What is the path to profitability you see? They pretty much have to gut rehab the building to add kitchens and bathrooms, in an economy where loans are pretty expensive. Is that competitive with people selling existing move-in ready housing stock in a down market? Do you want to be the first person to sign a contract in one of these conversions? (Not to mention the usual "new construction" taxes that are seller-paid on existing housing, but buyer-paid on new construction.)
I think everyone is incentivized to sit on what they have now and offer cheap leases. I also think that cities are incentivized to bring workers back to the office. Like in NYC, we spent billions of dollars on a new commuter railroad terminal that opens this year, and upgrades to run more trains per hour during rush hour. I don't think the state is going to step in and offer free money to make more housing.
All in all I love the idea of converting offices to housing. Working from home is great, and affording your own home is even better. But, I don't think the economy wants either of them :/
> we spent billions of dollars on a new commuter railroad terminal that opens this year, and upgrades to run more trains per hour during rush hour.
This is my problem with trains in general — they make very long term expensive assumptions about where people want to go. But when the trends change (such as remote work,) then there are hundreds of billions invested in trains going places people don’t need to go.
Unless you're referring to something besides the baseline interest rate (in which case you might need to clarify, as it's non-obvious why it would be the case), loans aren't "pretty expensive" now: they were "absurdly cheap" for the last decade.
Setting your baseline during the post-financial-crisis period of permanent zero interest rates is not particularly realistic.
I think everyone is incentivized to sit on what they have now and offer cheap leases. I also think that cities are incentivized to bring workers back to the office. Like in NYC, we spent billions of dollars on a new commuter railroad terminal that opens this year, and upgrades to run more trains per hour during rush hour. I don't think the state is going to step in and offer free money to make more housing.
All in all I love the idea of converting offices to housing. Working from home is great, and affording your own home is even better. But, I don't think the economy wants either of them :/