Well, once again, everybody is speculating about the real estate industry and specifically the commercial real estate segment because nobody wants to go back to offices. According to Bloomberg, about 50 of office space in use today is empty, and that's potentially a new normal, but it creates issues when 92 billion dollars of non-bank specifically office debt matures this year, which needs refinancing a potentially substantially lower prices. Some brokerages are estimating that there will be 330 million square feet of excess. Office Space by the end of the decade.

And just to picture what a million square feet feels like, think about an average Mall being around a million square feet now. picture 330 of those and fill them with cubicles. That's how much empty office space you might have. That's a lot, so it's leading a lot of people to believe that.

Oh well. we could probably just rebuild those office spaces into condos, right? I Mean why not just take the condos or or the office spaces and turn them into condos? You know we need more housing, so why not solve the housing? Problem by doing just that, Solve the housing problem at the same time as dealing with all these vacant office spaces. And the New York Times has done a phenomenal piece on this. The New York Times analyzed just this and they found that there are certain shapes of buildings that are really conducive to doing this.

Now they're all from a particular era, which is great. They have these shapes that look like this: They have eight shapes: o shapes, C shapes, U shapes, eye shapes and L shapes. these buildings are really conducive to being turned into office spaces because they're close to Windows and they have a lot of availability of space so it's easy to turn these buildings into condos. or Studios Look for example, if you have a solid like a a slender, a skinny Building look at this for example.

Let's say this was a typical small office building where maybe it was a 10-story building and you basically had little offices off the left and right. You had maybe be a receptionist window and then an office and then you had shared bathrooms. These kind of buildings are very typical for the late 1920s sort of the pre-war era office building where you had little suites as you could see here and these Suites are perfect for turning into guess what homes. two bedroom homes, one bedroom homes.

Fantastic. As you can see here, looks functional right? You created one, two, three, four, five, six, seven, eight nine, ten, eleven, eleven different units that people could live in out of what used to be offices. That's fantastic. Unfortunately, something happened that makes these sorts of conversions which look pretty nice and usable for Manhattan a lot less functional for today.

And that's unfortunately because we changed the architecture of our buildings substantially instead of having these older 1920s Style buildings where you had smaller windows that could actually operate and open and they weren't that wide to where a lot of space was close to Windows which could easily then be converted into condos. What did you end up getting after the war? Well You ended up getting apartment? well should I say Office Buildings That ended up looking a lot wider. See here's your typical 1929 building. that's cylinder that that's slim building.

I Should say that makes it very easy to on one side put a condo and then on the other side put a condo and then you have a hallway in between. Easy right? This is your typical 1929 building. Well what unfortunately happened after that? oh, 1959 post-war damn the thing. Got a whole lot box here and all of a sudden it's really difficult to put a condo in the middle of the property because now it has no window space at all.

But the problem just got worse. In 1974, the buildings got even wider. You can still see that same footprint for condo over here in the middle of nowhere. No window space.

Not great in 1974. Another example here. Willis Tower in Chicago Here's a 1983 example in Houston Same problem. Here's a 2020 example from the 50 Hudson Yards property.

Even worse of a problem. Now, this is typically how these are generally laid out. You have a crap ton of office space and cubicles. You have an open workspace.

That's what everybody wanted before the pandemic. Everybody wanted a bigger trading floor, a bigger co-working area. People didn't want small offices anymore. So what came to office? everybody's like.

Look, we got AC we don't have to be close to Windows We got fluorescent light bulbs we don't have to be close to Windows Heck now we got LEDs. Let's just have a massive open workspace and everybody can work together all happy. Well, that's wonderful and that's the trend We went on for like 60 years. Then covet hit and what happened.

Yeah, we just don't like offices at all. So now you're stuck with these open floor plan buildings where you really have to do a lot of rejiggering to make these. Office Buildings Functional and it's very difficult Now it's possible to do it. The New York Times shows an example of how it was possibly done.

Here's an example where you have the original floor plan followed by a potential after floor plan where you create a courtyard in the middle to create more light. but unfortunately that courtyard is just people looking at other people's windows. You don't really have a view of anything, but you do get some natural light. You basically have to hollow out the center of the building if you can do that structurally and now you can create condos, but you end up creating some funk like.

look at this. Look at these weird zigzag walls that you have to create because of the way the existing Plumbing electrical systems and most importantly the structural beams end up sitting. So you end up having structural members in the middle of bedrooms. You end up having funky floor plans and it makes it really difficult to convert these old Office Buildings into something functional.

And so the New York Times makes the argument that many, unfortunately of these Office Buildings are potentially just going to have to be demolished Again, you've got a lack of Windows in many of these, a lack of operable. Windows You know when you see like floor-to-ceiling glass skyscrapers? Well guess what happens with those suckers? You can't open the damn windows and you can't open the window. What do you not? Have a fire escape so you don't have a functional opportunity to turn it into condos anyway because you don't have two points of entry and exit. The problem deep: Interiors These open Office floor plans when people don't want offices anymore basically means when it comes to offices, you've got a lot of toxic assets.

Now, there are a lot of fears that the toxic Assets in the office space is going to end up leading to Contagion will end up seeing the residential and Commercial sectors that is multi-family single-family retail, industrial, and all real estate values compressed and that'll ultimately be for speculation in a separate video. But what we can say is, when it comes to offices, converting offices is going to be a whole lot harder than it seems. Yeah, Can we convert 1920s buildings? Absolutely. Can we easily convert some of the 60s, 70s, 80s, 90s, 2000s buildings? not so fast.

So we're going to have some massive problems. And so in my opinion this idea that, ah, no problem, empty offices just convert them to housing. Easier said than done. And if anybody's ever gone through permitting, you know that office space doesn't require the same standards that residential space requires.

In fact, a lot of office space in many states don't require fire sprinklers, but residential space does. Residential space Also often requires more intense seismic requirements because people might be asleep when disaster could strike, whether a fire or earthquake or otherwise. That leads to more intense engineering standards, which some buildings just won't satisfy. and so that creates a massive problem for the office real estate space.

Probably the last place I'd want to be right now is owning. Office Buildings and the idea that companies with money can just go in and start converting Office Buildings Probably highly unrealistic. What is very realistic though, is you gaining the lead by checking out the programs of building your wealth. Link down below: We've got a massive coupon expiration today on 420 at the end of the day 11 59.

we are going to be moving to a completely different structure where there won't be a low-cost entry anymore. So if you're looking for a low-cost way to get lifetime access to those live streams, make sure you join today because it's going to be getting a lot more expensive and the barrier and entry is getting a lot larger. So check out those programs. link down below and when it comes to office spaces sorry, the idea that we could easily convert these probably relatively unrealistic.

Despite everybody hoping for more housing, the housing shortage should probably continue for a long time until governments finally wake up and make it easier for developers to build more homes faster and still at quality standards, but that might be too much of a feat to accomplish. so in the meantime, housing shortage likely to continue while Office 10 thank you.