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ehsurfskate t1_j64jxb4 wrote

Reply to comment by LikesBallsDeep in Mayor Adams unveils proposal to convert Midtown offices into apartments by psychothumbs

There is ALOT you are missing and assuming with your assessment here.

First off is you are assuming there is no cash flow at all for these office spaces. There is and return to office continues to tick up. If it keeps going and if there is an event like a white collar recession employees will be more willing to go in and will have less bargaining power.

The second is you are assuming it would be more profitable to go residential. There are huge construction costs to make this transition, plus downtime where the building is empty and design costs. Residential is also less money per sf by ALOT.

The last and most important point is the value of commercial space versus residential. If you convert a building not only do you lose SF to get legal light and air plus egress for each unit, you lose huge value on the sf you do keep. This drops the value of your overall portfolio which you use to gain credit and borrow with (to the tune of tens of millions). These buildings are not all about cash flow for owners. They are giant stores of wealth for credit and borrowing.

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LikesBallsDeep t1_j667e6f wrote

You are stuck in 2019 world.

The old trend line of office space value is permanently gone. Adapt or perish.

Anyway, this is about allowing those that want to to do the conversion.

If you are right, nobody will want to, so no harm done, right?

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ehsurfskate t1_j677lji wrote

I’m not stuck anywhere and in my profession change and churn equal profit, I also work from home 3 days a week so not sure what you are on about.

I’m not sure why you are assuming it’s permanently gone either. Just as it changed to more wfh it can change back again. I hope it doesn’t but if we hit a recession and people need work they will go into the office if required.

I’m not saying it should not happen. I hope it does. I was just adding some context to the wide eyed people of this sun who may not know much about the commercial real estate market inner working besides - yay wfh new paradigm and yay more housing

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