Ideas/Opportunities as Office Market COLLAPSES?

[Jordan Decuir]

Fellow BPers, I usually don't look much into Commercial RE, but I found this article by Andrew Syrios (link below) to be very interesting. Projections of greater than 50% vacancy in some downtown office markets?!?! 

The Coming Collapse of Downtown Office Real Estate (biggerpockets.com)

I wanted to share as I assume others will find this interesting as well. I'm curious as to what others see as the potential opportunities coming in downtown (and possibly also suburban) office assets in the next couple of years as pre-covid leases expire and tenants choose not to re-up:

1) Find and short REITs that focus on downtown office space, especially in particularly-vulnerable regions/cities/industries?

2) Assemble funds and acquire downtown office buildings as they decline in value? If so, what is the strategy to make money there (for example, convert to condos or apartment units?)

3) Wait for downtown-office owners to get antsy/desperate and lock in some bargains on leases...then sublet or some other arbitrage type of strategy?

4) Literally any other ideas....

Anyway, I found this to be an interesting read with some links to more interesting reads as well. I'm interested to hear about what others think about the wave of potential opportunities that may be coming in downtown office real estate!

[Jade S.]

Quote from @John McKee:

Agreed with apartments, but that is tricky because the conversion can be costly.  I see more partnerships happening with developers, owners and the city to revitalize those areas. The city could give the owner and developer tax breaks until the conversion is complete.  I stay away from the CBD and focus more on the neighborhood districts because that's where the people are.

Boy, couldn’t agree more on this.  We have a 7500 square foot office building in a small historic CBD within close walking distance of restaurants/parking deck/apartments in the upstate of SC that is between Greenville and Spartanburg.  It’s currently fully leased, but I know downtown Greenville has several large spaces that are still empty as the pandemic has waned.