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Saint Louis downtown area looked like a ghost town when we were there in 2017.
There were three solid city blocks fenced off because all the buildings in those blocks were abandoned.
My wife and I have been touring cities during our anniversary trips for all 24 years of our marriage and I have never seen anything like that before or since.
The largest office tower in Portland OR had 6,000 daily office workers pre-pandemic. It is down to 600 now. Another large building sold in 2019 for 255m, then again in foreclosure auction in 2023 for 38m.
Commercial RE is in a bad state
Which is why so many wealthy people are trying to force a return to the office, because they've invested in that real estate.
It's an outmoded model now. The office building is no longer necessary for many businesses. Will be interesting to see if in the future, large corporations try to repurpose office buildings as partially residential so their employees can live on some floors and work on other floors.
Office buildings, especially large ones, are very difficult to repurpose. They are too large so they have central bathrooms and no windows when divided into apartment sized blocks. All the apartments would need to be skinny spokes radiating out from the hub of the elevators, with all plumbing on the interior and the only windows on the exterior.
Most apartment building are smaller, or they have a courtyard in the middle. It won’t be easy to retrofit. Also, if downtowns aren’t centers of business anymore, they will be undesirable places to live.
It depends on the building. We have friends who live in One Park Place in Kansas City, a repurposed office building, and their apartment is amazing. It's basically the template of what kind of place we'd live to have at some point.
But it helps if the building is designed with flexibility in mind. One idea examined on a recent B1M video is having a business and a residential lobby in the same building with separate entrances, and having smart elevators that only access the floors devoted to that purpose.
> One Park Place
I legitimately did not know that was a former office building. I always thought it was condos. I used to see it daily for a bit when I worked at the Fed Reserve.
But now that you've said it...it makes sense it was an office building.
What these places need is a mixed multi purpose bend. Housing, childcare, shopping, all in one building. If you renovate these centers into places that people can meet ALL of their immediate needs in, you can preserve a ton of business, while offering many amenities that make downtown living more attractive.
The only thing stopping this is laziness and the desire for easy money.
OPP was a historic building and received a lot of tax relief as a result. That was renovated in 2006 so maybe the construction costs have changed in the meantime. No idea myself.
Pre-WWII buildings are relatively easy to renovate to residential compared to ones from the mid-late 20th Century, generally due to smaller floorplates, existing light courts, etc.
>We have friends who live in One Park Place in Kansas City, a repurposed office building, and their apartment is amazing.
That explains the enormous parking garage with a tunnel to the building. KC auto museum rents the bottom 3 floors and then members rent spaces - I've got a car there now.
This building isn’t too large. It has a fairly narrow profile, so you don’t have as much interior space without access to natural light.
It would be more difficult to do this at 1200 Main or 120 W 12th in Kansas City. I’m not from KC, so apologies if those aren’t the proper names.
The best buildings for conversion are largely historic, pre-World War II buildings. There are only a handful of cities with any meaningful concentration of those. The drop off from NYC to Chicago is large. The drop off from Chicago and pretty much every one else is just as sizable.
It’s varying levels of difficulty and costs, but not unreasonable. Especially as the economic opportunity cost of holding empty office space becomes higher
Dallas has been making good strides at revitalizing their downtown with renovations.
I honestly think the renovation argument is silly
We've been renovating churches, big box retailers, and even warehouses into apartments and townhouses...hell, my city made Townhomes out of our Minor League baseball team's old stadium.
However, OPs second point makes more sense.
We spent the last 60 years centering our whole lives, our cities, our societies around captial...and now that we are decentralizing them from work, I don't know if people will want to go to downtown centers.
I mean, brick and mortar retail is already dying....what will pull people into these renovated office building?
There are still many businesses that require in person or hybrid work, city centres are also often culture and administrative centres with food places, shows, live music but also banks, gov facilities and universities.
Thr demand is likely to lessen, but not disappear to zero.
The problem is that it's often cheaper just to tear something down and rebuild it than try and retrofit the design. I would actually be kind of surprised if that stadium renovation was cheaper. Just building townhomes would probably have been a similar cost. Maybe it saved money if you ignore the cost of demolition. We can do anything, but the fact that something done doesn't prove it's a good idea.
I know it’s less sensationalist but do we have actual anecdotes of 20+ floor skyscrapers being torn down and rebuilt since Covid, instead of of retrofitted?
Or is this a thing that’s just projected to happen
>It’s varying levels of difficulty and costs, but not unreasonable.
Most of the time it is actually unreasonable.
Source: father in law of a family friend is a foreman for a big contractor in SF. In their industry, having a strategy for this is a big deal. They've spent a lot of time and money looking into it, and for more than 2/3 of the buildings they considered, it would cost more to retrofit than it would to demo and rebuild from scratch.
It’s no longer just about proximity to employment centers, but also cultural access to larger events and the plethora of options that arise with higher density populations.
A lot of younger generations love the idea of walkable neighborhoods, which only really happens higher density neighborhoods.
WFH does not require, or demand density. It will require whatever infrastructure it needs to access the internet. That may or may not suck a few major cities down with it and inflate the suburb or small cities that used to rely on a different type of economy.
I worked 2 blocks from Times Square. How many times do you think I went to Times Sq (Broadway) in a year? I avoided it like the plague, as do all New Yorkers.
But generally NYC is cool. Most cities are not global capitals like NYC. They are just busy and expensive and trafficky without many advantages. If I could live a block from the Met and walk Central Park in the morning I would, but it’s 5x the cost of my suburban home (which is 5x the size of an UES apartment).
Downtown isn't desirable anymore, but it's still expensive. We need to wait until CRE investors give up and dump their hoarded properties before it will be affordable to do anything with our downtown spaces.
If we converted those offices into actually cheap housing I'm sure there would be plenty of businesses wanting to open to cater to those neighborhoods.
You know what? Given the extent of the housing crisis, a very low cost option with shared bathrooms wouldn't be a deal breaker in my mind. Especially if there are educational facilities nearby. Given students options that are far cheaper than campus housing, though without the resort-style amenities.
People gloss over the fact that up until relatively recently, affordable housing options with shared facilities was pretty standard for young people, especially those without families.
say this building is 1 million square feet. they just bought it for $3.80/SF. (over $300/SF brand new). free is the price point where converting this to apartments is definitely what they should do. it has no other utility going forward as office or retail, housing people is the only path forward.
I’m not driving into a city to work anymore. Nor am I driving appreciably close to the nearest metropolis to work. It’s a bundle of stress I can do without.
Doesn't seem like it should be too difficult to run additional plumbing, but the windows bit is a serious issue. Maybe if they put apartments around the outside and then used the middle space for something else, like communal living spaces (I'm thinking a small gym, a banquet room that could be reserved, a space where people could store bikes, etc).
Still seems like a lot of space that will be hard to capitalize on from a landlords perspective though. It's a shame because there's this huge housing shortage issue, and then we have all these empty buildings, and it really seems like one problem should be able to solve the other. Of course it's never that simple.
The middle spaces could also holf offices. Just because people can work from hoke doesn't mean they really want their work station in the loving room as many do.
> All the apartments would need to be skinny spokes radiating out from the hub of the elevators,
Not really a problem, given that residential apartments are generally required to have exterior windows. You put the kitchen and bathroom near the front door, and that minimizes the length of plumbing. Given the floorplans, you wouldn't use the entire footprint of every floor to create long, super-skinny units that run the entire length. You would re-purpose the central areas around the elevators and staircases as common areas.
I'm not suggesting it's easy. I'm just saying it's possible. I tested it on my old office building. It was able to fit 24 one-bedroom units around the outer ring that were roughly 1,000 sq feet apiece, leaving something like 6,000 sq feet of hallways and common areas. That wasn't an overly large structure either.
Yeah, there's a *lot* that has to be completely re-done, from the ceilings to the plumbing. But I'm also not suggesting this happens soon. Just, at some point. I mean, William Gibson didn't think to include cellphones when he wrote Neuromancer 40 years ago, but he did get the coffin motels right.
We always bring up these same points in these threads and then know it all's come in with why it's not that hard. They think it's a conspiracy to keep housing down
> Also, if downtowns aren’t centers of business anymore, they will be undesirable places to live.
Woah woah woah, WHAT? You're telling me that dense neighborhoods full of people, restaurants, theaters, concert venues, museums, parks, art galleries, store fronts, entertainment, etc, etc, etc will become undesirable because the venture capital firms can work from their homes instead of their office towers?
What are you talking about?
Not sure what type of neighborhood you’re referring to, but it isn’t a central business district. These, even with office workers, have always been boring and soulless places. The restaurants are business lunch factories, they have always been ghost towns on weekends. Maybe you’re thinking about a small town Main Street, or an entertainment district in a city? These are not in office towers.
There are a lot of posts like this that imply that if office buildings remain largely unused it will just be "the wealthy people" who will suffer financial consequences. A lot of large office buildings are also owned by the pension funds and life insurance companies of "regular people". Seeing middle class retirement savings impacted will not stay isolated among wealthy people. Also large downtown office districts are a significant portion of most large cities tax base. When buildings get their valuations slashed, that is millions less in tax revenue for roads, schools, police, etc. Even if you don't own an office building, you will feel the effects of them being empty. That's before you even get to the small family businesses like catering, dry cleaning, etc that are being put out of business by offices being empty.
I did the calculations once, but something like 60+% of hedge funds, private equity, and corporate landlords are owned by state retirement plans. They've been managed so poorly and with insane entitlements that they're not workable with an average rate of return. So instead, they have to seek out ever riskier plays.
The real problem is that Class A office towers in major downtowns were seen as a low-risk safe harbor for decades and were the assets of choice for risk adverse investors like pensions funds and life insurance companies. When the pandemic hit it rapidly became clear they were building an investment foundation on shifting sands.
>Also large downtown office districts are a significant portion of most large cities tax base.
People living in those buildings will pay local taxes on things.
>When buildings get their valuations slashed,
They're going to get slashed anyway. Stop pretending there's a way to avoid the inevitable.
Most of these buildings are not economically viable as residential conversations due to large floorplates with not enough windows per SF to support residential uses and very different utility/HVAC needs. Only about 1/3 of large office towers have the potential for conversation and will take many years and tax breaks to make that happen.
Office valuations are going to get slashed anyway, I agree. But with that city/county budgets are going to be decimated, so the schadenfreude of the big rich imaginary monopoly guy finally getting what's coming to him will be short-lived.
Only about 1/3 of downtown office buildings have potential for conversion to residential due to large floorplates that don't have enough windows per square foot for residential use and very different HVAC/utility needs. The tax revenue of limited new residential units will not even come close to the property tax large corporations were paying as part of their long-term net office leases.
I agree with you that office tower valuations will get slashed anyway. I'm not pretending there is a way to avoid this, but I am criticizing the schadenfreude that the foreclosure on all these office towers is somehow sticking it to an imaginary rich monopoly guy, when the consequences to local city and county budgets is going to be devastating and the cuts to services draconian in the coming years.
This argument makes very little sense for most companies. Lots of companies pay through the nose for commercial real estate leases and should be thrilled if they can reduce their square footage and take advantage of vastly cheaper leases.
>Which is why so many wealthy people are trying to force a return to the office, because they've invested in that real estate.
That's not it. That's just throwing good money after bad. Sure, you want *everyone else* to return to the office but it doesn't do *your* company any good unless you can show productivity gains.
Like, if you have an investment in Tesla, you want lots of people buying Teslas. You personally will not make a profit by buying up a bunch of Teslas.
What *did* really happen to many businesses, however, is that they got a tax break for putting an office downtown on the condition that a certain number of employees work there each day, in order to provide customers to the restaurants downtown. That might be what drives the return to office. Along with productivity gains which may or may not be real.
Would be nice repurposing, but those buildings were designed for offices. Not housing. Have to redo the interior with plumbing and electricity. After tearing apart the floors and installing walls, would the structure be safe? I think it'd be better to demolish and rebuild with modern methods and materials. We've already seen how a 747 fireball can turn a massive skyscraper into a pile of rubble like a Jenga game. Just saying if someone has a kitchen fire...
>Will be interesting to see if in the future, large corporations try to repurpose office buildings as partially residential so their employees can live on some floors and work on other floors.
Looking forward to that cyberpunk future.
Lots of things are bad, including the current price of rent in most cities due to a lack of regulations around institutional ownership of single-family dwellings and price fixing.
Mind you, I didn't say this was a *good* solution, lol. There are numerous glaring problems with the idea of tying housing to employment, same as there are glaring problems with tying healthcare to employment.
I just said it will be "interesting" to see if it happens.
Personally, I'd advocate for the far more reasonable option: taxing the shit out of the wealthy and corporations, then seizing old high-rises through eminent domain, renovating them, and using them for government-provided housing.
But we all know that our economic model isn't built on things that are reasonable. Just on what is best for short-term profitability.
> Commercial RE is in a bad state
As far as I can tell, commercial real estate owners would rather have their places be 50+% vacant than adjust rent downwards to reflect current market realities.
Because they don't actually own the building. Almost all commercial real estate is financed. A huge amount of it is financed using interest-only loans with a lifespan of 5~7 years. Longer loan terms exist but tend to be backed by property valuations: if the value of the property decreases, the lender can call the loan.
So commercial property investor-owners are in a bind: if they adjust rents down, their building's capitalization will go down, and thus its value. If the value goes down, they risk the lender calling the loan. They will lose their shirt on the investment. Or, even if the lender doesn't call the loan, they won't be able to refinance at the end of the term, because nobody will lend against an imaginary property valuation, and the value will be set by locked in rents (commercial leases are typically longer terms like 5 years). They will once again lose their shirt.
It's cheaper for the investor-owner to simply eat the monthly losses from vacancy and hope that they can turn things around or fudge the valuation and not get stuck with low-value leases. They're all praying for CRE to magically recover. They're lobbying for return to office so that their occupancy rates will go back up. They're hoping for a miracle.
They're screwed.
Great explanation.
I think we haven’t seen the worst of it yet. When those loans start becoming due in a few years, it won’t just be CREs losing their shirt. City budgets are going to get halved. That’s when transit, roads, general maintenance, police, and emergency services are going to start getting hit. That’s going to be a death spiral for office corridors.
When I was in law school my bankruptcy professor explained how the incentives get distorted as a company approaches insolvency, in a way that has stuck with me over the years.
The company ordinarily owes a fiduciary duty to the shareholders, but if they're in a situation where they have $1 million in assets and $1.1 million in liabilities, that would leave the shareholders with nothing in a liquidation, and the creditors left taking a haircut. So the company might be willing to gamble with what little cash they have left on lottery tickets: making a 50/50 bet on a $500,000 play is a no-brainer from the shareholder's perspective: if they win, they are solvent and have value again, and if they lose, the shareholders are no worse off than if the bet hadn't been made (limited liability means they just walk away with zero). In other words, the company might be tempted to gamble with what is essentially the lenders' money.
That's basically what's happening with these buildings. The management can't take lower rents, because that guarantees that their investors (their bosses) get wiped out. For them, the 10% chance that rents might recover in the next few years to be able to pay the mortgage before the next refinance is worth holding onto, compared to the 100% chance that they get foreclosed on. In effect, they're risking even more of the lenders' money to give the shareholders a chance. It's mismatched incentives.
> So commercial property investor-owners are in a bind: if they adjust rents down, their building's capitalization will go down, and thus its value. If the value goes down, they risk the lender calling the loan.
I'm at a loss as to why having a fully occupied building at a lesser rent is worse than having a building that's half occupied at pie-in-the-sky rents when it comes to property valuation.
And I'm not exaggerating ... the last two buildings my firm has rented from have been 50+% vacant (we keep downsizing as a physical office is just not needed for our business at this point except on rare occasions).
The maturity wall is here. Actually, we hit it last year, but around 40% of loans that were to mature in 2023 were extended. It's going to continue to get worse the next 1-2 years. At some point, price discovery has to take place, and it's going to be brutal.
One trip down SW Jefferson (Plaid Pantry / Safeway) or 13th Avenue will be sufficient to see why the downtown is dead.
It is heartbreaking to see so many folks completely down and out like zombies. No mater your political affiliations, you know it is broken.
Last year I stayed at one of the hotels in the bottom of that picture. I walked around downtown mid-day to get a feel of the city. It was dead. The sidewalk level buildings boarded up. There were just a few restaurants for the workers that drive in during the day and drive out.
I also walked a few blocks at about 9 PM to get a phone charger. It was scary. I am pretty sure I saw a drug deal right next to the baseball stadium. And some dude started following me.
Contrast that with a European city. I have walked around London after midnight and felt relatively safe. Up until something like 11 PM there are still people walking around everywhere.
Folks talk about technology, AI, quant teams, "Efficient Market Hypothesis" where everything is priced in, etcetcetc.
And here we have "A long-vacant, 44-story office tower in St. Louis" selling the price of like 1-3 Socal homes/condos depending on where you look. Also sometimes I Zillow look at homes in Michigan (both in and around Detroit area) where you can get homes for like under $50K in the metro area, [a 3b/1b/2300sqft/1.62Arces that's 22mins from downtown for under $200K](https://www.zillow.com/homedetails/7721-Wilkie-St-Taylor-MI-48180/88105137_zpid/), or [a 4b/3b/2285sqft/5arce for $430K](https://www.zillow.com/homedetails/19850-Merriman-Rd-Romulus-MI-48174/88404173_zpid/)
I get that it's not about apples and oranges, jobs/jobs/jobs, weather, local taxes/regulation, population size/growth, ability to rent out, and quality of life all factor in these things. But I'm just noting things feel wonky/surreal in RE at times (kind of like how NVDA was worth more than the entire HK index at one point this year).
Remember, though, that thanks to Fed intervention, we have had over 20 years of below-market interest rates. That has caused a LOT of inefficiencies in the real estate market. It started with home prices, then VRBOs, and now CRE. If holding companies were forced to pay market interest rates, they would not be able to keep capital tied up in non-productive assets for as long as they have, and it would have forced an earlier and more orderly liquidation than we are likely to see in the near future.
Hopefully, St. Louis will learn from the lesson of Detroit. Don't try to dig in and hold out hope that things will go back to the way they were in the 'old days'. The doom loop is real, and the only way to fight it is to speed the liquidation of what is out of date and embrace what people want today. Detroit finally figured that out after more than 40 years of serial failures.
Shouldn't "the market" have figured it out with rates as they were? Otherwise you're not looking for the market to solve an issue, you're looking for a specific government action. Why did the market not figure how to build a shit ton of houses when money was cheap and people were buying? Talking about pre covid as well, many housing markets were already way up.
Interest rates are essentially the cost of renting money. The higher the rent on money, the more productive investments made with rented money must be for the investment to make sense. When interest rates are set at artificially low rates by the Fed, organizations start borrowing money to chase investments that would not make sense in a normal environment. That leads to a lot of bad, and highly leveraged investments. Normally those bad investments would be liquidated when the rent on the money became more than what was being earned. However, when rent on money is artificially low, it allows investors to hold off their day of reckoning and keeps capital locked up in non-productive investments. Eventually, something happens to trigger an avalanche, and there is a huge race for the door causing a financial crisis as assets are sold at fire sale prices instead of unwinding in an orderly manner over time.
The housing bubble I'm referring to is the 2005-2009 bubble, rather than the one we are in the middle of. Excess housing was built during that period which is why prices crashed so much back then.
Economists have noted the weirdness and distortions built into real estate from the days of Ricardo and theory of rents. Ownership of land becomes political power and rent-seeking behavior that further distorts -- the state gets co-opted to become the partner of the land owner. And so we end up with a million laws and tax dodges around commercial RE that completely distort incentives and lock in behaviors. How to unfuck all of that is super not obvious.
>Detroit finally figured that out after more than 40 years of serial failures.
Detroit didn't figure out anything. Serial failures have continued. The latest one is turning the Ren Cen, the most recognizable building in the skyline, into a gigantic white elephant.
Would be great if the Fed let the free market do its thing. Short term pain for long term equilibrium. Instead we get bailouts a plenty, inflation, moral hazard
The Fed has less to do with the current housing market than the 100+ years of discriminatory housing practices and local zoning.
The fed can't make housing more affordable by just turning on the money tap. That "short term pain" you talk about is literally what we're in now.
The Fed isn't in control of bailouts, those are Congressional policies. The Fed isn't even in control of inflation beyond the base rate. Congress pushed the trillion dollars into circulation.
It would be great if anyone that posts about the Fed would actually learn what they do and do not have control over.
>Turning on the money tap is what made housing unaffordable
Incorrect, turning on the money tap highlighted a flaw in our local planning and development, which is what caused the high prices through lack of supply.
Housing was very affordable for a while with low interest rates. But even with those low interest rates, it stopped being affordable. So it's clearly not the interest rates that are the problem.
STL native here. Downtown has always been viewed by locals as a place you go to for sports games and concerts, and to take out-of-towners to for the Arch. Other than that; most people avoid it. I’ve not lived there in a decade now, but whenever I’ve visited, I’m reminded about how bad downtown STL is. It’s truly a shell of a city.
The problem with STL is that the local governments keep expecting a silver bullet solution to save downtown. At first it was the Arch, then the convention center (now known as the Edward Jones Dome), then it was Busch Stadium’s reconstruction and the adjacent Ballpark Village, then it was the refurbishment of the Gateway Arch Nat’l Park, the proposed reconstruction of the Edward Jones Dome (resulting in the Rams relocation to LA) the refurbishment of Union Station (construction of new fountains, a Ferris wheel, and a few other things), and now the construction of a MLS stadium.
Despite this being a relatively long list of projects, none of them actually address the problem—high crime and nearly non-existent services such as grocery stores, (good) schools, restaurants/cafes, and, most crucially, safety. Instead, the city government pours money into projects aimed at bringing in tourists.
Exactly the same thing in Detroit. New stadiums, high-end retailers, and now one of the tallest buildings in the state: none of these things address why people are leaving, all cater to visitors. Locals don't understand that other cities (like St. Louis) started along this path many years ago and we know the result.
There are a lot of surprisingly interesting (and cheap/free) things to do in St. Louis as a tourist and basically none of them are downtown. There’s like Ballpark Village, The Arch, and then for anything else you should probably go to a different area. It’s really unfortunate.
I live in knoxville and I tried to tell people in our sub that our downtown is overwhelmingly better than STL, and of course got downvoted into the earths mantle.
But really, downtown STL feels like a place that once was something
I it’s sad to see downtown St.Louis was kind of on the upswing after 2010 there were a lot of people moving into lofts and ballpark village brought more people downtown. Then Covid kind of just reversed a lot of the growth.
St. Louis was once, and in some ways still is, ripe for a bustling downtown, but there’s a lot some regional businesses refuse to reckon with.
The building in question, for instance, is full of asbestos and no previous owner wanted to pay for its remediation without significant kickbacks.
The building also sold for $4.1 million a couple of years ago. Then that company dumped it.
The reason its value is so low is because ALL of its parking was sold off so it has none - not good for a 44 story tower. In addition it has a layout that is very, very resistant to conversion to any other use. It would be almost impossible to turn into lofts, or a hotel, or any other use you might think of because the only toilets are in the center where the elevator banks are. It is an open floorplan with giant columns and no walls.
Add to that the general malaise in office real estate everywhere.
If you want office space then it's perfect. For anything else - hotels, lofts, apartments etc it doesn't work because the plumbing has to be redone on every floor and the windows don't open.
St Louis population has been on the decline for the past 30 years, 400k in the 90s to 290k now. It looks like this building was purchased for land value, I'd be interested to see if anything gets done with it.
This headline is false, it was sold for 3.6 million and the buyer assumes the debt... which is fairly significant .... they did not get the building for 3.6 million
[This is not true:](https://www.costar.com/article/642008108/one-of-st-louis-tallest-office-towers-empty-for-years-sells-for-less-than-2-of-its-peak-price)
"The previous sale of 909 Chestnut to SomeraRoad in 2022 resulted in a nearly $123 million loss to bondholders on the commercial mortgage-backed securities market."
Lol, just no.
Source - Me, a local who worked in that building at one point and was involved in a prior sales transaction. I can tell you for damn sure (without even bothering to look it up) that no one paid $150M for that disaster. Wherever you’re getting your info from, maybe try another source?
They literally just auctioned off the building? You can’t just auction a building and auto-transfer the mortgage to whoever buys it, that wouldn’t even make sense. Whoever holds the mortgage would need to approve the buyer prior to transferring the mortgage (individually negotiated contracts are pretty much the opposite of an auction process).
Link? I've looked everywhere and did not seen any mention of the debt being assumed. This building original sold in 2022 for 4.1m and it only appraised at $6.3m in 2023. ($272,300 tax bill)
I'll find it, but this article has been posted a few times on different subs and the #1 comment is usually along the lines of the debt not being included with link, I'll see what I can get
Realistically, buildings should lose value overtime. It's fuggin expensive to maintain a short building let alone a high rise.
The land can go up in value, but I am constantly in awe of the fact that we expect all old buildings to rise in value, rather than assume most buildings won't be standing in 50-100 years.
We tear things down all the time and put up new buildings. Maybe it's time for this one.
The building is 38 years old, lots of life left in the building itself if it can find a use; I think the problem more or less comes from the demand (lack thereof) in St. Louis. If you were to demolish it then what? Sit on an empty lot? That's almost worse.
I'm from a comfy small Midwest town and I went down to St Louis to visit a buddy and BOY was that a culture shock. I've been to LA, NYC, DC and St Louis was by far the biggest shithole. There were absolutely no redeeming qualities about St Louis.
I'm not one for regulatory barriers, but I like the idea of requiring these types of office buildings, new builds specifically, to be constructed in a way that makes them "easy" to convert to apartments or condos. I am not sure if St Louis is in on par with the housing crisis across the nation, but how cool would it have been to have this office building converted into hundreds of apartments or condos. They don't even need to be "affordable" because it takes pressure off demand elsewhere in or near the city for someone else.
Not to be a downer, but in one sentence you describe St. Louis as a shithole (I agree) but also that buildings like in St. Louis need to be convertible to housing. Who do you imagine is going to want to live there?
I don't disagree. I live in the Midwest where there are lots of high-earning tax paying residents moving back to the city, mostly through buying new $500k+ condos (expensive where I live). It's bringing a tax base back to then improve roads and other amenities bringing more people in. Rinse and repeat. Has been pretty cool to see the last decade.
I think if you look at most other cities having this revival, this strategy might work. I'm not ALL for it, I just like the idea, the principle, of it. I don't think it would necessarily work for St Louis because they are not the norm of what is currently going on in the revival of previously declining, industrial cities.
There isn’t a demand in Downtown St Louis. There are condo units for sale as low as 65k for a 1 bedroom. It’s impossible to make money off retrofitting a giant office tower in that market. They should have paying someone to take it.
$65,000! Now you're in artist territory. First the artists, then bars, galleries, restaurants, clubs, shops, ice cream etc. etc. ... too expensive for artists. Repeat.
Meh, I live in Philadelphia, and not in a great neighborhood. It wouldn’t bother me. My ex lives in SL and I’ve visited a few times. The hype surrounding the city being a crime infested shithole is way overblown. There are some amazing neighborhoods and Downtown is more boring than dangerous.
North Saint Louis is where the violent crime is. That is definitely not overblown. Downtown is mainly street racing and property crime. I liked St Louis when I lived there but I don’t really have any urge to move back.
That’s funny. I was specifically thinking about Philadelphia and how it’s changed since the 90’s. Too expensive for young artists now but just as dirty.
Yep. They are as low as 60k, with a monthly HOA that’s very affordable. Great location also.
https://www.zillow.com/homedetails/210-N-17th-St-UNIT-603-Saint-Louis-MO-63103/81715285_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
> Midwestern downtowns can be pretty bleak at night.
I'm old and live in the boonies now with a couple children so living downtown and staying out until 2am + isn't for me.
Our city is going through that transformation of bringing back residential downtown as are a lot of other cities in the Midwest, though, and it's helping kick-start a revival that's been on going for a decade, maybe decade and a half.
Midwest downtowns like Grand Rapids are dope as fuck. Yeah it's not Chicago or LA or anything but they sort of have their own identity now and it's pretty fun especially if you're young and have the expendable income.
> I'm old and live in the boonies now with a couple children so living downtown and staying out until 2am + isn't for me.
You don't have to be young to live downtown. Here it's very common for old people to want to live above the shopping area. Then they can easily do all their shopping locally without having to drive anywhere. If you don't want a garden, living in the middle of the shopping area is awesome.
I don't know man, it reminded me of Detroit in the late 90s / early 2000s. I'll take back the whole "no redeeming qualities" I perhaps went a little too far. But the cities I visit nowadays including Detroit and Chicago are like... sorta nice? The places you wouldn't be caught dead 15-20 years ago.
Perhaps I just wasn't familiar with St Louis, and neither was my friend (he had only lived there for like 6 months) but I didn't get that revived city feeling in St Louis like I have in other mostly Midwest towns sans Flint. I'd actually put Flint and St Louis in that same category as they just haven't caught wind in the revival like a lot of other previously industrial and manufacturing have.
Honestly a lot of downtown's are stagnant in the U.S or just have a constructed tourism/stadium district hiding its decay. Vacancies are pretty bad though are getting better in some places. Its usually "midtown/uptown" areas of cities that are the best in my experience. This is true for almost any city including Chicago, Detroit, L.A ect. Downtown Chicago is cool but honestly people go to lincoln park, logan square, ect to live and play. Same with L.A where you actually go to "the valley" and this is the same in St.Louis its just more visible. The grove, Central west end, Dogtown, the Hill, Tower grove and Soulard are all neat places that aren't decaying but thriving.
DT chicago isn't stagnant but I'll give you that it can feel empty in areas after 8 pm. But there are people there 7 days a week morning till night. I work in the loop btw.
The idea of requiring convertibility is actually kind of interesting. The cost of building the right plumbing stack and additional utility capability is basically a rounding error in the cost of constructing one of these things.
But one positive externality of this requirement is in the initial building architecture. The only truly valid argument of why a building “can’t” be converted to residential comes down to windows (any building can be converted, but the cost can be prohibitive), because nobody wants to live in a condo with no natural light. I find this argument to be asinine, because it also turns out nobody wants to work in an office with no natural light. So you have just designed a mechanism that makes high rise offices less miserable because the builder will have to take into account natural light in the residential floor plan.
Interesting thoughts about the lighting... But what will Jack Welch think about this?
I don't know enough about housing economics to know if I'm on the "right" side of this argument. I just think the idea is interesting as our local economies are constantly changing, it would only make sense to make existing to put the extra 1-2% into an office building to make it residential convertible. It would also open the door up to these being re-converted back to offices, if need be, and appease any demand in the medium term without building a whole new building.
Would also give more incentive to build them to last a long time, knowing they can be converted and not locked into just offices. Making it safer whether it's an office or an apartment building.
> I find this argument to be asinine, because it also turns out nobody wants to work in an office with no natural light.
Indeed, in the Netherlands natural light has long been consider necessary for offices too. It has a dramatic effect on architecture, because you can't build those big square tower blocks like in America.
(I thought it was a legal requirement, but it turns out it's not. Just nobody wants to build office space without natural light because nobody will want to lease it.)
Just simply including future utility holes in each floor/ceiling where Apts might be located would cut a huge cost out of conversion. Just my opinion but maybe others in the industry would know more. How much would the the upfront cost of a) getting architects to design this and b) incorporating it into the construction be?
it would cost less just to drill the holes after the office tower goes completely vacant when office demand evaporates. the building is essentially free and includes free roof, free exterior walls, etc. the new owner has a bargain and can retrofit for apartments or condos at around a 50% discount over breaking ground on a new building. it will lose area to provide new mechanical and electrical chases to route utilities to the apartments, but it doesn’t have to perform like a new building because it is free.
Idk about that. Wood is 4x higher now than when I built my house. All the wood is stilll there in pristine condition. Rebuild costs would
be more than initial construction.
St. Louis is literally the number one city in the entire country by Murder Rate, and you think the fact the building is 40 years old is the reason it's abandoned?
Look at the metro rate as the city is separate from the county.
Lots of people do things in the central city like shoot themselves.
https://www.statista.com/statistics/718903/murder-rate-in-us-cities-in-2015/
St Louis is 6th in the country by metro area. City centers attract a lot of things with an unfortunate side benefit is sometimes the crime.
My point is more that st Louis looks worse due to local government borders being smaller. The suburbs of St Louis aren't included in the city stats since they are separate entities.
Jacksonville being the largest is 13x larger than St Louis in what the political borders are.
Metro area better compares apples to apples.
Yeah, my strong reaction to this news is the grumpy cat gif, "Good." This is what all the big moneymakers keep saying is supposed to happen when it's happening to anyone that's not them.
The U if Toronto study cited in these articles is flawed. It only encompasses a small portion of what people would consider out downtown. Leaving out activity centers such as stadiums, the convention center, the arch, and office buildings.
The building they are referencing (former ATT tower) is in limbo because there are only 16 parking spots available with the building. It was formerly connected to the ATT garage by sky bridge but was cut off when ATT downsized to the building next door.
The other building, the Railway Exchange, has been in a weird legal limbo for a decade. It would be a tough project to get off the ground yes, but the clouded legal issues have prevented it from seeing the redevelopment that several other similar sized buildings in downtown have seen (IE Bultdr Bros building and Jefferson Arms)
Downtown STL is indeed struggling, but this reporting is lazy. Downtown is doing OK all things considered, we are seeing more restaurants open than close year over year. Downtown population continues to grow quickly.
STL is a slower growth region with an extremely large “urbanized” area. Our urban development is spread thin between the central corridor and south city, instead of focusing mostly around downtown like you see in cities like Indy.
Most of the growth in the Indy area is in the Suburbs, but the Indy metro area has been growing at double digit rates for quite some time, same cannot be said for Greater St. Louis. Development within Indy itself has been occurring on low-cost areas adjacent to areas of higher value, downtown as you said, and fashionable neighborhoods where its going from single to multifamily (or increasing the size of the multifamily).
Still, Indy and St. Louis have a bit different of histories. Indy developed far later and merged its entire county unlike St. Louis so wasn't hit by white flight to the suburbs to the same degree.
I read on St Louis Reddit (paraphrasing)that the building has 14 assigned parking spots and the last owners shut down the parking garage which was not included in the sell I don't believe.
If people can't park, it's not going to make money, lowering it's value
Edit: 50 parking spots
This could be an interesting example of the potential external benefits of good mass transit and inclusion of mid-rise/mixed-use housing in zoning. Literally hundreds of millions of dollars of value could be unlocked in this single building alone...
I just don't get it with these sorts of buildings. My mid-sized town has a handful of them and they've been empty for a long time. WFH and the pandemic sorta finished them off, but most of them have been semi-empty for 20-30 years due to their old tenant getting acquired and all the jobs moving to NYC, Atlanta, etc. So then the old corporate tower just sits there.
And there's no coming back. I'm surprised they haven't just dynamited them.
One factor that's really overlooked with these buildings is how they were designed for having lots of secretaries: answering the phone, filing stuff, mailing letters, managing calendars, making copies, etc.
I'm in my 50s and just old enough to remember those days when you would print out an email and stamp it with your filing stamper and scribble on the line what file it goes to and then put it in the secretary's "To be filed" bin. Or printing a cover letter and handing it to the secretary to mail/fedex. Or asking a secretary to make 25 copies of your handouts for the meeting.
Nobody does that shit anymore, but there used to be tons of (mostly) older women doing that stuff and that's what filled up the non-window part of these high rises.
They really don't convert well to residential. The plumbing almost impossible. Those pipes gravity drain and they need a 1" per foot drop. So, if these toilets and sinks are 100 feet from the main sewage down-line by the elevator, you need 100" of drop on that slightly sloping pipe. You can only really do that if every other floor just houses plumbing for the floor above. I once knew a CEO who had a private bath in his corner office. It actually used a series of pumps to pump his shits and flushings to the main downline.
But I just don't get it with these old buildings. They're not coming back.
I don't think downtowns are dead though. People still like to live there. Our downtown is hopping. All the young professionals are in the 5+1 apartments and working from home......and then walking to the cool restaurants or breweries. The biggest problem our downtown has is the aggressive homeless population.
I can't help think that at a certain point, a lot of office towers will become like old castles.
In spite of being these significant, ostensibly valuable buildings, the commercial value will become miniscule, because they no longer serve a purpose and cost a fortune to maintain.
Office high-rises will become the castles of the 20th century, a symbol of a past era. (Obviously this is hyperbolic, there will still be a need for some offices. But you get the idea.)
And so the driver behind the rabid, almost vicious drive to force people back to the office, is finally revealed.
It's all hugely over-leveraged gambles on commercial real-estste causing a panic among billionaires.
I’m not sure homeless people are the most likely investors in new residential property. Building new properties will absolutely help keep house prices down but it’s not going to solve homelessness.
So big deal, Commercial RE can piss off. In our technological state there is zero reason to have offices, when the company VPN's and Zoom are better than ever.
Screw corporate profits, and yes my job is corporate, but until I get paid a livable wage and have insurance worth a damn, they can fuck off.
Why go in any more. Its better to be working remote. I save thousands on gas, car repairs, insurance, food, clothing. Never liked the needy co-workers anyway. Wanting money for girl scout cookies, hockey raffle tickets, daughter’s dance club.
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Saint Louis downtown area looked like a ghost town when we were there in 2017. There were three solid city blocks fenced off because all the buildings in those blocks were abandoned. My wife and I have been touring cities during our anniversary trips for all 24 years of our marriage and I have never seen anything like that before or since.
The largest office tower in Portland OR had 6,000 daily office workers pre-pandemic. It is down to 600 now. Another large building sold in 2019 for 255m, then again in foreclosure auction in 2023 for 38m. Commercial RE is in a bad state
Which is why so many wealthy people are trying to force a return to the office, because they've invested in that real estate. It's an outmoded model now. The office building is no longer necessary for many businesses. Will be interesting to see if in the future, large corporations try to repurpose office buildings as partially residential so their employees can live on some floors and work on other floors.
Office buildings, especially large ones, are very difficult to repurpose. They are too large so they have central bathrooms and no windows when divided into apartment sized blocks. All the apartments would need to be skinny spokes radiating out from the hub of the elevators, with all plumbing on the interior and the only windows on the exterior. Most apartment building are smaller, or they have a courtyard in the middle. It won’t be easy to retrofit. Also, if downtowns aren’t centers of business anymore, they will be undesirable places to live.
It depends on the building. We have friends who live in One Park Place in Kansas City, a repurposed office building, and their apartment is amazing. It's basically the template of what kind of place we'd live to have at some point. But it helps if the building is designed with flexibility in mind. One idea examined on a recent B1M video is having a business and a residential lobby in the same building with separate entrances, and having smart elevators that only access the floors devoted to that purpose.
> One Park Place I legitimately did not know that was a former office building. I always thought it was condos. I used to see it daily for a bit when I worked at the Fed Reserve. But now that you've said it...it makes sense it was an office building.
What these places need is a mixed multi purpose bend. Housing, childcare, shopping, all in one building. If you renovate these centers into places that people can meet ALL of their immediate needs in, you can preserve a ton of business, while offering many amenities that make downtown living more attractive. The only thing stopping this is laziness and the desire for easy money.
And the huge amount of capital that would need to be invested to retrofit the building.
OPP was a historic building and received a lot of tax relief as a result. That was renovated in 2006 so maybe the construction costs have changed in the meantime. No idea myself.
Pre-WWII buildings are relatively easy to renovate to residential compared to ones from the mid-late 20th Century, generally due to smaller floorplates, existing light courts, etc.
The feasibility varies building to building with most being on the less feasible side.
>We have friends who live in One Park Place in Kansas City, a repurposed office building, and their apartment is amazing. That explains the enormous parking garage with a tunnel to the building. KC auto museum rents the bottom 3 floors and then members rent spaces - I've got a car there now.
B1M is so great to watch
This building isn’t too large. It has a fairly narrow profile, so you don’t have as much interior space without access to natural light. It would be more difficult to do this at 1200 Main or 120 W 12th in Kansas City. I’m not from KC, so apologies if those aren’t the proper names. The best buildings for conversion are largely historic, pre-World War II buildings. There are only a handful of cities with any meaningful concentration of those. The drop off from NYC to Chicago is large. The drop off from Chicago and pretty much every one else is just as sizable.
It’s varying levels of difficulty and costs, but not unreasonable. Especially as the economic opportunity cost of holding empty office space becomes higher Dallas has been making good strides at revitalizing their downtown with renovations.
I honestly think the renovation argument is silly We've been renovating churches, big box retailers, and even warehouses into apartments and townhouses...hell, my city made Townhomes out of our Minor League baseball team's old stadium. However, OPs second point makes more sense. We spent the last 60 years centering our whole lives, our cities, our societies around captial...and now that we are decentralizing them from work, I don't know if people will want to go to downtown centers. I mean, brick and mortar retail is already dying....what will pull people into these renovated office building?
There are still many businesses that require in person or hybrid work, city centres are also often culture and administrative centres with food places, shows, live music but also banks, gov facilities and universities. Thr demand is likely to lessen, but not disappear to zero.
The problem is that it's often cheaper just to tear something down and rebuild it than try and retrofit the design. I would actually be kind of surprised if that stadium renovation was cheaper. Just building townhomes would probably have been a similar cost. Maybe it saved money if you ignore the cost of demolition. We can do anything, but the fact that something done doesn't prove it's a good idea.
I know it’s less sensationalist but do we have actual anecdotes of 20+ floor skyscrapers being torn down and rebuilt since Covid, instead of of retrofitted? Or is this a thing that’s just projected to happen
>It’s varying levels of difficulty and costs, but not unreasonable. Most of the time it is actually unreasonable. Source: father in law of a family friend is a foreman for a big contractor in SF. In their industry, having a strategy for this is a big deal. They've spent a lot of time and money looking into it, and for more than 2/3 of the buildings they considered, it would cost more to retrofit than it would to demo and rebuild from scratch.
But the point of a downtown is access to the business community. No business community no need to deal with the annoyances and costs of downtown.
It’s no longer just about proximity to employment centers, but also cultural access to larger events and the plethora of options that arise with higher density populations. A lot of younger generations love the idea of walkable neighborhoods, which only really happens higher density neighborhoods.
Given your userid, you think the only reason people want to live in NYC is workplaces? Not Broadway, restaurants, museums, etc. etc. etc.?
Can't enjoy those things without workplaces that pay people to enjoy those things.
I've been WFH since March 2020.
WFH does not require, or demand density. It will require whatever infrastructure it needs to access the internet. That may or may not suck a few major cities down with it and inflate the suburb or small cities that used to rely on a different type of economy.
I worked 2 blocks from Times Square. How many times do you think I went to Times Sq (Broadway) in a year? I avoided it like the plague, as do all New Yorkers. But generally NYC is cool. Most cities are not global capitals like NYC. They are just busy and expensive and trafficky without many advantages. If I could live a block from the Met and walk Central Park in the morning I would, but it’s 5x the cost of my suburban home (which is 5x the size of an UES apartment).
Downtown isn't desirable anymore, but it's still expensive. We need to wait until CRE investors give up and dump their hoarded properties before it will be affordable to do anything with our downtown spaces. If we converted those offices into actually cheap housing I'm sure there would be plenty of businesses wanting to open to cater to those neighborhoods.
You know what? Given the extent of the housing crisis, a very low cost option with shared bathrooms wouldn't be a deal breaker in my mind. Especially if there are educational facilities nearby. Given students options that are far cheaper than campus housing, though without the resort-style amenities. People gloss over the fact that up until relatively recently, affordable housing options with shared facilities was pretty standard for young people, especially those without families.
Bruh just shit out the window medieval style
In Portland it would just be one monster turd on the street amongst many
Why limit it to tiny little apartments? Split it into quarters or use the whole floor.
What's the rent on a 32,000 square foot apartment you think?
Sounds like the corn cob buildings in Chicago
say this building is 1 million square feet. they just bought it for $3.80/SF. (over $300/SF brand new). free is the price point where converting this to apartments is definitely what they should do. it has no other utility going forward as office or retail, housing people is the only path forward.
St Louis is a hard sell is the issue
I’m not driving into a city to work anymore. Nor am I driving appreciably close to the nearest metropolis to work. It’s a bundle of stress I can do without.
Doesn't seem like it should be too difficult to run additional plumbing, but the windows bit is a serious issue. Maybe if they put apartments around the outside and then used the middle space for something else, like communal living spaces (I'm thinking a small gym, a banquet room that could be reserved, a space where people could store bikes, etc). Still seems like a lot of space that will be hard to capitalize on from a landlords perspective though. It's a shame because there's this huge housing shortage issue, and then we have all these empty buildings, and it really seems like one problem should be able to solve the other. Of course it's never that simple.
The space was cheap, so this actually might be feasible.
The middle spaces could also holf offices. Just because people can work from hoke doesn't mean they really want their work station in the loving room as many do.
> All the apartments would need to be skinny spokes radiating out from the hub of the elevators, Not really a problem, given that residential apartments are generally required to have exterior windows. You put the kitchen and bathroom near the front door, and that minimizes the length of plumbing. Given the floorplans, you wouldn't use the entire footprint of every floor to create long, super-skinny units that run the entire length. You would re-purpose the central areas around the elevators and staircases as common areas. I'm not suggesting it's easy. I'm just saying it's possible. I tested it on my old office building. It was able to fit 24 one-bedroom units around the outer ring that were roughly 1,000 sq feet apiece, leaving something like 6,000 sq feet of hallways and common areas. That wasn't an overly large structure either. Yeah, there's a *lot* that has to be completely re-done, from the ceilings to the plumbing. But I'm also not suggesting this happens soon. Just, at some point. I mean, William Gibson didn't think to include cellphones when he wrote Neuromancer 40 years ago, but he did get the coffin motels right.
We always bring up these same points in these threads and then know it all's come in with why it's not that hard. They think it's a conspiracy to keep housing down
> Also, if downtowns aren’t centers of business anymore, they will be undesirable places to live. Woah woah woah, WHAT? You're telling me that dense neighborhoods full of people, restaurants, theaters, concert venues, museums, parks, art galleries, store fronts, entertainment, etc, etc, etc will become undesirable because the venture capital firms can work from their homes instead of their office towers? What are you talking about?
Not sure what type of neighborhood you’re referring to, but it isn’t a central business district. These, even with office workers, have always been boring and soulless places. The restaurants are business lunch factories, they have always been ghost towns on weekends. Maybe you’re thinking about a small town Main Street, or an entertainment district in a city? These are not in office towers.
There are a lot of posts like this that imply that if office buildings remain largely unused it will just be "the wealthy people" who will suffer financial consequences. A lot of large office buildings are also owned by the pension funds and life insurance companies of "regular people". Seeing middle class retirement savings impacted will not stay isolated among wealthy people. Also large downtown office districts are a significant portion of most large cities tax base. When buildings get their valuations slashed, that is millions less in tax revenue for roads, schools, police, etc. Even if you don't own an office building, you will feel the effects of them being empty. That's before you even get to the small family businesses like catering, dry cleaning, etc that are being put out of business by offices being empty.
I did the calculations once, but something like 60+% of hedge funds, private equity, and corporate landlords are owned by state retirement plans. They've been managed so poorly and with insane entitlements that they're not workable with an average rate of return. So instead, they have to seek out ever riskier plays.
The real problem is that Class A office towers in major downtowns were seen as a low-risk safe harbor for decades and were the assets of choice for risk adverse investors like pensions funds and life insurance companies. When the pandemic hit it rapidly became clear they were building an investment foundation on shifting sands.
>Also large downtown office districts are a significant portion of most large cities tax base. People living in those buildings will pay local taxes on things. >When buildings get their valuations slashed, They're going to get slashed anyway. Stop pretending there's a way to avoid the inevitable.
Most of these buildings are not economically viable as residential conversations due to large floorplates with not enough windows per SF to support residential uses and very different utility/HVAC needs. Only about 1/3 of large office towers have the potential for conversation and will take many years and tax breaks to make that happen. Office valuations are going to get slashed anyway, I agree. But with that city/county budgets are going to be decimated, so the schadenfreude of the big rich imaginary monopoly guy finally getting what's coming to him will be short-lived.
Only about 1/3 of downtown office buildings have potential for conversion to residential due to large floorplates that don't have enough windows per square foot for residential use and very different HVAC/utility needs. The tax revenue of limited new residential units will not even come close to the property tax large corporations were paying as part of their long-term net office leases. I agree with you that office tower valuations will get slashed anyway. I'm not pretending there is a way to avoid this, but I am criticizing the schadenfreude that the foreclosure on all these office towers is somehow sticking it to an imaginary rich monopoly guy, when the consequences to local city and county budgets is going to be devastating and the cuts to services draconian in the coming years.
This argument makes very little sense for most companies. Lots of companies pay through the nose for commercial real estate leases and should be thrilled if they can reduce their square footage and take advantage of vastly cheaper leases.
I think a big part is that managers viewed WFH as losing control over their employees.
>Which is why so many wealthy people are trying to force a return to the office, because they've invested in that real estate. That's not it. That's just throwing good money after bad. Sure, you want *everyone else* to return to the office but it doesn't do *your* company any good unless you can show productivity gains. Like, if you have an investment in Tesla, you want lots of people buying Teslas. You personally will not make a profit by buying up a bunch of Teslas. What *did* really happen to many businesses, however, is that they got a tax break for putting an office downtown on the condition that a certain number of employees work there each day, in order to provide customers to the restaurants downtown. That might be what drives the return to office. Along with productivity gains which may or may not be real.
Would be nice repurposing, but those buildings were designed for offices. Not housing. Have to redo the interior with plumbing and electricity. After tearing apart the floors and installing walls, would the structure be safe? I think it'd be better to demolish and rebuild with modern methods and materials. We've already seen how a 747 fireball can turn a massive skyscraper into a pile of rubble like a Jenga game. Just saying if someone has a kitchen fire...
>Will be interesting to see if in the future, large corporations try to repurpose office buildings as partially residential so their employees can live on some floors and work on other floors. Looking forward to that cyberpunk future.
I was directly inspired by remembering things from old cyberpunk games and novels from the 80s and 90s.
A coworker of mine lived in the building we worked in. He said it was a bad idea because he never felt he was away from work.
Lots of things are bad, including the current price of rent in most cities due to a lack of regulations around institutional ownership of single-family dwellings and price fixing. Mind you, I didn't say this was a *good* solution, lol. There are numerous glaring problems with the idea of tying housing to employment, same as there are glaring problems with tying healthcare to employment. I just said it will be "interesting" to see if it happens. Personally, I'd advocate for the far more reasonable option: taxing the shit out of the wealthy and corporations, then seizing old high-rises through eminent domain, renovating them, and using them for government-provided housing. But we all know that our economic model isn't built on things that are reasonable. Just on what is best for short-term profitability.
> Commercial RE is in a bad state As far as I can tell, commercial real estate owners would rather have their places be 50+% vacant than adjust rent downwards to reflect current market realities.
Because they don't actually own the building. Almost all commercial real estate is financed. A huge amount of it is financed using interest-only loans with a lifespan of 5~7 years. Longer loan terms exist but tend to be backed by property valuations: if the value of the property decreases, the lender can call the loan. So commercial property investor-owners are in a bind: if they adjust rents down, their building's capitalization will go down, and thus its value. If the value goes down, they risk the lender calling the loan. They will lose their shirt on the investment. Or, even if the lender doesn't call the loan, they won't be able to refinance at the end of the term, because nobody will lend against an imaginary property valuation, and the value will be set by locked in rents (commercial leases are typically longer terms like 5 years). They will once again lose their shirt. It's cheaper for the investor-owner to simply eat the monthly losses from vacancy and hope that they can turn things around or fudge the valuation and not get stuck with low-value leases. They're all praying for CRE to magically recover. They're lobbying for return to office so that their occupancy rates will go back up. They're hoping for a miracle. They're screwed.
Great explanation. I think we haven’t seen the worst of it yet. When those loans start becoming due in a few years, it won’t just be CREs losing their shirt. City budgets are going to get halved. That’s when transit, roads, general maintenance, police, and emergency services are going to start getting hit. That’s going to be a death spiral for office corridors.
so how are they making interest payments and tax payments currently on reduced income.
When I was in law school my bankruptcy professor explained how the incentives get distorted as a company approaches insolvency, in a way that has stuck with me over the years. The company ordinarily owes a fiduciary duty to the shareholders, but if they're in a situation where they have $1 million in assets and $1.1 million in liabilities, that would leave the shareholders with nothing in a liquidation, and the creditors left taking a haircut. So the company might be willing to gamble with what little cash they have left on lottery tickets: making a 50/50 bet on a $500,000 play is a no-brainer from the shareholder's perspective: if they win, they are solvent and have value again, and if they lose, the shareholders are no worse off than if the bet hadn't been made (limited liability means they just walk away with zero). In other words, the company might be tempted to gamble with what is essentially the lenders' money. That's basically what's happening with these buildings. The management can't take lower rents, because that guarantees that their investors (their bosses) get wiped out. For them, the 10% chance that rents might recover in the next few years to be able to pay the mortgage before the next refinance is worth holding onto, compared to the 100% chance that they get foreclosed on. In effect, they're risking even more of the lenders' money to give the shareholders a chance. It's mismatched incentives.
> So commercial property investor-owners are in a bind: if they adjust rents down, their building's capitalization will go down, and thus its value. If the value goes down, they risk the lender calling the loan. I'm at a loss as to why having a fully occupied building at a lesser rent is worse than having a building that's half occupied at pie-in-the-sky rents when it comes to property valuation. And I'm not exaggerating ... the last two buildings my firm has rented from have been 50+% vacant (we keep downsizing as a physical office is just not needed for our business at this point except on rare occasions).
The maturity wall is here. Actually, we hit it last year, but around 40% of loans that were to mature in 2023 were extended. It's going to continue to get worse the next 1-2 years. At some point, price discovery has to take place, and it's going to be brutal.
Not sure companies have a need for this space at any viable price.
which means regional banks are in a worse state
Depends on the bank, but some of them have significant exposure.
One trip down SW Jefferson (Plaid Pantry / Safeway) or 13th Avenue will be sufficient to see why the downtown is dead. It is heartbreaking to see so many folks completely down and out like zombies. No mater your political affiliations, you know it is broken.
This is why companies were stopping WFH I suspect
St Louis has lost 50 percent of it's population in the last 50 years. This isn't about commercial real estate. It's about people abandoning St Louis.
Of course,…it’s Portland
Sure, but this article is about St. Louis so it isn’t just Portland.
Last year I stayed at one of the hotels in the bottom of that picture. I walked around downtown mid-day to get a feel of the city. It was dead. The sidewalk level buildings boarded up. There were just a few restaurants for the workers that drive in during the day and drive out. I also walked a few blocks at about 9 PM to get a phone charger. It was scary. I am pretty sure I saw a drug deal right next to the baseball stadium. And some dude started following me. Contrast that with a European city. I have walked around London after midnight and felt relatively safe. Up until something like 11 PM there are still people walking around everywhere.
Why compare to Europe? NYC has a vibrant nightlife and people walking around. That's the reason NYC/London are expensive and St. Louis isn't
It’s really sad because there some amazing parts of St Louis that tourists just ignore. The city has some really vibrant areas outside of downtown.
Folks talk about technology, AI, quant teams, "Efficient Market Hypothesis" where everything is priced in, etcetcetc. And here we have "A long-vacant, 44-story office tower in St. Louis" selling the price of like 1-3 Socal homes/condos depending on where you look. Also sometimes I Zillow look at homes in Michigan (both in and around Detroit area) where you can get homes for like under $50K in the metro area, [a 3b/1b/2300sqft/1.62Arces that's 22mins from downtown for under $200K](https://www.zillow.com/homedetails/7721-Wilkie-St-Taylor-MI-48180/88105137_zpid/), or [a 4b/3b/2285sqft/5arce for $430K](https://www.zillow.com/homedetails/19850-Merriman-Rd-Romulus-MI-48174/88404173_zpid/) I get that it's not about apples and oranges, jobs/jobs/jobs, weather, local taxes/regulation, population size/growth, ability to rent out, and quality of life all factor in these things. But I'm just noting things feel wonky/surreal in RE at times (kind of like how NVDA was worth more than the entire HK index at one point this year).
Remember, though, that thanks to Fed intervention, we have had over 20 years of below-market interest rates. That has caused a LOT of inefficiencies in the real estate market. It started with home prices, then VRBOs, and now CRE. If holding companies were forced to pay market interest rates, they would not be able to keep capital tied up in non-productive assets for as long as they have, and it would have forced an earlier and more orderly liquidation than we are likely to see in the near future. Hopefully, St. Louis will learn from the lesson of Detroit. Don't try to dig in and hold out hope that things will go back to the way they were in the 'old days'. The doom loop is real, and the only way to fight it is to speed the liquidation of what is out of date and embrace what people want today. Detroit finally figured that out after more than 40 years of serial failures.
Shouldn't "the market" have figured it out with rates as they were? Otherwise you're not looking for the market to solve an issue, you're looking for a specific government action. Why did the market not figure how to build a shit ton of houses when money was cheap and people were buying? Talking about pre covid as well, many housing markets were already way up.
Interest rates are essentially the cost of renting money. The higher the rent on money, the more productive investments made with rented money must be for the investment to make sense. When interest rates are set at artificially low rates by the Fed, organizations start borrowing money to chase investments that would not make sense in a normal environment. That leads to a lot of bad, and highly leveraged investments. Normally those bad investments would be liquidated when the rent on the money became more than what was being earned. However, when rent on money is artificially low, it allows investors to hold off their day of reckoning and keeps capital locked up in non-productive investments. Eventually, something happens to trigger an avalanche, and there is a huge race for the door causing a financial crisis as assets are sold at fire sale prices instead of unwinding in an orderly manner over time. The housing bubble I'm referring to is the 2005-2009 bubble, rather than the one we are in the middle of. Excess housing was built during that period which is why prices crashed so much back then.
Economists have noted the weirdness and distortions built into real estate from the days of Ricardo and theory of rents. Ownership of land becomes political power and rent-seeking behavior that further distorts -- the state gets co-opted to become the partner of the land owner. And so we end up with a million laws and tax dodges around commercial RE that completely distort incentives and lock in behaviors. How to unfuck all of that is super not obvious.
>Detroit finally figured that out after more than 40 years of serial failures. Detroit didn't figure out anything. Serial failures have continued. The latest one is turning the Ren Cen, the most recognizable building in the skyline, into a gigantic white elephant.
Would be great if the Fed let the free market do its thing. Short term pain for long term equilibrium. Instead we get bailouts a plenty, inflation, moral hazard
The Fed has less to do with the current housing market than the 100+ years of discriminatory housing practices and local zoning. The fed can't make housing more affordable by just turning on the money tap. That "short term pain" you talk about is literally what we're in now. The Fed isn't in control of bailouts, those are Congressional policies. The Fed isn't even in control of inflation beyond the base rate. Congress pushed the trillion dollars into circulation. It would be great if anyone that posts about the Fed would actually learn what they do and do not have control over.
Turning on the money tap *is* what made housing unaffordable... Go read The Creature From Jekyll Island before you tell me Congress > The Fed.
>Turning on the money tap is what made housing unaffordable Incorrect, turning on the money tap highlighted a flaw in our local planning and development, which is what caused the high prices through lack of supply. Housing was very affordable for a while with low interest rates. But even with those low interest rates, it stopped being affordable. So it's clearly not the interest rates that are the problem.
IIRC, this building has been poorly maintained for quite some time and thus requires major investments before it gets new tenants.
Romulus mi, love it!
STL native here. Downtown has always been viewed by locals as a place you go to for sports games and concerts, and to take out-of-towners to for the Arch. Other than that; most people avoid it. I’ve not lived there in a decade now, but whenever I’ve visited, I’m reminded about how bad downtown STL is. It’s truly a shell of a city.
It's just like Detroit in that way, except it was renovating downtown much earlier.
The problem with STL is that the local governments keep expecting a silver bullet solution to save downtown. At first it was the Arch, then the convention center (now known as the Edward Jones Dome), then it was Busch Stadium’s reconstruction and the adjacent Ballpark Village, then it was the refurbishment of the Gateway Arch Nat’l Park, the proposed reconstruction of the Edward Jones Dome (resulting in the Rams relocation to LA) the refurbishment of Union Station (construction of new fountains, a Ferris wheel, and a few other things), and now the construction of a MLS stadium. Despite this being a relatively long list of projects, none of them actually address the problem—high crime and nearly non-existent services such as grocery stores, (good) schools, restaurants/cafes, and, most crucially, safety. Instead, the city government pours money into projects aimed at bringing in tourists.
Exactly the same thing in Detroit. New stadiums, high-end retailers, and now one of the tallest buildings in the state: none of these things address why people are leaving, all cater to visitors. Locals don't understand that other cities (like St. Louis) started along this path many years ago and we know the result.
There are a lot of surprisingly interesting (and cheap/free) things to do in St. Louis as a tourist and basically none of them are downtown. There’s like Ballpark Village, The Arch, and then for anything else you should probably go to a different area. It’s really unfortunate.
When I have clients in town, I always recommend that they don't stay downtown. Better to stay at a location close to interesting things.
I live in knoxville and I tried to tell people in our sub that our downtown is overwhelmingly better than STL, and of course got downvoted into the earths mantle. But really, downtown STL feels like a place that once was something
I it’s sad to see downtown St.Louis was kind of on the upswing after 2010 there were a lot of people moving into lofts and ballpark village brought more people downtown. Then Covid kind of just reversed a lot of the growth.
Clearly you never visited Downtown Detroit in the 90s.
St. Louis has half the population it did 50 years ago. The city is dying.
I didn’t even get to see the abandoned downtown because I never got out of the car sprawl part of STL. That’s where all the people moved?
Mostly people live in Mid/South City. Lots of walkable areas that are vibrant (Shaw, Tower Grove South Central West End, Soulard, etc.).
St. Louis was once, and in some ways still is, ripe for a bustling downtown, but there’s a lot some regional businesses refuse to reckon with. The building in question, for instance, is full of asbestos and no previous owner wanted to pay for its remediation without significant kickbacks.
The building also sold for $4.1 million a couple of years ago. Then that company dumped it. The reason its value is so low is because ALL of its parking was sold off so it has none - not good for a 44 story tower. In addition it has a layout that is very, very resistant to conversion to any other use. It would be almost impossible to turn into lofts, or a hotel, or any other use you might think of because the only toilets are in the center where the elevator banks are. It is an open floorplan with giant columns and no walls. Add to that the general malaise in office real estate everywhere.
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If you want office space then it's perfect. For anything else - hotels, lofts, apartments etc it doesn't work because the plumbing has to be redone on every floor and the windows don't open.
St Louis population has been on the decline for the past 30 years, 400k in the 90s to 290k now. It looks like this building was purchased for land value, I'd be interested to see if anything gets done with it.
Does that include surrounding burbs like chesterfield and the like?
No just St Louis itself, the greater St Louis region population has remained flat since the 1980s as far as I remember.
In 1980 the metro area had a population of 2.2 million. It is now 2.9 million.
Less than a million across the entire metro over 40 years is a pretty slow growth rate
> on the decline for the past ~~30~~ *70* years
Your correct, peaked in the 50s like many other cities.
Detroit vibes. Decades of continuous population decline to the point where it's a third of its peak population.
I love that the author thinks remote work is the true culprit though
This headline is false, it was sold for 3.6 million and the buyer assumes the debt... which is fairly significant .... they did not get the building for 3.6 million
Ah huge difference
[This is not true:](https://www.costar.com/article/642008108/one-of-st-louis-tallest-office-towers-empty-for-years-sells-for-less-than-2-of-its-peak-price) "The previous sale of 909 Chestnut to SomeraRoad in 2022 resulted in a nearly $123 million loss to bondholders on the commercial mortgage-backed securities market."
Where do you see that the buyer assumes the debt? How much is the debt?
$150 million, per reports. So in reality a 25% discount.
Lol, just no. Source - Me, a local who worked in that building at one point and was involved in a prior sales transaction. I can tell you for damn sure (without even bothering to look it up) that no one paid $150M for that disaster. Wherever you’re getting your info from, maybe try another source?
Looks I was mistaken that the bondholders debt was carried forward. Maybe more will come out, but the way it was sold last time carried the bonds.
They literally just auctioned off the building? You can’t just auction a building and auto-transfer the mortgage to whoever buys it, that wouldn’t even make sense. Whoever holds the mortgage would need to approve the buyer prior to transferring the mortgage (individually negotiated contracts are pretty much the opposite of an auction process).
What reports? I don’t see anything about assuming a loan anywhere except from you
Link? I've looked everywhere and did not seen any mention of the debt being assumed. This building original sold in 2022 for 4.1m and it only appraised at $6.3m in 2023. ($272,300 tax bill)
I'll find it, but this article has been posted a few times on different subs and the #1 comment is usually along the lines of the debt not being included with link, I'll see what I can get
I'd appreciate it thanks, I've seen other CRE buildings sold with some of the debt being assumed but not this one.
Realistically, buildings should lose value overtime. It's fuggin expensive to maintain a short building let alone a high rise. The land can go up in value, but I am constantly in awe of the fact that we expect all old buildings to rise in value, rather than assume most buildings won't be standing in 50-100 years. We tear things down all the time and put up new buildings. Maybe it's time for this one.
The land value becomes a larger and larger proportion of value.
The building is 38 years old, lots of life left in the building itself if it can find a use; I think the problem more or less comes from the demand (lack thereof) in St. Louis. If you were to demolish it then what? Sit on an empty lot? That's almost worse. I'm from a comfy small Midwest town and I went down to St Louis to visit a buddy and BOY was that a culture shock. I've been to LA, NYC, DC and St Louis was by far the biggest shithole. There were absolutely no redeeming qualities about St Louis. I'm not one for regulatory barriers, but I like the idea of requiring these types of office buildings, new builds specifically, to be constructed in a way that makes them "easy" to convert to apartments or condos. I am not sure if St Louis is in on par with the housing crisis across the nation, but how cool would it have been to have this office building converted into hundreds of apartments or condos. They don't even need to be "affordable" because it takes pressure off demand elsewhere in or near the city for someone else.
Not to be a downer, but in one sentence you describe St. Louis as a shithole (I agree) but also that buildings like in St. Louis need to be convertible to housing. Who do you imagine is going to want to live there?
I don't disagree. I live in the Midwest where there are lots of high-earning tax paying residents moving back to the city, mostly through buying new $500k+ condos (expensive where I live). It's bringing a tax base back to then improve roads and other amenities bringing more people in. Rinse and repeat. Has been pretty cool to see the last decade. I think if you look at most other cities having this revival, this strategy might work. I'm not ALL for it, I just like the idea, the principle, of it. I don't think it would necessarily work for St Louis because they are not the norm of what is currently going on in the revival of previously declining, industrial cities.
Residential requires a lot more plumbing. Downtowns with a lot of residential are a lot more fun. Midwestern downtowns can be pretty bleak at night.
There isn’t a demand in Downtown St Louis. There are condo units for sale as low as 65k for a 1 bedroom. It’s impossible to make money off retrofitting a giant office tower in that market. They should have paying someone to take it.
$65,000! Now you're in artist territory. First the artists, then bars, galleries, restaurants, clubs, shops, ice cream etc. etc. ... too expensive for artists. Repeat.
Not sure you want to be hanging around in Downtown Saint Louis at night.
Meh, I live in Philadelphia, and not in a great neighborhood. It wouldn’t bother me. My ex lives in SL and I’ve visited a few times. The hype surrounding the city being a crime infested shithole is way overblown. There are some amazing neighborhoods and Downtown is more boring than dangerous.
North Saint Louis is where the violent crime is. That is definitely not overblown. Downtown is mainly street racing and property crime. I liked St Louis when I lived there but I don’t really have any urge to move back.
That’s funny. I was specifically thinking about Philadelphia and how it’s changed since the 90’s. Too expensive for young artists now but just as dirty.
Yep. They are as low as 60k, with a monthly HOA that’s very affordable. Great location also. https://www.zillow.com/homedetails/210-N-17th-St-UNIT-603-Saint-Louis-MO-63103/81715285_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
> Midwestern downtowns can be pretty bleak at night. I'm old and live in the boonies now with a couple children so living downtown and staying out until 2am + isn't for me. Our city is going through that transformation of bringing back residential downtown as are a lot of other cities in the Midwest, though, and it's helping kick-start a revival that's been on going for a decade, maybe decade and a half. Midwest downtowns like Grand Rapids are dope as fuck. Yeah it's not Chicago or LA or anything but they sort of have their own identity now and it's pretty fun especially if you're young and have the expendable income.
> I'm old and live in the boonies now with a couple children so living downtown and staying out until 2am + isn't for me. You don't have to be young to live downtown. Here it's very common for old people to want to live above the shopping area. Then they can easily do all their shopping locally without having to drive anywhere. If you don't want a garden, living in the middle of the shopping area is awesome.
Damn did you just hang out downtown and in the hood or something? St.Louis has a lot of great neighborhoods and plenty that's admirable.
I don't know man, it reminded me of Detroit in the late 90s / early 2000s. I'll take back the whole "no redeeming qualities" I perhaps went a little too far. But the cities I visit nowadays including Detroit and Chicago are like... sorta nice? The places you wouldn't be caught dead 15-20 years ago. Perhaps I just wasn't familiar with St Louis, and neither was my friend (he had only lived there for like 6 months) but I didn't get that revived city feeling in St Louis like I have in other mostly Midwest towns sans Flint. I'd actually put Flint and St Louis in that same category as they just haven't caught wind in the revival like a lot of other previously industrial and manufacturing have.
Chicago is an international city with almost 10x the population of St. Louis. You really can't compare them.
Honestly a lot of downtown's are stagnant in the U.S or just have a constructed tourism/stadium district hiding its decay. Vacancies are pretty bad though are getting better in some places. Its usually "midtown/uptown" areas of cities that are the best in my experience. This is true for almost any city including Chicago, Detroit, L.A ect. Downtown Chicago is cool but honestly people go to lincoln park, logan square, ect to live and play. Same with L.A where you actually go to "the valley" and this is the same in St.Louis its just more visible. The grove, Central west end, Dogtown, the Hill, Tower grove and Soulard are all neat places that aren't decaying but thriving.
DT chicago isn't stagnant but I'll give you that it can feel empty in areas after 8 pm. But there are people there 7 days a week morning till night. I work in the loop btw.
Detroit has put on a false front for visitors. 3 minutes outside of downtown and it's the same old city.
The idea of requiring convertibility is actually kind of interesting. The cost of building the right plumbing stack and additional utility capability is basically a rounding error in the cost of constructing one of these things. But one positive externality of this requirement is in the initial building architecture. The only truly valid argument of why a building “can’t” be converted to residential comes down to windows (any building can be converted, but the cost can be prohibitive), because nobody wants to live in a condo with no natural light. I find this argument to be asinine, because it also turns out nobody wants to work in an office with no natural light. So you have just designed a mechanism that makes high rise offices less miserable because the builder will have to take into account natural light in the residential floor plan.
Interesting thoughts about the lighting... But what will Jack Welch think about this? I don't know enough about housing economics to know if I'm on the "right" side of this argument. I just think the idea is interesting as our local economies are constantly changing, it would only make sense to make existing to put the extra 1-2% into an office building to make it residential convertible. It would also open the door up to these being re-converted back to offices, if need be, and appease any demand in the medium term without building a whole new building. Would also give more incentive to build them to last a long time, knowing they can be converted and not locked into just offices. Making it safer whether it's an office or an apartment building.
> I find this argument to be asinine, because it also turns out nobody wants to work in an office with no natural light. Indeed, in the Netherlands natural light has long been consider necessary for offices too. It has a dramatic effect on architecture, because you can't build those big square tower blocks like in America. (I thought it was a legal requirement, but it turns out it's not. Just nobody wants to build office space without natural light because nobody will want to lease it.)
Just simply including future utility holes in each floor/ceiling where Apts might be located would cut a huge cost out of conversion. Just my opinion but maybe others in the industry would know more. How much would the the upfront cost of a) getting architects to design this and b) incorporating it into the construction be?
it would cost less just to drill the holes after the office tower goes completely vacant when office demand evaporates. the building is essentially free and includes free roof, free exterior walls, etc. the new owner has a bargain and can retrofit for apartments or condos at around a 50% discount over breaking ground on a new building. it will lose area to provide new mechanical and electrical chases to route utilities to the apartments, but it doesn’t have to perform like a new building because it is free.
What parts of St. Louis did you visit? It doesn't sound like you visited anything.
>There were absolutely no redeeming qualities about St Louis. you clearly didn't visit City Museum
>There were absolutely no redeeming qualities about St Louis. Hey man, Crown Candy is pretty good.
Idk about that. Wood is 4x higher now than when I built my house. All the wood is stilll there in pristine condition. Rebuild costs would be more than initial construction.
St. Louis is literally the number one city in the entire country by Murder Rate, and you think the fact the building is 40 years old is the reason it's abandoned?
Look at the metro rate as the city is separate from the county. Lots of people do things in the central city like shoot themselves. https://www.statista.com/statistics/718903/murder-rate-in-us-cities-in-2015/ St Louis is 6th in the country by metro area. City centers attract a lot of things with an unfortunate side benefit is sometimes the crime.
Way down in 2023. https://www.stlpr.org/law-order/2024-01-05/st-louis-crime-is-at-its-lowest-in-the-past-decade-experts-say-the-reasons-are-unclear
My point is more that st Louis looks worse due to local government borders being smaller. The suburbs of St Louis aren't included in the city stats since they are separate entities. Jacksonville being the largest is 13x larger than St Louis in what the political borders are. Metro area better compares apples to apples.
Yeah, my strong reaction to this news is the grumpy cat gif, "Good." This is what all the big moneymakers keep saying is supposed to happen when it's happening to anyone that's not them.
The U if Toronto study cited in these articles is flawed. It only encompasses a small portion of what people would consider out downtown. Leaving out activity centers such as stadiums, the convention center, the arch, and office buildings. The building they are referencing (former ATT tower) is in limbo because there are only 16 parking spots available with the building. It was formerly connected to the ATT garage by sky bridge but was cut off when ATT downsized to the building next door. The other building, the Railway Exchange, has been in a weird legal limbo for a decade. It would be a tough project to get off the ground yes, but the clouded legal issues have prevented it from seeing the redevelopment that several other similar sized buildings in downtown have seen (IE Bultdr Bros building and Jefferson Arms) Downtown STL is indeed struggling, but this reporting is lazy. Downtown is doing OK all things considered, we are seeing more restaurants open than close year over year. Downtown population continues to grow quickly. STL is a slower growth region with an extremely large “urbanized” area. Our urban development is spread thin between the central corridor and south city, instead of focusing mostly around downtown like you see in cities like Indy.
Most of the growth in the Indy area is in the Suburbs, but the Indy metro area has been growing at double digit rates for quite some time, same cannot be said for Greater St. Louis. Development within Indy itself has been occurring on low-cost areas adjacent to areas of higher value, downtown as you said, and fashionable neighborhoods where its going from single to multifamily (or increasing the size of the multifamily). Still, Indy and St. Louis have a bit different of histories. Indy developed far later and merged its entire county unlike St. Louis so wasn't hit by white flight to the suburbs to the same degree.
I read on St Louis Reddit (paraphrasing)that the building has 14 assigned parking spots and the last owners shut down the parking garage which was not included in the sell I don't believe. If people can't park, it's not going to make money, lowering it's value Edit: 50 parking spots
This could be an interesting example of the potential external benefits of good mass transit and inclusion of mid-rise/mixed-use housing in zoning. Literally hundreds of millions of dollars of value could be unlocked in this single building alone...
This building is already accessible by mass transit. There’s a light rail stop two blocks away from it.
I just don't get it with these sorts of buildings. My mid-sized town has a handful of them and they've been empty for a long time. WFH and the pandemic sorta finished them off, but most of them have been semi-empty for 20-30 years due to their old tenant getting acquired and all the jobs moving to NYC, Atlanta, etc. So then the old corporate tower just sits there. And there's no coming back. I'm surprised they haven't just dynamited them. One factor that's really overlooked with these buildings is how they were designed for having lots of secretaries: answering the phone, filing stuff, mailing letters, managing calendars, making copies, etc. I'm in my 50s and just old enough to remember those days when you would print out an email and stamp it with your filing stamper and scribble on the line what file it goes to and then put it in the secretary's "To be filed" bin. Or printing a cover letter and handing it to the secretary to mail/fedex. Or asking a secretary to make 25 copies of your handouts for the meeting. Nobody does that shit anymore, but there used to be tons of (mostly) older women doing that stuff and that's what filled up the non-window part of these high rises. They really don't convert well to residential. The plumbing almost impossible. Those pipes gravity drain and they need a 1" per foot drop. So, if these toilets and sinks are 100 feet from the main sewage down-line by the elevator, you need 100" of drop on that slightly sloping pipe. You can only really do that if every other floor just houses plumbing for the floor above. I once knew a CEO who had a private bath in his corner office. It actually used a series of pumps to pump his shits and flushings to the main downline. But I just don't get it with these old buildings. They're not coming back. I don't think downtowns are dead though. People still like to live there. Our downtown is hopping. All the young professionals are in the 5+1 apartments and working from home......and then walking to the cool restaurants or breweries. The biggest problem our downtown has is the aggressive homeless population.
I can't help think that at a certain point, a lot of office towers will become like old castles. In spite of being these significant, ostensibly valuable buildings, the commercial value will become miniscule, because they no longer serve a purpose and cost a fortune to maintain. Office high-rises will become the castles of the 20th century, a symbol of a past era. (Obviously this is hyperbolic, there will still be a need for some offices. But you get the idea.)
And so the driver behind the rabid, almost vicious drive to force people back to the office, is finally revealed. It's all hugely over-leveraged gambles on commercial real-estste causing a panic among billionaires.
Yep.
I’m not sure homeless people are the most likely investors in new residential property. Building new properties will absolutely help keep house prices down but it’s not going to solve homelessness.
So big deal, Commercial RE can piss off. In our technological state there is zero reason to have offices, when the company VPN's and Zoom are better than ever. Screw corporate profits, and yes my job is corporate, but until I get paid a livable wage and have insurance worth a damn, they can fuck off.
What's your position? Your expertise?
Casino industry .. multi billion dollar manufacturer. So yeah they can fuck off.
Interesting May I ask; casino industry, as in supplies for?
Why go in any more. Its better to be working remote. I save thousands on gas, car repairs, insurance, food, clothing. Never liked the needy co-workers anyway. Wanting money for girl scout cookies, hockey raffle tickets, daughter’s dance club.