Ethics of Real Estate Investment, NIMYism and the Housing Crisis

In reply to Boost_Crazy :

I've never said all CEO's are evil despots.  I'm saying most have monster ego's and it's hard to change the ways that got you where you are.   
  This is the same as the change from majority farming to industrial.  Only instead of happening over a life time it occurred almost overnight.  
 It's hard not to resist and instead try to return to the ways of the last 2 centuries. 

      Plus there is the reality of the market place.   If suddenly there was an abundance of skyscrapers and giant office buildings. A big chunk  of the assets major companies have paid for would disappear.   
   Yes some companies will sell their headquarters to a leasing  company and lease back for cash flow reasons.  Often to capitalize on an asset at times of low income.  
    Regarding the conversion of offices to apartments.  I'm sure it would be expensive but what would be worse would be those buildings underutilized.  

   The Bank that employees  my wife has mainly empty buildings with a few people who prefer to get out of the house occupying whole floors.  Office decorum has disappeared since most managers tend to stay at home and let the computer  inform them of the productivity of each employee.   
     My wife manages people all over the globe. And she tells me that some offices are so boisterous that even those who would prefer to go in can't get their work done because phone calls etc. cannot be heard over background noise.  
  I can understand that.  Few or no managers on the floor?  Modern Open offices ( to get away from cubicles  ) it's too easy for a few boisterous  people to disrupt the whole floor. Those who do like to come into the office tend to be more interested in socializing than being productive. Hence the 42% increase in productivity working from home. 
   Not like the top floors with private offices.? Entry,    Staffed  by people who used to be called receptionists. 
     

Using a $400 per square foot high rise office building for high density residential IS UNDERUTILIZATION. 
 

And massively expensive to convert (fire codes, egress methods, demising partitions, utilities delineations)
 

It would represent an enormous devaluing of the property.  I know it sounds counterintuitive, but it would almost always make more business sense to leave it empty. 

Also kind of a pipe dream to be frank. You've got toilets but no showers or baths; how you gonna jack one in? How you gonna do Rooms? Fire code? Ventilation will also be a huge factor, fire codes will demand separating regions for "apartments" but it's hard to modify existing systems cheaply.

Sucks too, because lord knows there's enough spent concrete and unused buildings around that could be transformed into better instead of just being torn down.

In reply to GIRTHQUAKE :

Conversion worked for The Electra in Vancouver - the old BC Hydro building at Burrard and Nelson, also the West Coast Transmission Building on West Georgia in Vancouver.

The Qube (West Coast Transmission)

The Electra (BC Hydro)

frenchyd said:

Do you know what the average commute is in major cities?   Both in time and cost?   Not to mention cost of attire and the rest of personal appearance?  Then we are ignoring the cost of day care for children and the rush when the child comes down with a cold or other sickness.  Does the Employee have any personal time left to cover their absence?   

Are you saying people should be able to work from home so they can take care of their kids, or am I missing something here?

I have been pushing back pretty hard on my employer's return to office initiative, but I recognize the value of an office.  They aren't obsolete, nor will they be anytime soon.  Poor management, politics, culture, etc. can exist in all work environments, not just in the office.

On topic, I am curious why some buildings can be converted to residential successfully, and others cannot?  I have seen numerous industrial & office buildings converted quite successfully.  None were mega high-rises, but I would be interested to know how that is different and where the line is drawn.

In reply to ProDarwin :

Not saying it can't be done, just saying it's no where near as simple as is being stated. 
 

Consider it like converting a purpose built race car to being a street legal car. 
 

All the systems were designed for commercial applications. Single user utilities, proximity to commercial users, distance from schools and other residential infrastructure, fire fighting challenges for residents, parking, bathrooms, egress from sleeping areas, etc etc. 

Zoning is also a huge issue.

Plus, high density residential is often lower price tags and income levels, and commercial is really high. Someone has to pay the difference. 
 

The best buildings for adaptive reuse like this are unique buildings that have been depreciated in value which can justify the expense of the modifications and drop in gross value.

In reply to SV reX :

Thanks for filling me in on the why's. You make a clear and valid case.  
     Assuming someone had a big building, some things must be done at that site and I suppose excess office space  could be leased out.  
 For example lawyers could use some space for client meetings and Moot court and record keeping while most  work could be done from home or in court. 
      Most work at a bank can be done from home with only top management and a small cashier staff  needed. 
   Between Zoom and web site sharing  I think many places would be able to dramatically reduce office bound personal.  
     Do you have any suggestion with what to do with the surplus spaces that work from home will produce?   

In reply to frenchyd :

There have always been ebbs and flows in commercial real estate. 
 

There will be as many different solutions as there are companies with empty buildings. 
 

Honestly, I have full faith in the business world and capitalism to solve the problems. There has never been a time when owners of multi million dollar buildings couldn't figure out what to do with them. 

SV reX said:

In reply to frenchyd :

There have always been ebbs and flows in commercial real estate. 
 

There will be as many different solutions as there are companies with empty buildings. 
 

Honestly, I have full faith in the business world and capitalism to solve the problems. There has never been a time when owners of multi million dollar buildings couldn't figure out what to do with them. 

 I generally avoid threads like these but this made me chuckle because Michigan is full of multimillion dollar buildings that multimillion dollar companies couldn't figure out what to do with other than let them return to the earth. Your geography may vary.

In reply to logdog (Forum Supporter) :

I didn't say the solution was necessarily to put them to good use.

In some cases the solution may be to let them sit idle and return to the earth. Usually because of the cost to convert it to any other use. 
 

That's still a legitimate choice on the part of the business. Every building is unique, and every solution will be unique. Some of the solutions won't be appreciated by some people. 

In reply to pheller :

I almost never find property theft to be a good thing, no matter what fancy terms you use to describe it. 

Should I be able to take your house because I have a better use for it? How about your car? Your money? We do enough of that already.

"The good of society" has been used in horrible ways throughout history. Pretty sure you can come up with your own examples. Anytime I hear someone use that term, I know they are out to berkeley someone over for the good of themselves and use the government to do it. 

Most of these companies lease space in these building. And the converting to apartments would fall on who ever actually own these buildings, investment companies? Would it be worth the investment? 

Could you imagine trying to route all the dryer exhaust

pheller said:

My question would be: 

 

Why should society wait around for businesses to decide? If land can be used for other purposes today, why should we as humanity wait around for some business to prop itself up with real estate it isn't using, is crumbling, and is generally under utilized?

Because the business is paying for it? Because it isn't great real estate? Because if it is crumbling, then the government would have to pay for it to be repared/replaced? 

yupididit said:

Could you imagine trying to route all the dryer exhaust

Sure. Communal laundry rooms, no laundry in the units. Still pretty common today. 

In reply to Toyman! :

Residential property is a bit different. I firmly believe that our primary housing should be nearly tax free if it is comparable to the neighboring/local housing market. If you've got something far larger than all your neighbors, then yea, ok, maybe pay some additional property taxes, but if you've got ONE normal house, then taxes should be easily affordable while working, and free when over 65 or on SS. 

But a corporation is not a person - it should not get the rights of humanity. 

mtn said:

pheller said:

My question would be: 

 

Why should society wait around for businesses to decide? If land can be used for other purposes today, why should we as humanity wait around for some business to prop itself up with real estate it isn't using, is crumbling, and is generally under utilized?

Because the business is paying for it? Because it isn't great real estate? Because if it is crumbling, then the government would have to pay for it to be repared/replaced? 

No-Where do I say that the government is taking ownership of said property. 

I said that such property should be taxed to motivate the owner to sell the property. IE - holding it (empty at least) will not result in a profit. They could use it for storage, they could lease it, whatever, but it can't just sit and do nothing. 

In reply to pheller :

Why not?

In reply to pheller :

So what you are saying is a company has no right to property ownership? That sounds like a spectacularly bad idea in and of itself.

Holding an empty property already results in a loss of profit. 

If you jack their taxes, who do you think is going to pay them? It won't be the corporation, it will be their customers. 

When big corp owns your legislature outright, they won't be the one that gets bent over the barrel by the new tax law. There will be loopholes that only they will be able to afford to take advantage of and they will be paying less while slipping some money into your representative's pocket. Using the tax code as a whip and prod to control behavior is how we ended up the the retarded ass tax law we have now. 

This assumes that the corporation has any customers. 

Why would property sit vacant if the corporation had customers? 

Corporation can own property, sure, they just can't speculate with it. They can't say "we were here first so we claim this unused property for eternity, and will advocate for tax laws that allow us to own it."

That's just it, I think there is a lot of vacant property out there that people manage to own despite it costing them tons of money, and I'd bet it's because there are tax advantages to doing so. They don't really see it as a loss on their books because they right it off as depreciation. 

There was a great article on a few sites about RealPage and its leasing software that basically figured out that it was more profitable for residential property managers to leave apartment units vacant, rather than lower leasing rates. In some cases, it defied all logic to human leasing managers, but sure enough - after a year or two, the strategy showed a profit increase. 

I think there are a lot more loopholes out there for both commercial and residential real estate that "defies logic" but we have a tax code that allows wasteful use of limited land while still being profitable because of said tax loopholes. 

Maybe I'm wrong. Maybe vacant commercial property will bring down huge corporations and developers will get land for pennies on the dollar. 

I will admit, some of my ire on this topic is because I see so much vacant land, so many empty store fronts, so many seemingly empty warehouses, and I wonder "how do they afford to keep the lights on if they aren't making money with that property?" 

It's akin to seeing that really cool, really high-demand car rotting away in someone's back lot. You ask them how much they want for it and they quote you a ridiculous price, but yet it sits and sits and sits, and they never budge. A waste of resources. Sure, it's their car and they can do what they want with it, but in the case of land, that negatively impacts local land prices, just like that car rotting away jacks up the prices of similar cars still on the road due to scarcity. 

mtn said:

In reply to pheller :

Why not?

Because he believes that he - or at least the government, which he politely describes as "society" - knows what is best and should be allowed to dictate terms to those who do not live up to his... I mean, "society's", standards.

He has consistently demonstrated this view point here for several years, if not longer.

I seem to be the only one who has serious concerns with greed negatively impacting humanity's forward progress. 

Capitalism thrives on competition. We seem to have a lot of mechanisms in place that prevent competition. That protects wealth once it reach a certain level of power. If you're afraid of government, you should also be afraid of wealth that is so powerful it owns government. 

Toyman! said:

In reply to pheller :

I almost never find property theft to be a good thing, no matter what fancy terms you use to describe it. 

Should I be able to take your house because I have a better use for it? How about your car? Your money? We do enough of that already.

"The good of society" has been used in horrible ways throughout history. Pretty sure you can come up with your own examples. Anytime I hear someone use that term, I know they are out to berkeley someone over for the good of themselves and use the government to do it. 

 

Marry me ...I'm a good cook and I'm handy with a wrench.

I'll just leave this here.

mtn said:

yupididit said:

Could you imagine trying to route all the dryer exhaust

Sure. Communal laundry rooms, no laundry in the units. Still pretty common today. 

Which is gross