Hybrid work leaves offices empty and building owners reeling

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The part I didn’t understand (still don’t) is how they are walling off entire cores of buildings so they can transform more of the upper floors into penthouse apartments. If I understand correctly, that is space that is already built but now will never be used for any purpose at all. Seems odd, not to mention wasteful.

I think that’s a relic of the “air rights” system in New York. A building owner also owns the empty space above the building, and has the ability to sell those “air rights” to a neighboring landowner allowing him to build an even taller building. You also get to build taller if you don’t use your whole lot. I suspect the empty space in the middle of the building is counted the same under the air rights system, as an open space beside the building.

What Are NYC Air Rights All About? | StreetEasy

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The veritical center of a high rise has no sunlight and no direct access to outside air, which are two things people like to have where they live. So making the building with a hole down the middle (like a donut) allows both more sunlight AND direct access to fresh air by the interior units. Otherwise, they would be very difficult to sell–even at a massively discounted price.

Same problem exists with living in space. A large space vessel would need to have areas that permitted people to feel they were not trapped in a tiny space–so large open spaces would be necessary. Which is one major reason for the holodecks in Star Trek.

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Yeah I thought about that, yet people buy townhomes that have nothing but windows in the front and back. I thought office buildings could be sectioned off kind of like that, long and thin, versus fat and wide (and lots of windows) and some people would go for it.

My condo in Boston had wonderful windows along the Charles, and a vertical “light shafft” that gave the illusion of windows (yes there were 2) in the bedroom - but the only thing you could see was a brick wall opposite the 20-ft shafft.

Anyway give me the concession for that (huge) shafft and I’ll figure out something to do with it. Rock climbing! Roller coaster! Trash shafft. Mushroom farm. Haunted house! Delivery shafft. Oh the possibilities!

[No, I can’t believe the word shafft, minus an f is prohibited here. OMG.]

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Goofy the void is so something can be built on a top floor like balconies or on the roof. You can not add square footage but penthouses are worth more than center square footage.

The problem is in the moment. Meaning the finances are what they are now. That does not mean the buildings will not be repurposed as office space later. Some will be.

Remember in NYC buildings were torn down and a building was built in its place rinse and repeat. Common place in NYC.

Big ticket items like this, one-offs, and the finances are stuck.

Separate note about 30% of loans are commercial. High rises are not the 30% of loans. Might be 35 or 45% of the 30% of commercial loans. There are other forms of commercial real estate. But the warehouses are also at times turning into bad loans.

Second Separate Note

San Francisco Sees Population Growth After Post-Pandemic Exodus. The city’s population grew by 4,925 people to 848,019 residents during the 12 months ended on June 30, according to the report.Dec 19, 2023
https://www.bloomberg.com/news/articles/2023-12-19/san-francisco-sees-population-growth-after-post-pandemic-exodus

Employees and employers are holding on to remote work. As more people are hired more office space will be needed. Further out these buildings will mostly fill again.

Its a great place for heating and air conditioning equipment. And you can see potential for gyms and workout space. Maybe even laundromats. How about a hobby shop with special tools and equipment. A model train layout. At the right price there might be lots of interest.

I love the attitude of some people who have a very narrow focus on who will buy and what will sell. Creative people willing to stick their neck out and try something new are too rare. We have lots of the other stick in the mud type.

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Having done nothing more than watch that segment, I thought the issue was related to the conversion of office space to residential. Local building codes effectively mean that you can use less of the space for residences compared to offices. So the converters can’t use all of the available space. They have to leave something empty. So they leave the center empty, which is less desirable (and therefore less profitable) as living spaces.

–Peter

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They ran the concept of using only existing space into getting penthouse space.

Probably because penthouses sell in the $10s millions in NYC.

Yes, that was my understanding.

That will certainly help with the housing shortage.

I suspect the main problem with center space is lack of windows. In office buildings they are almost always on the sides. (In buildings constructed for residential use, they are often H shaped to provide more windows.)

The center space is usually elevators. The corners often have emergency stairs. Big spaces without windows are fine, but probably not for everyone. That center space probably could be a retailer. An upper class jeweler. Or an accountant. Law office. Beauty salon? Manicure shop.

I don’t think that is quite correct. I gathered you couldn’t add square footage period. So you cut out the undesirable middle of the building, and build an equal square footage of luxury penthouses on top. The penthouses are where the real money is. That’s why they don’t turn those areas into amenities. The need to delete the square footage.

I watched it when it was broadcast (OK, might have been Monday, since I watch almost nothing live, preferring to record and skip commercials), so was going from a bit of memory there.

Still, I find that strange. Are these converters actually building more floors to create the penthouses? Why wouldn’t they just use the existing top floors for penthouse space and save the costs of adding a couple of floors? You can always bury bathrooms and storage toward the inside of the building, since those don’t need any windows.

–Peter <== who doesn’t really get the city living thing. The 'burbs are just fine, TYVM.

Rent out the space to crypto miners. The residential unit owners would never have to pay for heating their apartments. :slightly_smiling_face:

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Remodel the window spaces for apartments, Rent the space near the core to office workers, because galley slaves don’t need a view.

Steve

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Yes. And having an actual human take care of you will become an ultra deluxe frivolous luxury envied by many.

I am an old grump, and the predominance of AI voices on many youtube style videos is growing rapidly and disgustingly, as they AIs remain moronic.

d fb

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The techies want political campaigns run granularly by AI emailings.

Imagine the political suicide involved.

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Wow! That sounds great! I’d like to incorporate Stock Analyst GPT into my own business. How can I learn more about this exciting opportunity?

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Interns are not “headcount”. They are “don’t count”, they don’t get paid, they don’t get an office, mostly they don’t even get a desk. So they wouldn’t help fill up the empty office buildings, wouldn’t contribute to the economy, and mostly smoke weed and crash on somebody else’s couch.

To do this economic analysis properly you need to subtract those people from the headcount that already didn’t exist, making the sum changes to the economy precisely “zero.”

Tough crowd around here, I’ll say.

(PS: I have an AI stock picking system I made, if you want to go into business with me I am accepting applications, along with processing fee of $100. I call my system “Dartboard”, and I made it myself in my shop. It has colors and everything. Let me know of your interest soon; times a wastin’)

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The voices will improve with time, and will be optimized to sound even more pleasing and persuasive than the best humans.

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