ago|reply
Inventory of listed homes remains extremely low. https://fred.stlouisfed.org/series/ACTLISCOUCA
Median days on market still near all-time lows
SF: https://fred.stlouisfed.org/series/MEDDAYONMAR41860
Cal: https://fred.stlouisfed.org/series/MEDDAYONMARCA
USA: https://fred.stlouisfed.org/series/MEDDAYONMARUS
[+] [-] esalman|3 years ago|reply
[+] [-] dredmorbius|3 years ago|reply
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.
[+] [-] Apocryphon|3 years ago|reply
[+] [-] PKop|3 years ago|reply
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.
[+] [-] bearjaws|3 years ago|reply
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.
[+] [-] sidvit|3 years ago|reply
[+] [-] paxys|3 years ago|reply
[+] [-] baggy_trough|3 years ago|reply
[+] [-] gumby|3 years ago|reply
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.
[+] [-] Cupertino95014|3 years ago|reply
What else? "eye" as a verb. ("Supervisors eye relaxing building codes")
[+] [-] denimnerd42|3 years ago|reply
[+] [-] seibelj|3 years ago|reply
If I owned a $1 million+ property in SF I would be selling ASAP - the pain is just getting started
[+] [-] purim|3 years ago|reply
[+] [-] onlyrealcuzzo|3 years ago|reply
At least from 2012-2018 - in my circles - everyone was blaming "Chinese cash-buyers" for a lot of problems.
I think 3 things:
1) Vancouver has a MUCH higher ratio of immigrants - especially immigrants that feel comfortable enough with their long-term situation - to purchase than in LA or San Diego. The Bay area might be close.
2) Although the percentage of foreign buyers is less than 10% in Vancouver and not the actual reason for the problem - that ratio is a lot higher than in LA, San Diego, or The Bay. It's closer to 1% in CA.
3) Most importantly, Vancouver's price to rent & income (after taxes) are BAT$HIT insane compared to California.
So although it's not the reason for Vancouver's high prices - and no one should be talking about it - it's not surprising that people talk about it more in Vancouver than in LA.
[+] [-] wbsss4412|3 years ago|reply
Not saying it’s a bad thing, but it’s not just seething racism at play, there were major waves of immigration into the city, which drove up housing prices.
[+] [-] abeppu|3 years ago|reply
> 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_...
https://sf.gov/sites/default/files/2022-07/AAO%20FY2022-23%2...
https://sf.gov/news/mayor-breed-signs-balanced-budget-sets-s...
[+] [-] inferiorhuman|3 years ago|reply
[+] [-] Taniwha|3 years ago|reply
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).
[+] [-] arberx|3 years ago|reply
Companies will have power to do this in a downturn.
[+] [-] rr888|3 years ago|reply