Turning offices into car parks

A roughly 68,000-square-foot office building at 8121 Van Nuys Blvd. in Los Angeles that has long been targeted for demolition may become a charging station for electric vehicles.

https://www.costar.com/article/817581815/vacant-los-angeles-office-may-see-new-life-as-electric-vehicle-charging-station

The banks must be in a world of pain

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Did you ever see “8 Mile”? A sequence was shot in this parking garage. It is not a move set. It is a real building in Detroit. The theater went out of business years ago, but offices on upper floors of the building are still in use.

When I was in Houston, years ago, I noticed some old office buildings that had been turned into parking garages.

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That is all over Manhattan but usually in the more beat up older buildings.

Just more blatant fear mongering.

–Peter

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Bad property debt exceeds reserves at largest US banks

Loan loss provisions have thinned even as regulators highlight risks in commercial real estate market

NYCB New York Community Bank is raising funds. The stock dropped.

Why the banks in this scenario? Nothing in the article suggests that the owner has an outstanding loan on the property.

On the contrary, a bank might actually be financing the destruction of the property and the rebuilding of the charging stations.

What you see as pain for a bank might actually be a lending opportunity.

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Quite agree, but the banks are heavily involved in commercial property loans. If they are knocking down what looks like a relatively new office building it can’t be good for the banks. This is almost a year ago and it hasn’t got any better as far as I can see:

That’s Charlie Munger, the 99-year-old vice chair of Berkshire Hathaway Inc. BRK.A BRK.B, in an interview with the Financial Times published Sunday, in which the newspaper said he warned that U.S. banks are “full of” bad loans on commercial property.

https://www.marketwatch.com/story/charlie-munger-says-banks-full-of-bad-loans-on-commercial-property-report-40ef883

Uninformed conjecture and supposition. Took me 90 seconds to find out this medical office building was built in 1970 and it had no tenets.

https://www.loopnet.com/Listing/8121-Van-Nuys-Blvd-Panorama-City-CA/3781130/

There is no reason to think this 50 year old building still had a loan against it. Your post does not support your conclusion.

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My post was not meant to support my conclusion. I probably should have explained it in a bit more detail as it appears to have been misunderstood.

When I owned offices they were 80/90 years old and in very good condition and also full of tennants. I drove past the other week and they are now empty and are slowly being vandalised.

If they are pulling down what look like perfectly good offices and turning them into car parks then the commercial property sector must be in a mess, along with the banks who fund it:

Regulators in December said the near $6 trillion pile of outstanding commercial real-estate loans, of which about half were owned by banks, was a top threat to the financial system in 2024.

https://www.morningstar.com/news/marketwatch/20231230133/no-one-is-throwing-good-money-after-bad-why-2024-looks-like-trouble-for-commercial-real-estate

In this case, they are almost certainly not. These are apparently medical offices.

Medical office space is the one corner of the office market that is doing fine. People are seeing doctors as much as ever. If they can’t keep medical offices filled, there’s something wrong with the building (which could be as simple as the wrong location for a medical building - doctors like being close to hospitals, and there is no hospital near this particular building).

So, as I said earlier, more fearmongering.

–Peter

The commercial office space sector is wobbling. That’s well documented and we’ve talked about it a bunch on METAR.

But I don’t think your anecdote supports your conclusion. This property is being redeveloped from a weak use case to a stronger one. That’s what happens in healthy real estate markets.

Which is the point that I was making

Strangel,y the city where i had my properties is turning into something like Los Angeles

You said the commercial property sector was a mess. Both uses are still commercial property. Buildings just sitting there vacant is a mess. Redevelopment is a good thing. It is a bullish indicator.

Not just me, I gave examples of others saying this and also showed how the banks are affected,

Right. But your example is evidence the sector is improving.

I am just going to leave that one here…

I have a feeling I might need to link to it again in the future.

:bookmark:

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I do love it that the best argument/discussions of microeconomical issues on the MF mostly take place on our macroeconomic board.

It is our equivalent of twiddling our thumbs?

d fb

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@flyerboys

That is hilarious.

Is anyone up for the twelfth round of Ph.D. guessing at medical conclusions with all the wrong information? The knockout round? Supporting cast a dentist? Stats tell a different story at 1 am.

Perhaps more like the occasional look at a tree instead of the whole forest?

—Peter