[pefloresjr]

The CRE industry is in a world of hurt. Office buildings face a perfect storm for disaster:

- People being forced to stay home from work
- Whole companies having experience with their workforce working from home all at once
- Companies in need to cut expenses in pandemic aftermath

This could actually be a boon for the housing crises. So many buildings are going to be unable to lease their space that they are going to have no choice but to start converting to residential space that isn't as lucrative and will require investments in conversion.  And CRE mortgages are based on valuations assuming commercial leasing tenants.

The world is transforming before our eyes.

I've been expecting this to happen for years, kind of like soccer becoming a leading American sport.  Especially for places like SF where residential rents/leases are very valuable.  I seems that the tech boom that has been happening has needed much more office space than expected.  Even those in downtown areas that don't have the old college campus atmosphere have been taking up a great deal of commercial square footage.  That push for office space has finally used up the excess office development allowed under SF building limits.  Perhaps the economic impact of COVID19 and viability of work from home will finally bring about the expected conversion of office space, but I will wait to believe it until I see it.  I do know of at least one tower on Van Ness near Civic Center in SF that recently converted from commercial to residential but have not seen any widespread conversions.  

Cheers,
Pete F.

[pefloresjr]

The CRE industry is in a world of hurt. Office buildings face a perfect storm for disaster:

- People being forced to stay home from work
- Whole companies having experience with their workforce working from home all at once
- Companies in need to cut expenses in pandemic aftermath

This could actually be a boon for the housing crises. So many buildings are going to be unable to lease their space that they are going to have no choice but to start converting to residential space that isn't as lucrative and will require investments in conversion.  And CRE mortgages are based on valuations assuming commercial leasing tenants.

The world is transforming before our eyes.

I've been expecting this to happen for years, kind of like soccer becoming a leading American sport.  Especially for places like SF where residential rents/leases are very valuable.  I seems that the tech boom that has been happening has needed much more office space than expected.  Even those in downtown areas that don't have the old college campus atmosphere have been taking up a great deal of commercial square footage.  That push for office space has finally used up the excess office development allowed under SF building limits.  Perhaps the economic impact of COVID19 and viability of work from home will finally bring about the expected conversion of office space, but I will wait to believe it until I see it.  I do know of at least one tower on Van Ness near Civic Center in SF that recently converted from commercial to residential but have not seen any widespread conversions.  

Cheers,
Pete F.