How Empty Offices Are Ruining American Cities
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- เผยแพร่เมื่อ 5 ต.ค. 2023
- Major American cities such as New York and San Francisco face serious problems - mass migration, empty offices and declining tax revenues. These trends have had a direct impact on cities, which rely on tax revenues for funding, a significant portion from commercial real estate. Stijn Van Nieuwerburgh has defined this cycle of spillover effects as the 'urban doom loop.'
Watch the video above to learn more about the so-called 'urban doom loop' threatening American cities, and what local governments can do to avoid falling further into fiscal trouble.
Producer, shot, and edited: Kate Sammer
Supervising Producer: Jeff Morganteen
Animation: Alex Wood, Christina Locopo
Additional camera: Brad Howard, Sean Conolon
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How Empty Offices Are Ruining American Cities
Soooo, let me get this straight... A tiny number of investors bought a ton of real estate in NY City under the premise that the real estate market would infinitely grow and were more than happy to soak up all the profits when that happened, then when that same growth caused the average person to have to leave NYC due to insane housing prices, they complain that rich people are paying all the taxes. What a shocker! When you buy everything, you wind up paying all the taxes.
Ok Capt obvious. Just making sense is very annoying when rich people are suffering so much from not having money enough to continue this ponzi scheme. Meany
Privatize the profits, socialize the losses.
Oh booo hooo, those pooor poooor million and billionaire commercial real estate developers. ;p
Nicely put, but not just NYC, not by any means.
The punchline is that the top 500 wealthiest pay an average of 9% in income tax, so if they are paying a little more in property tax that's as it should be.
Stop blaming people doing WFH.
Yeah its so LAZY to blame WFH when cities never invest in affortable housing
they will continue to blame them and never will change. Its their mantra. The need to fill the office space with blood and flesh. Who cares about family life or any other life? You devote 100% to the office. It's the new 'church'.
Who do you think those offices were built for?
👋👋👋👋 Hello 👋👋👋❤❤❤❤
@@thaanonymous776They were built for the companies, who continue to prefer WFH because it's cheaper for them than paying for offices.
Cities have been made and remade for centuries because of war, plagues, etc. The lack of imagination about this issue is embarrassing.
These empty office buildings should be turned into multi level gyms with a rooftop area for yoga, indoor playground for kids, year round indoor water park or a multi level community center with a library, working/study area, indoor garden with benches and a Starbucks cafe. Anything to get people out of the house and near other humans.
I understand from the comments people want these to be converted into apartments. It can’t happen for multiple reasons. When the engineers designed the building they didn’t intend on it being a living space with complex plumbing and electrical. You can’t even do a restaurant here because the city code enforcement laws. You need multiple exists and so much more.
Demographic change matters.
No one cares if the cities are remade in 500 years.
@@lifeofmike556Convert into housing.
Modern humans certainly lack vision and long term planning.
NO BAILOUTS.....its called investing and YES, it is not risk free
but it shall come back to bite everyone 😂 we dont just go down we shall take others with us too 😢😅
From your mouth to the Lord's ears
this is someone who gets what is going on!!!
We dont need to convert office buildings into residential buildings. When jobs are relocated so will the poeple. Let those investors take the loss and devaluation of their properties, just like stock investors.
@@InvestingAlex we have a housing crisis, we absolutely should convert to build more housing, those buildings are literally the core of multiple city's property tax intake which they need to fund services and keep the lights on. Your ideas if we adopted them would literally be catastrophic
@@mohammedsarker5756 locally here in Atlanta the offices have been vacated, there is nobody paying taxes, the burden is pushed off on residential as it soars out of control without even considering its vacant neighbors. the office building owners are converting ground floor space into food halls, like that is going to businesses back. Apparently they just think millennials will just go to every food hall, it feels like the food hall market is saturated though. There is also too much housing, there are 3000 vacant apts in my neighborhood alone at any given time, the market is strong supply side, they maximize profits by charging millennials way too much in rent, so they can leave a signifcant chunk of apts empty and still profit.
It's almost like zoning and designing cities with an unnaturally high separation of work and housing, creating black hole neighbourhoods when ppl aren't in offices, was a bad idea.
Cities are too car dependent and nobody wants to waste time during their daily traffic commutes 🚗⏳🛣
Hello 👋👋👋👋❤❤❤❤❤
walkable cities.
Zoning was one of the worst ideas coming out of the 20th century.
@@rashakor Zoning has its place. Or do you want to have factories next to residential spaces? Zoning single use zones like your life depends on it, that is dumb...
being a landlord has always been known as being a big risk it’s so annoying that they’re babied whenever things go wrong in their favor
The people who has a say in how to run the country is connected or themselves own lands. It is only natural, whether we like it or not to put their own interests first 😏
This isn’t about saving landlords, it’s about the knock on effects onto the city itself and the people that live in it.
Commercial property taxes go down, means less money for services for the people that live there. Fewer people in the office means less foot traffic at work start/end, which a lot of local businesses rely on to survive.
@ihkeyy4144, The communist are so worried about criticizing landlord that they make arguments ignoring the effects it has on all the other people. Those services you want need tax revenue to pay for it. Fewer workers in those office buildings means less tax revenue which means fewer services. It’s almost like no one actually paid attention to the video.
@@birdrocket you dont need so many services for fewer numbers of people, urban escapees have taken their rent / spend money elsewhere, to places who then in turn use localised taxes to invest in more services as needed, it gets spread where the workers go.
@@paulpips2742 Except in a lot of cases the amount of infrastructure is the same. Sewer, gas, electric, roads, etc all of that doesnt magical get smaller if people move
Greedy landlords are the problem. If I work remote and had option to rent a 3 bedroom house for $ 1600 vs a studio apartment in the city for $ 2,500 per month its no brainer. Work is no longer tied to location and people can move around. Landlords want to force back to the office so they can keep prices high and rip off people.
where does greed play a part?
all i see are landlords trying to pay their bills…
@@petarsulentic7181 then they should get a job
Ah, the classic evil capitalist conspiracy theory
Thank the Biden administration.
“Greed” meaning asking for market rate? 😂
Here’s the thing: Following 9/11 attacks, so many forward thinking experts made it clear that replacing the WTC with new high rise towers wasn’t necessarily a good idea, because in the age of internet, employees wouldn’t need to come to the office. Yes this was 2001, yet for two decades developers/investors ignored this reality and stubbornly kept building and building and building. What we are facing right now was just a matter of time.
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They said that after the 2008 financial crisis as well, and some forward thinking tech companies were allowing people to work from home shortly afterward, but many of those companies reversed course later on.
@@728huey That is true! There were huge investments in teleconference and remote work, but the trend failed because lower and middle management could not justify their existence without office workers to oversee.
Without the pandemic there would never had been such a dramatic shift to WFH. The investors cannot be blamed here.
I can imagine another big housing crisis incoming aaaand guess who will pay for all the defaults hehe :3
Not to mention they have probably been building using asbestos as material.
Empty buildings, and a housing crisis happening at the same time. Seems like there’s a match to had.
Can't have billions worth of office space when a big chunk of employees cannot afford houses in the area. Most cities around the world needs mixed use spaces, you cannot have a sprawling downtown where every one just comes by to work.
@@sobhansarthak6000 agreed. These buildings are big enough to have restaurants, small grocery stores, shops, and more as well.
that's why we shouldn't bailout these well connected CEOs and property owners. every single one of them knows or is closely associated to some very wealthy money hoarder, and if they should plan to borrow money from the whether at market rates or if lower costs for concessions as necessary. #NoCommercialRealEstateBailout which means they get to experience and learn from the 2008 financial crisis first hand along with every lazy or irresponsible American out there that indebted themselves well beyond rational kr realistic means for good and bad times.
Well a lot of office buildings lack plumbing and windows, so it's hard to retrofit them.
Easy solution. Sleep at work! jk
I suppose letting people work from home and converting office buildings into living space to drop the ridiculous rent prices is out of the question then.
Yeah its just the renters want luxury offices money again instead of have affortable houses 😂😂😂 stupid video
blasphemy! we need to bring wages down, lay people off, but also force regular folks to take 1h+ commutes.
/s
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Office spaces often don't have the water hookups needed for separate apartments
Exactly what I was saying while I was watching this video....sheer greed is all this is. So many people are looking for affordable places to live. Convert the buildings into apartments, make the rent affordable and Viola! More people stay in the city to pay taxes and landlords and owners make money.
Make these city buildings mixed use, so people can live, work and shop all within walking distance.
Yeah, i've been watching other videos showing where this is being done in some of the EU countries.
Been happening in Canada in some areas and it's brilliant. Even in crazy cold temperatures I imagine people will bundle up and walk more in the winters which is good!
You can't live in them because they don't meet standards for living areas .
Also imagine the reality that billion dollar tech companies can't pay for lease space but some random teacher or firefighter will rent the space as their home lol. Go look up the price per sq foot for commercial real estate, if the building can't match existing rents it is a default event for their loans so they can't reduce rent rolls.
Oh and yes from a lender perspective and debt default, it is better to not rent it at all than to get a lower amount. Being unable to rent it is not a default event until you can't pay the Interest
This is an unfortunate collateral consequence of our lives improving. Leaving your home for the vast majority of your waking hours to commute to go work in a random building in a downtown never made sense. I'm so grateful technology has caught up and I will never have to do it again (I'm down to once a week). We'll have to figure out what to do with all these buildings, but me going back to work in them is not one of the possible solutions.
I usually only go into the office twice per week (but my boss is reasonable and will let us WFT more days if we are feeling under-the-weather), and I cannot believe how much my general health and energy has improved. I'm not a morning person and that extra hour of sleep those days is priceless and has actually contributed to my work productivity.
I wouldn't say "never" just like telecommuting isn't for everyone. People need to remember in their opinions that not everyone is like them.
Unless you become an entrepreneur, you will be back in an office eventually. Not this year, not next year, not in 5 years. But you, absolutely, will be back in the office. Eventually.
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@@socalstr I'll be retired in 5 years, maybe less . . .
Office work was largely archaic about a decade ago, the pandemic just knocked over the house of cards. Modern internet speeds and accessibility (especially in urban areas) was just ignored to justify the office space.
My wife works from home, she hasn’t needed to actually visit an office with any regularity for 5 years, but until the pandemic she was doing it for basically no reason. In her current position there isn’t even really even an office to go to and the ones she would go to (if required) wouldn’t have anyone in them for her to “collaborate” with.
My job requires me to be physically present for 30-40% of my work, but an accountant, a programmer, a web designer, customer service… why?
I’m a software developer, and WFH has an additional benefit. We require long periods of uninterrupted time to focus on our work, which is naturally occurring at home, but rarely in an office environment.
Because it's statistically proven that colocated workers are much more productive with their time, especially knowledge workers.
@@spacetoast7783this will play out over the coming years where the companies that survive and thrive have people in office mostly. IBM went remote back in 2000 and got destroyed by Silicon Valley the next 20 years and abandoned it by 2018 for a hub structure.
WFH only makes sense for a few roles in some companies.
Because managers don't understand what they manage unless they watch you in their offices 247.
@@spacetoast7783incompetent managers don't care about productivity. They care about control and blow jobs.
Reading these comments gives me a little hope. Im happy to see people mentioning zoning problems, greedy landlords, and investors as the reasons behind these problems. Dont forget that the car companies are a major reason why we are so car dependent. Theyve been lobbying county and federal governments for nearly a century. We need livable, walkable cities using mixed zoning laws.
Something they touched on in the very beginning is that many people have moved and are no longer in commuting distance of their former offices--often taking advantage of lower housing prices further away from the city. In that case "returning to the office" would mean moving again, just after getting settled in to a (presumably) more enjoyable lifestyle. And since housing prices and now mortgage rates have risen, housing near the office may simply no longer be affordable on their current salary. Companies that try to force a return to the office may suddenly lose a lot of their talent, as people choose to (or are forced to) find new jobs closer to where they now live.
And this is, for the employee, one of the greatest benefits of remote work. Salaries have not kept up with inflation. The opportunity to work remote allow employees to enjoy a more affordable lifestyle.
Offices are not suitable for conversion because the landlords want to follow minimum square footage laws in order to maximize their gains. So a nice large office building with open floor plans and nice natural light, when divided into the minimum square footage requirements leads to interior windowless units which cannot be sold. So instead of making nice large warehouse style units with open floor plans and plenty of square footage and natural light, they refuse to convert them and complain to their politicians they cannot turn AS MUCH of a profit using the current laws. Greed has no bounds and we all see it.
Boo hoo, Mr. Government, we could make tens of millions of dollars by make a simple decision. But that means we won't be able to make tens of BILLIONS of dollars. What ever should we do??? 😞😞😞
It would be very interesting if those buildings were - because of that - turned into mixed use.. I guess arcologies is the best word. The outer units being homes (benefiting from sunlight and so on, the interior space used for shopping, recreational, and community areas
That is a really good idea. Although, I am not sure for how many for them it will work.
For actual skyscrapers, one issue is sewage and water. Since city water doesn't have enough pressure to get water up a tower on it's own.
For a lot of big towers they have specialized trucks which periodically pump out the sewage.
But, I don't think 90% of offices should be that way. That would only really apply to megatowers. @@hypnokitten6450
The unstated underlying problem behind this is that cities allowed themselves to depend too much on highly concentrated commercial and ultra-luxury residential real estate. Those sectors are far more volatile than intermixed commercial and middle and lower-middle class housing. It is very analogous to the spate of failures of banks that catered to the high-end customers. It's very tempting, because while those are in their growth phases they generate far more tax revenue and there is intense, and well-funded, political pressure to yield to the desires of those behind those projects. But, unlike private equity, governments need to think of long-term effects after bubbles burst and economic conditions change. It's actually good economics to reserve part of your assets in lower reward and lower risk investments instead of chasing the momentary huge earners.
@@donaldkasper8346 I detect racism and classism. Suggesting lower middle class housing is crime ridden, it seems you are jumping to certain very low income housing examples.
yes, the price was jacked up into an absurd level in the first place
and it finally just came down into a normal level,
meaning that we're no longer dealing with delusional level of rent price,
which make it even better.
the loser is the one that kept thinking that the rent price will increase year over year,
and people will do anything to keep giving them an absurd amount of rent price.
you can only jack the price so much before people was fed up.
if people think that the price no longer make any sense they will just leave.
I’m at studying this at Columbia now. I can’t tell you how absolutely correct your statement is! You can copy and paste this in Miami, LA, San Fran, Chicago, etc. These major cities refuse to acknowledge their part in catering to the wealthy and ignoring the rest of their citizens.
Good 👍👍👍❤❤❤❤❤
The reason office and luxury residential are so heavily concentrated is that for many years they were the only business plan that can be underwritten to make any profit because rents were always going up. construction costs are just too high to feasibly produce middle or low income housing and its not showing any signs of correcting. Theres a reason affordable housing has to be subsidized by the government
Convert office buildings to apartments, way too much office space , not enough housing
Converting commercial real estate into apartments can be so expensive and challenging that sometimes it might be more practical to demolish the building and start anew.
@@cyclethruquick1165 By the same definition it is still converting, but there is one extra step, demolition. Also that "expensive" part has never proven to be true.
Convert them to condos like Canada is doing. Learn from Canadam
@@cyclethruquick1165do that
Office buildings can’t be easily converted because of the plumbing - they often only have 1 pipe running down the middle for 1 block of toilets per floor, 1 gas line because they only have 1 kitchen per floor, etc. Adding plumbing and gas lines for 8 additional toilets/kitchens per floor is crazy expensive so it’s usually cheaper to just knock it down and start again.
Part of the problem is people don't want to commute an hour into the city. If the city and companies want to attract people find a way to make living in the city affordable.
Every friend I had moved out of New York because it became unaffordable. If my family wasn’t here I would have been gone too. I’m currently at the peak of what I’m willing to pay these people for rent. Another dollar more and I need to pivot because I’m not about to spend my whole life being squeezed into a dirty ass train fearing for my life with every commute and working just to pay to live in an overpriced box.
so if you're not doing that, what are you doing?
If there is an oversupply of commercial real estate and a severe shortage of residential units in most big American cities, it seems like work from home is actually the solution. Just convert more of these buildings into residential units
It takes a lot for humans to innovate.
Once people started working from home a percentage were never going to want to return to the office. Remote work is just better, as long as you are professional enough to get your job done well. I've put maybe 3,000 miles on our 2nd car in the last 4 years. I have more time for my family, and I don't have to drive into a crowded, gridlock, dangerous city.
Urban Doom Loop - Are We Serious?
It's high time we encouraged people to break free from the daily commute, sparing our environment from the relentless CO2 emissions, especially when remote work is a viable option.
The colossal, soulless office structures that house countless cubicles must undergo a transformation.
Imagine repurposing these massive edifices to alleviate the burdens of rental costs, and offer living spaces to those in dire need of shelter.
We don’t have this problem in Canada. Our cities are designed to be densely populated, prioritizing living spaces in the city centre’s, rather than office buildings. We also never have major highways intersecting our city centre’s.
Usually when the rich hurt the poor benefit and when the poor benefit the rich hurt. So I take this as a f****** win. Even if it does mean less tax money for a city, it also means that less people need to live in the city to begin with because they don't have to work there which is good. So overall I see this as a good thing
Actually, when the rich hurt they find a way to lessen their hurt by hurting the poor. They will find a way to get a bailout from the lower and middle classes. One way or another, they always privatize the profits and socialize the risks/costs.
@@izzytoons sounds like America is rigged and that the entire structure of society needs to be reworked
Couldn't care less about the struggles of greedy landlords. Love this for them. ❤
I couldn't care less about landlords either, but if you were paying attention, you'd see that this has a knock-on effect for everyone else as well. Less tax revenue for the city means they will have to cut essential services, which will further encourage people to move out of cities. And while you may personally not care about the financial wellbeing of cities, it's important to remember that cities heavily subsidize the lifestyles of the suburban and rural areas surrounding them. A loss in tax revenue in the big cities will also means that your small town will suddenly not have the state funding required to service its roads, pay for emergency services, repair critical infrastructure, etc. So something has to give. If we stay the current course, then everyone will suffer. Cities may need to find new sources of tax revenue, such as refactoring how they tax land and real estate.
It's a trickle down. You may not own a building, but the failure of one industry can effect you indirectly.
@@LimitedWard insightful response 🤔. The companies in these office buildings still exist. The only difference is that Kyle is responding to emails from home and not a cubicle. The company goods and services are still being produced (and taxed) regardless of where their office is.
And if fewer people live in the city, fewer cops and other services are needed.
@@velious2121well in 2008 no one I know foreclosed on their homes. However over 3 million US homes we foreclosed on. However, I know several people who lost their jobs, were forced to work several more years because their 401Ks were useless (this also prevented new graduates from getting jobs), and also many companies went out of business. You can reply to your emails from anywhere you want. Just make sure you have a job and a house first.
Only a doom loop because of terrible financial models that allowed this to happen, both in the public and private spheres. There was always a reckoning. Highly centralised and expensive real estate became increasingly unaffordable, unsustainable and illogical in modern internet-connected society. So-called wealth built not on productivity but speculative interest-only debt.
investors when they make money after gambling "noooo government please dont tax meeee",
investors when they lose money after gambling "pleeease help government save meee"
The contradiction is very poignant. There is a lot space available, there are a lot of people lacking a home, and somehow the market seams to separate the supply and the demand rendering an over production of goods unreachable to the consumer.
Something has gone wrong there.
It will be interesting to see how the market balances it self in this one.
It won't. Local story from news paper (different country but I think the principle is the same) "House has been on sale for over 100 days" owner wants his imaginary profit and won't lower the price. Potential buyers can't get a bank loan of required size due to high interest rate, owner is aware of this but does still not lower his price. Article is angled as oh woe is me why don't potential buyers have better paid jobs so they can to buy my overpriced house.
The issue is that it costs alot to convert office space to housing. Also, most commerical office buildings are very wide with large floor plans for more open layouts. You cant make apartment units unless you want them to be extremely long and narrow. Its just not worth it to the developer.. yet.
well converting commercial real estate to residential is not an easy fix. Plumbing is an issue when trying to make bathrooms for residential apartments. There is usually only one bathroom per floor in my corporate tower so the structure is different than a residential high rise that has multiple bathrooms on one floor. The analogy would be like repairing worn out clothes from very cheap brands. It's not economically feasible to repair and restore a shirt when you can replace it with a $5 shirt that's brand new. Just because it's possible to convert commercial properties into residential it takes money to motivate people to actually do it and justify it's worth.
Try re-zoning anything large. It takes years and potentially millions of dollars in attorney fees, architects, and engineers plus a myriad of other consultants
Many people lacking homes but could not afford to buy homes
"city property prices fall". That's a good thing. For the last 50 years, urbanisation has caused prices to sky rocket to the point of ridiculousness. Cities become overcrowded, and small towns become ghost towns. I've been saying for years. Don't complain about property prices pricing you out of your own home town. You can move. There are towns and cities across America where the land is so cheap that the paper work probably costs more than the land itself. Perhaps this wave of "empty offices" can bring a little sanity back to property prices.
Greedy landlords and greedy banks now crying.....and Government having to live on a budget....welcome to the REALITY that is for the rest of us!
You know that government can spend unlimited money through printing. Lack of tax-revenue will just boost inflation. It's a lose-lose for us.
@@luiscamacho1996 I think the printing unlimited money refers to the Federal government level though. Local/state governments do not have that same luxury...which is the issue in this story....maybe in terms of issuing more bonds? But we all know The Federal Government wouldn't let a state/city FAIL, so they would indeed get a bailout from the Feds by printing more money.....so you may be right. It would get nasty-political if a Republican President indeed stood by and allowed a Blue State like California to fail to make a point....hahaha. What do I know...I get my knowledge from an Uneducated Economist TH-camr.
So basically rich ppl havin a hard time paying the bills
its the Sovereign and Super funds that will be greatly affected. Which will trickle down to the 401K (Superannuation) performance. They just need to look elsewhere to invest instead of commercial properties (especially office spaces).
Let’s just accept the fact that we have entered a new era. With technological and communication advancements which
compresses distances that allows us to do things differently with business and ways of working.
Dividing the city into strict zones may make such changes in the nature of office space development more difficult. I am very curious how American cities will deal with this and whether they will move away from the archaic division of the city into zones.
City are slowing reversing these archaic rules. Here in Austin, TX we have a pretty progressive council pushing major land use reform but so much nimby opposition, wasting time in lawsuits.
Hello 👋👋❤❤
they just said commercial tax revenue is only 10% of all tax revenue. and if people continue to remote work then the property values in NYC will finally decrease, this means people in New York can finally afford to buy a home. How is this a bad thing? Also, seems like majority of the property tax comes from personal property tax instead of commercial real estate tax. This means if the property value decreases and people start buying properties in New york then the city will be able to collect the tax from that. This benefits the people more. Why must the people sacrifice themselves for the sake of the landlords and real estate tycoons?
Its a great thing for the average person. CNBC is just fluffing big business' interests, doom and gloom about the poor investors who are worried their investments will plummet
Hello 👋👋👋👋❤❤❤❤
Prop up stupid people because they're rich.
Because money has always ran this country.
This is a bad thing for overpriced big city prices??! Why should workers on pathetically low wages have to pay to travel to work because they cannot pay BS rent in NY or Manhattan. What's the point? When the rent in Manhattan is higher than your income.
Rich people aren't getting enough money! We have to do something! The peanuts they let us have after theft and corruption could be taken away! /s
The problem is these big buildings with little to no residents, we need residential spaces not offices
that's why we shouldn't bailout these well connected CEOs and property owners. every single one of them knows or is closely associated to some very wealthy money hoarder, and they should plan to borrow money from them whether at market rates or at lower costs for concessions as necessary. #NoCommercialRealEstateBailout which means they get to experience and learn from the 2008 financial crisis first hand along with every lazy or irresponsible American out there that indebted themselves well beyond rational or realistic means for good and bad times.
that's not to say we should make grants and low than market rate interest loans to small businesses looking to revitalize main street as well as the civic backbone of America. this may include searching out for the least at risk regional banks and infusing them with capital at lower interest rates, so ling as they have proven to rational and responsible programs, unlike the WaMu, SVBs of the world. perhaps even offer far lower interest rates if they sign onto not being acquired by any profitable bank of the past 10 and the next 10 years. They're meant to compete and provide alternatives. the big banks are criminals.
I'm a Federal employee--I still technically have an office in downtown DC that has sat unoccupied since March 2020. Roughly half of my co-workers have been instructed to report to the office at least 4 days per period starting next week, but my telework/remote agreement has actually been extended for another year. Despite me not minding coming into the office (since I just live across the river in Arlington).
Just coffee badge bro. Go in for catered lunch & coffee then dip at 2 before rush hour. If they want me more productive then they’ll want me home.
@@ricecakeboii94 I just learned that term yesterday and was like, "oh, that's me!". I go in on Monday for my 1-1 with my manager. Get there 10AM, gone around lunchtime. Tuesday most of the day, then WFH the rest.
Hello 👋👋👋❤❤❤❤
I'm also a Federal employee. Prior to me going out on extended medical leave, I had to go into the office "two days per pay period" (a two-week period), usually I went in on Wednesdays since it was the slowest day of the week. If I had to travel to an actual office (even outside my area) that counted as one of the days.
We have way more space than we need.
Stijn at the end mentioned only about 10% of offices in his estimation were good candidates for conversion to apartments. He then listed hotels as another possible use. I wish he had briefly detailed why a hotel would be possible in a building where apartments wouldn't make sense. The base infrastructure for either type of building would seem to be pretty similar as far as water, sewage, electrical, etc.
I had the same thought and wonder if it’s because of profit. They would probably make more money with hotel rooms than with apartments. A hotel is still considered a commercial building and they probably don’t wanna deal with the problems that come with residential buildings.
Rich people do NOT pay a disproportionate share of income tax. Rich people OWN the buildings that are taxed, middle class and poor people PAY that tax through their rent.
40% of federal taxes are paid by 1% of the population lol. they are kind of like your dad when you go out to eat as a kid, you put your $1 in for the pizza as a little joke and they pay the other $50's of the bill. so just put your bib on and eat your pizza quietly like a good boy 👶
Entirely wrong
Where do you get your propaganda?
What has been impacting suburbs for a long time, finally came to the cities. Online retail has a large part to do with it. COVID just sped it up. Unless people can get creative, I suspect there will be a whole lot of empty buildings (companies, apartments, houses, malls, plazas, etc) all over the U.S.
We need to completely rethink how we live. I’m out of touch with most people, because I’ve never bought all the crap most people do, but I wonder if people are buying as much as they used to. If not, doesn’t bode well for a greedy, capitalistic society, where our economic well-being rests on buying crap we don’t need.
Uh, no. Building high rent offices instead of housing that people desperately need and can't afford is ruining cities.
If office work and environment was less toxic, stressful and political most people would return voluntarily. But that's never going to happen, so hybrid or remote it is.
Mmmm
@udipta 💯.
Interesting to learn about. Appreciated his ending comments about how cities have always had to reinvent themselves throughout the ages. This is just another one of those challenges.
Hello 👋👋👋❤
Cities have been about work commutes for too long, it’s time for them to be about the people who live in them again
Wait - Building giant single purpose buildings may not have been a flexible long term investment strategy?
5:30 Unsuitable for conversion to apartments is a shorthand for "apartments for living is too cheap per squarefoot we want higher rent per square foot that can only be generated from cinema halls, hotels etc"
Not necessarily. Others have pointed it out already, but just the sewer lines for example, would have to be entirely redone per floor.
They aren't stupid, cheaper rent, is better than none at all.
@@sebastianlucas704 Not really, houses arent milk. They have a very long shelf life.
The internet has been around for 30 years, the only reason this is an issue is because of complete power tripping by large companies, as well as just awful city design with stupidly expensive infrastructure maintenance, where endless sprawl means generally corporate chains are the only viable option, thus then requiring the big office spaces that are now in trouble.
Constant short sighted goals is blind to the future.
He says towards the end most office buildings are not convertible into apartments but then suggest the office buildings can be converted into hotels? lol
That doesn't make sense yeah. And if you really have to you can just tear down the building and build a large appartment complex on top of it.
At the 2019 Ohio State University commencement, Fareed Zakaria spoke emphatically about the decay of small towns, suggesting cities were taking over. I scoffed at the time.
People from the cities moved back to small towns
I know few offices "available" for rent for many years and still empty. They prefer to set crazy expensive rent, paying property taxes, maintenance etc, and waiting someone, instead of normalize rent to adequate level and do business. That could be benefits for everyone, jobs, business, less expenses, but they prefer to keep "property" empty.
Yuuup. There really needs to be a vacancy penalty for real estate companies that sit on way too much "rental" space, whether it's commercial or residential.
These buildings get mold, structural problems, pests and get broken into. They cost taxpayers thousands when cops or health and safety have to go to them. Why the hell should I pay for a building to be left to rot just because some greedy ass company refuses to rent it for less or repurpose it?
It's not as simple as just lowering the prices. As they mention in the video, most of these properties are used with a loan. With a loan, the landlords require a certain amount of rent in order to keep the property above water. If they just "lowered rents", then they would essentially be losing money on the property every month since commerical contracts are usually 5+ years. As a result, they would eventually default on the building anyways. This is why they would rather take a chance at vacancy and wait until they can secure a long term tenant at the correct price so they can continue the operations of the building.
Interesting. But if property is empty for 2-4 years they loose more. Anyway, in many places rent just unrealistically high. Closed loop
I would say convert them to condos/apartments if possible. In various cities a lot of people would love to live right downtown so I think the demand would be there, and it could help ease housing issues. However I see greed as a major obstacle to that and they would rather cope by blaming remote work. Any investment comes with risk and simply put, a lot of office space has been made obsolete.
It's not just about a pandemic, its also about apps like zoom and Facetime making the need for an office location almost obsolete. Technology is truly a double edged sword.
Productivity has gone done sadly proven by our GDP. Some industries are fine for WFH but think people need structure at the office.
I had the pleasure of working in the office for almost a year as a tech employee. It is the dumbest thing ever. I drive 30 minutes to do 2-4 hours of work in a given day, then waste the remaining 4-6 hrs just sitting there. I could and now do my job 100% from home with my new job. Im am overall more happier to work in peace and when i have nothing to work on I can still hover over my ticket system and relax. @@user-pe3tt7iu7g
@@user-pe3tt7iu7gshow me stats of this productivty down….
It's not happening in Canada or Europe. The true reason is America's love and option for living in low-density suburbs. People don't want to travel that far.
Dubai has zoom as well, but why is downtown Dubai more bustling than downtown Chicago ? Cause American cities are neglected.
@@user-pe3tt7iu7gits mean reverting, the increased in productivity is unsustainable to begin with so a period of too high productivity will result in a period of lowered productivity.
housing is scarce and overpriced. i'd like to know why, by his estimates, only 10% of empty office space could be converted into apartments. build walls, add plumbing, someone will want an industrial style apartment with floor to ceiling windows.
It would be great to use all that space for residential space. If you can work from home, all you need is some meetup collaboration space occasionally.
He might be a professor in a business school, but I don’t think he knows much about construction. The fear is usually that creating too much residential real estate crashes the market. North America’s dire need for residential property means that’s unlikely to happen. Those office blocks could be turned into flats in very little time. The big hurdle is planning. If the local government is willing to let millimetre precision go, drylining would repurpose those offices in six to nine months. But then you’d crash the residential property market.
"Rich people pay the majority of taxes"...where? I don't see the nightly news saying poor folks have the option to work from home or leave to other states as they will.
I feel for the cities that are having tax issues now, but don't give these billion dollars corporations billions of tax credits with no way to get adequate means of recuperating those grants if the company can't meet the requirements.
40% of federal taxes collected is paid by the top 1%
It was show in the video data wise. Numbers don’t lie. They have more money to tax.
Most “poor” people jobs require physical labor. You can’t hammer nails or flip burgers from home.
really? cause I hear billionaires pay an average of 3% after accounting for tax loop hole evasions and unfair tax code advantages, which force the average American to pay an average of 14%. All which of course flows back to these hoarding corporate contractors price gouging our government. the amount they dodge in taxes can literally feed all our children at school for 2 years, but of course they dont want that, because on average they hate average American, and their families, and seek to keep them indentured to their virtual wealth hierarchy.
that's why we shouldn't bailout these well connected CEOs and property owners. every single one of them knows or is closely associated to some very wealthy money hoarder, and they should plan to borrow money from them whether at market rates or at lower costs for concessions as necessary. #NoCommercialRealEstateBailout which means they get to experience and learn from the 2008 financial crisis first hand along with every lazy or irresponsible American out there that indebted themselves well beyond rational or realistic means for good and bad times.
Virtually everywhere except in the heads of people that can't be bothered to look at objective data on the matter.
How to stop the real estate doom loop is rezoning and building purpose is needed (especially politically for a more balanced urban and suburban environment.)
Keep in mind that the doom loop is not new. Detroit went through a "doom loop" via automaker layoffs and downsizing. New Orleans is also going though a "doom loop" but is more nuanced by proximity to nature (Gulf Coast flooding) than economic, just too expensive to renew from natural disasters.
It's not quite wise to compare this to something like Detroit or New Orleans. Those had extreme external factors that forced a massive changes to the demographics of a city. This problem was caused by bratty real estate moguls who are too conservative and stuck in their ways to change things, because they were promised an "investment opportunity," and forgot that sometimes investments don't work out.
@@heychrisfox so, when do the assets reflect accurately on the balance sheet or cash flow statement? Either way; when people so not want property, for natural or man made reasons, that should be the signal for economic change. That change is now; but what I have seen is owners being stubborn. Politicians being stubborn. Such delay in change in price will increase the likelihood of a sharp decline in price when the change and competition happens; or outright decay because there is not enough population to support the infrastructure.
Hello 👋👋👋❤❤❤
Maybe it is just enforcement: th-cam.com/video/h8Rq5CJBWnk/w-d-xo.htmlsi=xw_tc5PD-wd7j2vw
Since the Pandemic, nobody wants to be in enclosed spaces anymore. It's happening in many Metropolitan areas in the world. Work days are divided between work-from-home and office time.
In many cities around the world, I want this doom loop to arrive quicker and mightier so the f**k*d inflated prices come crashing down!!
Inflated cost of living does this.
"Rich people pay a disproportionate share of income taxes" perhaps that is because they have all that income. Funny how that works
That kind of police does not work. Rich people just move elsewhere.
The problem isn’t their income.
It’s the taxes.
Very basic incentives structures.
Lowering taxes is the best way to incentivize economic growth.
That is empirical data.
Erm the sentence means their portion of the tax bill is not proportionate to their portion of income. For instance at the federal level the top 1% pay 40% of the income taxes while only having 20% of the income.
And the problem exists at the federal level too. The federal tax base is realistically something like 20-25% of the population. If they make different choices the other 75-80% of Americans are screwed,.
@@guizaoaccsince when we as humans need to depend on the charity of rich people. Might as well let them be dictators then jeez. It’s 2023 why are u still under the feudalism mindset? Money is not real. There is no billionaire that actually earned a billion…it’s like you are dying of thirst and there is water across the road 20 feet away but you don’t want to cross because it’s a Double line and jaywalking is illegal so you die of thirst instead. Sometimes common sense got to be common sense. We can tweak it so we don’t have to depend on a few rich it’s ok economies are not some natural thing it’s all ran by law bro it’s human creation so why don’t change if u see the outcome only benefiting a tiny few instead of the majority?
@@guizaoacc Lowering taxes has never increased our GDP, or more importantly, EVER improved the lives of any normal non millionaire or billionaire american. Ever.
Notice how no one is rushing to lower MY income tax from my paycheck?
@@guizaoaccThis is correct, if the rich move elsewhere cause operations are cheaper there's no jobs in there .. yups lowering taxes is actually the solution
"...so if a few rich people or families leave, that could leave a large hole in the [tax] budget." I wonder who has been saying the exact same thing?
Instead of bailing out the landlords cities should invest in infrastructure and services that make the city more attractive to people. Remote work is here to stay, some jobs will be in person but remote work will play a significant role going forward so instead of bailing out landlords and businesses in the long term they should focus on making a city somewhere you want to live outside of work culture. Make them walkable, build parks and nature reserves, invest in public transit and invest in the people living in your city.
It's a cute idea, but have you seen what's going on in big cities? The infrastructure isn't the problem. Who wants to do you the city if their chance of becoming a victim of crime or getting poked by a drug needle, or having bad interactions with homeless people increase dramatically? You have to address the broken policies of these cities that have failed everyone before you can even think about what cute things to put in the city.
Like some european cities...
@@mediocreman2 Given how brutal your police is, I am baffled by its inefficiency. Why don't they simply arrest all drug users on the street?
Screw the land lords. Let them collapse.
No mention of the fact that this is the simple and predictable reversal of the urban inflation that has gone on for decades at the expense of the rest of the nation. The growth of big cities has been mostly explained by inflation of values. City governments not only spent these windfalls, they handed out huge pensions to the public employee unions that guaranteed their election in return. The small 4% decline in tax revenue would be no problem if these cities hadn't committed their cities to trillions of dollars in entitlements buying votes!
Hello 👋👋👋❤❤❤❤
I moved to an English town 45 years ago and saw how it had lots of empty office blocks. They're still empty. I've often wondered why all these tall buildings were built and what goes on in them. Apparently not much.
Many businesses are leaving cities because of the massive increases in crime and people living on the streets in front of businesses. At least where I live.
Places like San Francisco, Seattle, Chicago, New York Los Angeles etc.
2:10 - That one graph ain't telling the whole story. What percent of a person's income aka the effective tax rate is what really matters to most people, not just the total amount being paid....nice try CNBC
It does matter more though, the amount a poor person pays might not even cover the salary for a government worker. But a single rich persons tax could dozens of workers
@@johnsamuel1999 correct that's how taxes are supposed to work.
I see stuff like this and I'm left thinking about how screwed up our system is. For example, halfway through the professor mentions a 10-ywar mortgage in which the company never paid any equity, but the property value goes down and they're screwed... If that we're a person and their house, we'd say they deserved to lose it.
And it's worth remembering here, these major companies, these extremely wealthy people... They have all the money, make these terrible choices in order to give themselves more money, then come crying when their bad decisions hurt everyone.
If a handful of people were to leave a city and it makes a billion dollar hole, that's a bad situation that could have entirely been avoided by having federally funded services. Truth is, they won't leave because the urban lifestyle is what they want... They have to be near the services that are truly only in the city.
I can't help but look at stories like this and be reminded that it is the fault of the wealthy and powerful for setting up such a vulnerable system.
Socialism for the rich, unregulated capitalism for everyone else. We had a term for this 100 years ago that I think we should bring back - these people are robber barons.
Well from the context, I don't see to much of an issue with them losing it.
However, when too many people default on loans the banks who gave the loans lose money.
Which means that they are going to try to take their pound of flesh from everyone else to retake the losses.
Zzzzz... corporates and lease owners want to make us go back to the office again, waste our time in traffic to please a micromanager. You know what: NEVER AGAIN!
Newsflash - the 15 minute neighbourhood is a reality! City councillors and mayors need to wake up and implement very simple policies. But of course it's just easier to blame the worker who refuses to commute for financial, environmental and personal reasons.
This is not surprising in any way shape or form. Our society is centred around economics and everything else is well down the list of priorities for the decision makers and the consumers. When economics is #1, its a hard fall when a disruptive change occurs.
It's funny crime was never mentioned once in this video.
they conveniently skipped the one shadowy reason why people leave cities...
@@johnsmith-fk7fw exactly!!!! Unreal.
I can't stand when economists and shills use that misleading metric. Like of course the percentage of revenue they pay is greater, the numerical amount they pay is more because they have the most money. They never mention the metric that actually matters which is the percentage the 1% pay in respect to their total income.
@@Bash70 so if someone works harder they should pay more to support you? Why not carry your fair share of the weight, you're not a little kid lol. Have some self respect 😁
they always hiding the true
I don't understand how office buildings can be turned into hotel space but can't be turned into apartment space.
This feels short-sighted... out with the old and in with the new. Deconstructing what doesn't work to build a new social structure. But I think we are going to start seeing home pods where they can stuff as many people in as little space as possible.
thats already a thing=hostels
Better than perpetual unaffordability and homelessness.
That's illegal as a dwelling. There are requirements for window access and there is plumbing needs. That's why office buildings have trouble converting . They basically have to be stripped down
@@chiquita683 just sell the converted offices as very big, low occupancy luxury apartments to rich people who absolutely can afford it. it would take a huge amount of demand off normal homes. the idea that we have to bulldoze the entire office building to maybe house 100 households in ??? years, instead of doing some light conversion to house 20 households now, is very short sighted.
I’m a current Urban Planning graduate student at Columbia and the two main issues we’re studying in NYC are 1.) (re)zoning, and 2.) tax breaks for affordable development. Most of the city needs to be rezoned to allow for higher residential density needed to build more units. Mayor Adam addresses this in his “City of Yes” plan. These buildings need to be converted to mixed-use and mixed-income in order to meet the housing need, and to generate taxable rental income for the building. More importantly, the state legislature has to reconsider or replace the 421-a tax abatement program which was designed to spur affordable housing rental development. Developers cant make the deals pencil without it. The costs of acquisition, labor, and materials are all fixed so unless there’s some tax relief they will never convert these office buildings or construct new ones.
NY needs to figure out their broken policies before they can even think about trying to attract people back to the city.
Rezoning process is lengthy and tedious until they start loosing money they "might" do something
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There is more to it than that. 1st off..the cost to rezone those building will be very expensive..they would need to read it to meet the current energy codes and add additional mep to meet the new occupancy needs.and not all commercial space is livable to some extent. Most every room would need some type of window fenetration and it would not all be possible in many instances. Just saying
What about the millions of "migrants" that will keep being bussed into the city everyday. What will you do with all of them??
I've been working 80 to 100% from home for 3 years (100% in the last year) and love it. I don't care about these offices.
I'm missing the part where this affects me or most common people. Your average person does not have a stake in commercial real estate or even in REITs. Even the tax revenue may be reduced but won't be eliminated completely.
I think a big part that’s missing in the equation is the general safety of some the cities listed. The homeless and crime problem in SF and LA would still be a big deterrent for many people to return to those cities
5 star comment ! Everyone is talking about technology but nobody notices this!
They do touch upon it in the vdieo, by saying "lack of funding" for public safety, but the public safety issue is not caused by a lack of funding but by intentional policy towards decriminalization of crime.
Comcast should embrace WFH and Remote Work!!! They are an ISP company. Let the Doom Loop happen!!! #WFHForever
Posting from England, I work from home and we routinely get guilt tripped by the government and chief executives to come back to the office, lime we are deliberately withholding money from overpriced sandwich shops and unreliable train services. Like many in England and I suspect the USA my wages and standard of living has been squeezed in the past 13 years whilst the 1%s who own these buildings have got richer, so you will excuse me if I dont get too weepy at the thought of them losing money.
Agree. USA here and yep, we are being squeezed by the cost of living. To the 1%, my thoughts and prayers.
If only 10% of office buildings, by his calculation, can realistically become housing, how can any of that other 90% be made into hotels? Aren't hotels just buildings with small apartments?
As someone who started working remotely during the pandemic I was like this is the best thing ever! But now after so many years and still working from home I miss meeting with my colleagues in person, grabbing a coffee on my way to work from my favorite seller, walking past other people and stores and shops.. doing activities with my colleagues DURING work. Meeting NEW people organically. Now I just wake up later than usual go to my computer to work and then order food and groceries to my house.. rinse and repeat everyday.
Just because you prefer it certain way doesn't mean everyone does. I love remote work. It allows me to travel and work from different places.
Hybrid might be the best way to go.
Same for me but I haven’t reached my breaking point so to speak
@TheVinster You're missing the point that you need some level of office attendance. It doesn't help someone who likes in person collaboration to show up to an empty office. I've seen new hires increasingly struggle because they can't get the same level of feedback remotely.
IMO, hybrid with two days a week in office is a healthy compromise. It helps folks who genuinely are at their best going to an office while still retaining sufficient flexibility to those who like remote work.
sounds like a "you" problem
I work from home my entire life and can still do all the things that you miss
San Francisco's my 2nd favorite US city
I always enjoy visiting
Yes safe and walkable city
@@ahsanurr4219 walkable, bikeable and better transit
@@NicksDynasty Yes i agree but the only thing I hate is that the street is very hilly
What I’m hearing is “boohoo the millionaire/billionaire hedgefund banker types are ‘struggling’” this is not a real problem. Like you can repurpose buildings into anything, or just tear them down and make agricultural spaces why is this an issue
These cities want people to live and work in the cities, but these cities intentionally not want to reduce crime.
unrelated comment but i just want to share something:
"the generalized fourth power law"
10 times heavier load per axle=10 000times more road damage
cars are only a rounding error for road maintenance (buses and semis destroy the roads the most)
10$ for 1h parking=87k $ in one year for a 2.5m x 5m patch of asphalt
thanks for your attention
bye
Urban central centers had a second chance following the decline of population from the 1950s-1980s. They failed.
It is time they suffer and truly learn their lesson. The only upside many of these cities have is they are walkable and transit friendly with pretty good architecture.
These aren't the same people from the. Most people from that time, are dead. So long as people don't learn history, mistakes will repeat.
Maybe some of those office buildings can be converted into urban farms.
Love the ending, difficult to turn into housing but easy to turn into hotels or entertainment places lol
The "urban doom loop" is a term coined by Columbia Business School Professor Stijn Van Nieuwerburgh to describe the negative impact of remote work on cities. With many office workers still working from home due to the pandemic, there is a reduced demand for office space, leading to revenue and value declines for office owners. This, in turn, leads to declines in property values, reduced property tax revenues for the city, and less money for public services. As a result, people may migrate out of the city, property values fall further, and the city enters a downward spiral of fiscal health. The problem is particularly acute in cities like New York, where property tax revenue is about half of all tax revenue, and commercial property tax revenue is about 10% of all tax revenue. The technology sector is particularly affected by the urban doom loop, as it has been more permissive of remote work. The impact of remote work on commercial real estate is also affecting regional banks, which are facing a credit crunch due to a deterioration in the credit quality of commercial mortgages.
Nobody thought that it will come to a time when people will prefer working from home to office. The pandemic brought that seismic shift.
In the past, social interactions at work places didn't cause much problems but nowadays some comments that could let go would land you at HR which could ruin you. If you consider these issues, it's advisable to work from home if you don't want any problem.
Y'know, these are basically none of the reasons people should work from home. But you're at least heading in the correct direction, so good for you.
Oh nooo the people that play with risky debts, using real estate as investments, and the banks are hurt! The only way is to... gulp... rethink how to repurpose the overpriced office building for other mixed use like living space etc! What a tragedy!
Why don't they convert them to decent and reasonably priced apartments and allow us all to work from home when possible. He neglected to specify why the areas couldn't be converted.
Its because big cities in US aren't as desirable as it is in Asia and Europe. Blame crime, drugs, homeless, bad schools, and poor infrastructure.
Blame poor infrastructure that favors cars over people, crappy inner and inter-city transit, stagnant wages that have not kept apace with the cost of living or inflation that rises everyday, every year. This contributes to homelessness. And lack of money leads to crime, and the schools have been defunded virtually every 4 years since desegregation, but cops have been drastically increased in funded every year to become practically the 4th branch of the US military. Corporations have purchased en-masse ALL the single family homes, and instantly flipped them often without actually adding any value or improvements to the building, therefore further pricing out the average american and destroying the american dream.
This is a sad attempt at anti US propaganda
@@Ether202 In other words: overshoot. As in communism. And they complain about the EU, where they basically don't have such problems, and lofts in post-industrial buildings are very popular...
@@DCBJ2011 Calling the kettle black ≠ US propaganda. What point in his comment seems wrong?
The cost of real estate in many cities disagrees with your theory. When real estate costs more, it is because it is more desirable.
"Rich people pay a disproportionate share of income taxes" 2:16
It's misleading to tout how much the rich pay in taxes without showing it as a percentage of their astronomical incomes. Let's get real. Many of these so-called 'high contributors' might be paying a pittance in relation to their earnings. For them, it's just another luxury expense. Meanwhile, the lower 50%? Taxes for them can mean choosing between essentials and luxuries, health and sickness, joy and sorrow. Let's not distort the narrative with selective data presentation.
Nope
Nope, this is just you not understanding how rich people invest and poor people, even if they have disposable income, don't. My "poor" neighbors have had more vacations, more nights out, more concerts, etc. But they don't invest. So now, even though I don't make insane income, I'd "net" more wealth generation every year, because I invest. Investments get better tax treatment, because surprise... We want people to invest. Poor people literally refuse to understand the monetary system. Even if you gave them a million dollars, they'd be poor again. Being rich in America is actually not hard... People refuse to learn how to play.
Also, the tax system is literally percentage based... How can a person paying 40% in taxes pay less in tsxes than you paying 20% rate? You guys try so hard to be victims, rather than actually learn how rich people got rich.
The reason people are poor is they literally don't understand money. In fact, I'll take it further. Every single thing poor people do, makes them poorer. They are beyond clueless as to how to play this game. They literally have negative financial knowledge. Even the middle class of America is mostly 99% clueless.
@@Tential1Tax write offs. You think anyone is actually paying 40% taxes? Rich people will find every loophole in the world.
Those empty office buildings would be great for day care, after school programs, community centers, schools...All it takes is the imagination and the willingness to change current zoning laws.
I’m sure the crime issues have nothing to do with it 🤦🏽♂️
I left The City in 2008. I used to be sad. Today I am thankful I left S.F. when I did!
Me too! I left SF in 2018 and am so thankful that I left. Especially after seeing the horrible increase in crime on the news.