Throwing the dollar under the bus to save the banks:
The commercial real estate sector is at risk of seeing its biggest crash since 2008, and that could slam US banks with up to $160 billion in losses.
That’s according to a new working paper from researchers at USC, Columbia, Stanford, and Northwestern, assessing the impact of higher-for-longer interest rates on the commercial real estate industry and the US banking system.
More of this to come:
$100 in 1913 would only be worth about $3.87 today.
Ok. Big changes in commercial real estate come from work from home and reduced demand for office space and partly to shift to online retail.
Bank stress tests are supposed to cover this. Stockholders take the loss but the banks survive. You would think insurance companies and pension funds that invest in real estate may also be hit.
How bad will it be? Slows GDP? Reduces available capital? Will it impact residential or industrial real estate? If so, how?
The crux question is how quickly can construction codes and their related bureaucracies, habits of home and office life, and engineering imaginations adapt to radically remodeling and re-purposing “office buildings” into new patterns of use.
I would love to inhabit a small snug safe space in a NYC high rise, and would not mind sharing a lot of facilities that are now required in any legal apartment.
The winners of this race will suddenly have comparatively much cheaper housing and vibrant urban life.
Out of your shabby apartments and into the streets!
The guy who started WeWork did this with WeLive. It failed miserably. People don’t want to share their bathrooms and kitchens and living spaces it would seem.
I’ve read many pieces talking about the difficulty of transitioning office space to residential (and a couple outlining successes in doing just that.) Honestly, I don’t know what’s so difficult about it. With the higher ceilings that most commercial spaces offer, it would seem that simply building a false floor throughout each level and running plumbing, electrical, and perhaps hvac to re-engineered units would be fairly easy.
It would also be trivial to re-time elevators to stop a foot or two higher, there’s already all of those services at each level, and they’re engineered to handle more load for an office full of people than would be used by separated apartments on each floor, I would think.
As I say I have no expertise in an of these, butI do have the interest, sparked partly because of the sudden change in how people work and the already existing stock of commercial space which seems to be no longer needed.
Want, vs need. There are many bedroom rentals in our town, where you have the privacy of your own bedroom (and en suite bath if available,) but share the rest of the house. I did this until about 20 and Youngest is doing it now. The cost of a rental on your own is prohibitive for those starting out, and if you move to a new city for a job, you have no friend base to start with. These are often 30+ day rentals, and is basically like a college dorm, except that the tenants tend not to be grouped by a demographic. My concern for doing this on a larger scale would be safety issues. If those were resolvable, I would consider this when checking out a city.
In my last three years of college I created and ran boarding houses, starting with 6 inmates and ending with 16. People BEGGED me to be admitted. Sharing a bathroom and eating facilities with other people was typical for a huge part of the population only a century ago, and is EAZY for people who are properly cultured and civilized. Perhaps the wasteful emphasis on rampant petty privacy is part of why so many people are now habitually nasty, slaves of bad habits, and uncivilized.
Anyone who has been in the service is probably not horribly concerned about “privacy”. The seats in the barracks head when I was a boot didn’t have dividers between them. We sat “cheek to cheek”. When I worked at RS, we store managers were flown down to Dallas for the annual meeting every August. We were put up, two to a room in the hotel. My roomie one year was also a Navy vet. I noticed he was perfectly comfortable coming out of the shower and walking around the room buck nekked.
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(army brat followed by primitivissimo mountaineering childhood, Mom saying “modesty is of the mind, not the clothes” as we did laundry and bathed.
Choice is always a good option. Youngest is still in a house filled with roommates. Only difference is now he is living with friends in a rented house, vs strangers. Not everyone in this country is established and I would welcome a country where the difference between want and need was well understood.
