[chii]

> why the city should swoop in and give tax payer money to landlords.

is the only thing stopping better housing ideological aversion to subsidizing landlords?

If the landlords cannot find economical ways to turn offices into residential apartments, they won't do it. Therefore, it is in the city's interest to make such a subsidy.

[Spooky23]

The landlord should go bankrupt and the city can seize the property at the tax auction.

Real estate ownership has more direct and indirect subsidies than any business other than oil. Their greed shouldn’t be rewarded.

Let the government bailout the bank by buying and auctioning off the distressed asset.

[hedora]

This is a situation where capitalism is actually pretty close to optimal.

The landlord attempts to sell at a small enough loss to avoid bankruptcy.

If that fails, the lender (which should be collecting enough interest or holding enough insurance to absorb the shock) forecloses and sells at auction to the highest bidder.

The new owner effectively received a subsidy, since they bought way below cost.

Incompetent real estate holding companies and banks go under, increasing future economic efficiency.

If all this is so bad to lead to economic contagion, the government can bail out the retail investors and institutions that got swindled by the wall street folks.

That bailout is some tiny percentage of the cost of bailing out the real estate holders, since all the fiscally irresponsible companies that went under act as ablative shielding.

[chii]

which is exactly what will happen, if there's no gov't intervention.

However, this will take years, if not a decade or two. The reason being that the real estate companies knows this is possible, and so is likely diversified, and therefore, can absorb the losses for a long time (as long as they have income elsewhere to make up for it), and hope for a reversal of demand for offices, or wait for organic growth to catch up.

They will not willingly bankrupt themselves and take a loss for no good reason - that's just stupid.

So in the mean time, the offices aren't being used efficiently. If the city is really keen on making good use of the space by making it residential, they can speed this process up by subsidizing.

[Spooky23]

The more leveraged companies will start failing in 3-5 years, especially if rates stay high.

Commercial leases are usually 10 year deals. Tenants who don’t walk will shrink and have leverage to negotiate.