[bugglebeetle]

It’s not so much about individual investments, but how commercial real estate sits as an asset class in wealthy people’s portfolios generally. There’s no scenario where a 2008 for commercial real estate doesn’t cost them a lot of money, so it’s in their material interest to push for back to office.

[function_seven]

> It’s not so much about individual investments, but how commercial real estate sits as an asset class in wealthy people’s portfolios generally.

Those same individuals also own companies that pay rent, and so also have an incentive to reduce the amount of money spent on that.

I don't think anyone in the managerial class is looking at their E-Trade asset mix, and deciding that they should change company policy to protect their investments. One decision at one company isn't going to move the needle one iota. And even if it did, it would move another needle the other way (companies are tenants, not landlords).

Much easier to sell the real estate and purchase more shares in companies that were once tenants.

[bugglebeetle]

To whom would they sell this real estate in a tanking, high-interest rate market, exactly?

[JumpCrisscross]

> whom would they sell this real estate in a tanking, high-interest rate market, exactly

Anyone with the political connections to get a residential conversion approved. The wealthy elite are uniquely positioned to profit from this in a civically inactive and politically insular city like San Francisco.

[bugglebeetle]

Residential conversions are wildly expensive and frequently infeasible, so even assuming you have the political connections, the financing is going to be a challenge, and of course your end goal is to fill them with tenants in a down market for tech jobs.

Congratulations, you’re basically back to square one of filling empty real estate, now at additional cost. And thus why the incentives are to try and ride out the status quo by forcing people back into offices.

[simfree]

This really depends on the specific building. There are many office buildings that could have slapdash remodels done to make them habitable and revenue positive, and there is plentiful pent up demand for affordable rents in urban cores.

Nevermind the knock on effects of retaining and growing the on street retail base that has fled entirely commercial sections of many urban cores. You don't get a safe, friendly neighborhood when the streets are deserted every evening after 5:30pm.

[bugglebeetle]

As cited elsewhere on this thread, it really only works for old buildings and not for huge swathes of the newer-built commercial real estate that’s sitting empty right now:

https://www.nytimes.com/interactive/2023/03/11/upshot/office...

Again, we also have to think about what the incentives would be for preserving the value of the general case of the asset class, not whether individual buildings are convertible.

[ghaff]

That's sufficiently indirect and diffuse that I don't really believe it. That's a bit like Amazon is a non-trivial part of my stock portfolio even through index funds so I'm going to make us go all-in on AWS for that reason (as opposed to other herd-following reasons that may be good or bad).

Especially among execs who have so much wealth that commercial real estate holdings, much less the ones they can directly influence, are in the noise.

[bugglebeetle]

An individual investor has nowhere near as much sway over masses of other people as the business owners we’re describing here, so this analogy doesn’t hold. If you could invest in Amazon while simultaneously forcing others to spend millions on their services, you probably would!