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The pandemic is over, most people are working in person, and the economy is normalized. Maybe a few CBD's are still ghost towns, but these are the exception and not the norm. (See linked reference.)
Office Projects Face Delays, Cancelations (sic) as Uncertainties Linger
That says more than you think.
Also, we're talking about downtowns.
And not the past, which is what the article covers.
This is what you get with free sources that don't break things out. Industry people including me have much better info.
Please tell me you read past the headline. The data in the article shows that year over year changes in demand are positive in some places and negative in others. There is *no* mass movement towards serious suppression of office demand.
Now I suppose you could cherry pick some very localized downtown regions of a few cities and claim that office demand is cratering. But a highly localized drop in demand, to only the immediate vicinity of a few CBD's, does not amount to anything warranting the catastrophizing headlines of "dying downtowns".
If that is the position, you have effectively moved the goalposts quite significantly.
Furthermore, you object that this data is backward-looking. Well, newsflash - there is no such thing as data about the future. Not without some sort of wormhole or time travel. You can try to argue based on extrapolation using a model, but you need to then state what the model's assumptions are if that is the argument you want to make.
Data from a month ago is history. Data from today isn't. That's what many of us have in the industry....stats, specific leases, any breakout of any geography based on inputs from today.
The topic is downtowns. Most are doing quite a bit worse in the past year. I've said this again and again.
Data from a month ago is history. Data from today isn't. That's what many of us have in the industry....stats, specific leases, any breakout of any geography based on inputs from today.
The topic is downtowns. Most are doing quite a bit worse in the past year. I've said this again and again.
Changes over extremely short time periods could be market fluctuations. Has anyone in your industry done the analysis on the statistics of fluctuations to determine what the significance of this is?
"Downtowns" is a broad category and includes a lot of places that are doing OK, or OK on one side and not so good on another.
On average, transit ridership is now at around 76% of prepandemic levels - and this is designed for going downtown, mostly not to serve the car-dependent 'burbs. I'd argue that this means as a whole, downtowns are not doing too poorly.
Thousands of brokers, developers, investors, etc., devote the sum total of their existence to trying to understand trends. That's why building values have been falling.
Thousands of brokers, developers, investors, etc., devote the sum total of their existence to trying to understand trends. That's why building values have been falling.
So, according to their reports, what percent of the value changes are attributable to interest rate changes, and what are the assumptions they are making about vacancy rates? Even if the analysis is based on sophisticated models, the output is only as reliable as the assumptions that go into that model.
A lot of factors push values both up and down. For example, two that tend to push upward right now:
--Due to barriers to entry, not much is breaking ground.
--For those worried about a potential recession, overvalued stock markets, wars, etc., real estate can be a safe haven.
Normal office-to-residential conversions only work in skinny buildings, and even that tends to be hard to pencil. Dorm rooms need buildings to be much skinnier still.
With a normal "urban one-bedroom apartment" you can put a semi-enclosed bedroom 20' from a window. You can't do that with a dorm room or a multi-bedroom "student apartment" where every major room needs a window.
Occasionally you can build a light well to solve some of this, but that's a challenge for a lot of technical and cost reasons, and gets much harder as the building gets taller.
You can do them in fatter buildings as long as the exterior walls/window line to what will be the central core (hallways, stairwells, HVAC/Storage closets, Elevator shafts) isn't too long.
Interesting viewpoint that universities and colleges may be able to take up vacated commercial space in cities, increasing vibrancy and spending by visitors in downtowns.
Can it work? I think it can only help, since many downtowns are struggling today, from where they were pre-pandemic levels.
Even city urban universities like to keep everything on their own footprint/campus. As mentioned in the one article UC Hastings (now UC SF) going to downtown SF years ago is more of an anomaly. Some schools might be able to do that as a one off graduate school location, but it's not a trend that will save downtowns. Universities and students like everything to be within reach walking distance, and incorporating dedicated shuttle busses, of main campus.
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