The Coming Collapse of Downtown Office Real Estate

14 Replies

Jump to latestLatest
  • Sharon Rosendahl
    Investor · Quilcene, WA · Member since 2017 · 235 posts · 169 votes
    4y

    I walk 1.5 miles to my office in downtown Seattle on the rare occassions that I commute in (I take pubic transportation a quite a ways and don't otherwise go there). The empty stores/restaurants and offices are more abundant than I ever remember them being. Besides residential buildings, I feel like owning other types of commercial may be a little risky. I have heard that residential buildings are still managing ok but many aren't very affordable at $450k for 500 or 600 sf.

    0Reply
    • Andrew SyriosPro Member
      Moderator
      Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
      4y

      Yeah, I've been hearing this a lot about many such cities. San Fran is only the worst, but there are many others. And it will only get worse for the next few years too.

      Podcast Guest on Show #121
      0Reply
  • BiggerPockets TeamPro Member
    OP
    Member since 2026 · 14k+ posts · 5 votes
    4y

    I live in the Los Angeles area. As I drive around the neighborhood, I am noticing a lot more for lease signs pop up.

    Originally posted by Aurora Trevino.

    BiggerPockets
    0Reply
  • BiggerPockets TeamPro Member
    OP
    Member since 2026 · 14k+ posts · 5 votes
    4y

    I like how the author says "California did not actually legalize stealing $950 or less" but then provides a link to an article stating shoplifting is "de facto legal" .... talk about trying to put lipstick on a pig! https://www.hoover.org/rese...

    Originally posted by Robert Abbott.

    BiggerPockets
    0Reply
    • Andrew SyriosPro Member
      Moderator
      Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
      4y

      I mean, I basically say as much "but it did downgrade and deprioritize such crimes leading to a noteworthy uptick in shoplifting which has led multiple retailers to relocate"

      Podcast Guest on Show #121
      0Reply
  • Matthew WeaverPro Member
    Investor · IN/OH/AZ · Member since 2020 · 19 posts · 12 votes
    4y

    Besides self induced inflation, I believe this is one of the main reasons the FED will crash the economy. I am not a Chix Little, however think about who owns the mortgages for these commercial buildings? Insurers, medium and large pension funds. If the commercial is allowed to crash, these operations will take a big hit to value and the ability to fund future liabilities; the economics will get ugly. Not even CAlPERS can withstand that loss. So why is it tied to the FED? They will force high unemployment and put the employer back in control at the hiring line. Then all these people who currently say, I am not coming back to the office will either do so or not get hired. I have other business owner friends who quietly say they are tired of this prevalent attitude; job loss will correct it.

    [email protected]574-575-3374
    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y

    nice write up.. I was in the Standard insurance building in Portland few weeks ago and Standard sent every one home .. one issue is the homeless and crime in the urban core on top of covid .. Umpqua bank is moving headquarters to Lake Oswego Kruse way office parks.. I think suburban office is going to benefit from this in certain markets.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
    • Andrew SyriosPro Member
      Moderator
      Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
      4y

      I haven't personally been to San Francisco since before the pandemic (although even then I noticed a decline) but I have been to Portland a few times and agree, it's gotten pretty bad downtown for the reasons you mentioned. Not surprised companies are starting to move and think there could be some opportunities in suburban office space, although the move toward flex work and work from home would make me nervous about buying anything too big.

      Podcast Guest on Show #121
      0Reply
    • Brian Ploszay
      Member since 2021 · 28 posts · 5 votes
      4y

      Suburban office was in decline pre pandemic. Perhaps it will reverse.

      0Reply
  • David Henderson
    Member since 2022 · 3 posts · 0 votes
    4y

    I live in San Francisco. What you say is depressing but true. It’s frustrating, but San Francisco tends to be a resilient place. I only hope that’s true this time, also.

    0Reply
    • Andrew SyriosPro Member
      Moderator
      Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
      4y

      Yeah I hope so. Hopefully people start seeing the light regarding some of these misbegotten policies and investors can come in and reposition these offices to flex/residential in the coming years. We shall see.

      Podcast Guest on Show #121
      0Reply
  • Brian Ploszay
    Member since 2021 · 28 posts · 5 votes
    4y

    Few takeaways: The vacancy rates are probably worse than reported as leased space often remains underutilized. After leases expire, many firms will downsize their footprint. Also, cities rely on the taxes from commercial real estate. The buildings will not be able to support these taxes anymore. It is unlikely that most of these cities will decline, rather they will evolve.

    0Reply
    • Andrew SyriosPro Member
      Moderator
      Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
      4y

      I think many of these cities have declined unfortunately and probably will further. But eventually they should (at least partially) bounce back as these vacant office spaces are repositioned into retail/residential.

      Podcast Guest on Show #121
      0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y

    The pandemic opened a lot of eyes. It doesn't make sense to maintain a large office when employees can work from home. However, I think most employees are less productive when working remotely, which is how Musk feels about Twitter. We'll eventually find a balance, but I expect far fewer large offices in the future.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free