Hot take.

White collar work significantly shifted in 2020, and most big America metros are now full of vacant offices. Those would’ve been a very boring / safe investment if the world kept plugging along as it had for the past 75 years.

We should find a way to incentivize converting these spaces into residential use. That’s what we need right now, and we should look at this as an opportunity to lower housing demand and housing prices.

We just bailed out SVB, gotta keep this money printer going my guy.

Depends on who takes the loans. Big banks and the 1%, bailout. Us, recession/depression incoming.

Yeah, it ends with the littles guys footing the bill for the big guys so they don't get boo-boo's. Corporate socialism ho!

Kinda. The housing crisis was caused by new schemes around high risk home loans. A lot of these commercial property loans were likely deemed very low risk, but then a global pandemic completely upended a century of commercial real estate precedent.

Go to any major metro area in the western world, and you’re probably going to find lots of vacant offices and commercial tenants thirsting for their lease to expire.

So a similar end result, but how we got here was likely a less about greed and negligence, and more about a radical shift in human behavior.

Wrong country bud

This is like comparing a burrito to a cheesecake. They might both include flower and cheese, but they are very different things. Just because these stories both involve real estate and lending doesn’t mean they’re related.

China’s problem is a big mess with developers over borrowing in the past, and not and being able to borrow now. The problem in your main article is mainly about commercial buildings like offices, which people no longer want to lease, because so many people are working remote.

This vacant office problem has less to do with greed and more to do with white collar humans deciding to instantly, and radically, change where they go to work.

Can you name a source that isn't some boomer propaganda?

Perhaps. But my guess is that this ain’t going to be a “few quarters” thing. More people are working remote and we just don’t need commercial office space like we did 5 years ago. Things have radically changed, and many companies are bailing on their leases as soon as they come to the end of their term. And commercial leases are often 3 to 10 years. So people are going to be bailing from those over the rest of this decade. That risk of large loan default could continue to increase.

Lower profits means death

Moreover, no one is converting these unused offices in to residential properties. I’m guessing because the average price per square foot is significantly lower for SF property targeting residential use.

That's part of it, but there's also significant up-front costs to doing that type of conversion. If enough spaces become apartments, the remaining commercial space will profit without needing nearly as much investment, so the property owners are in a bit of a game of chicken to see who will break first and convert or sell low and start tanking the market.

I read a thing where they can do this with commercial buildings from before like 1950, but a lot of the big skyscrapers are harder. The older buildings have a smaller footprint, so it's easier to convert them to apartments with windows and a decent layout. When you convert the big buildings, you either end up with a bunch of really long, thin apartments with a window at one end and no natural light in the other rooms, which makes them unappealing; or you get a bunch of apartments clustered around the edges with all sorts of unused space in the center. You can convert the center space into functional space - storage units for the apartments, a gym, meeting rooms, etc - except then you're committing to higher costs for maintenance, cleaning, insurance, etc.

Personally, I'd like to see the second option become a thing, but then I don't own any large commercial real estate, so ...