CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, APRIL 28, 2020, OR THEREAFTER
FOR RELEASE: TUESDAY, APRIL 28, 2020, OR THEREAFTER
BY THOMAS D. ELIAS
“VIRUS MAY BRING A VIABLE HOUSING SOLUTION”
“VIRUS MAY BRING A VIABLE HOUSING SOLUTION”
“Before the pandemic, all my clients were
asking for new leases for office space. Now they’re all asking how to get out
of their leases.” A
prominent Los Angeles real estate lawyer speaking earlier this month.
It turns out
that all those bills the Legislature passed over the last 18 months to make
denser housing commonplace in California for relief of the longtime housing
crunch may suddenly be rendered irrelevant by a virus.
For the
longer Californians shelter at home to slow the spread of the COVID-19 coronavirus
plague the more obvious it becomes that all the office buildings that rose in
the major cities of this state over the last decade stand a decent chance of
becoming high-rise white elephants.
Meanwhile,
Gov. Gavin Newsom spent much of the last two years lecturing California
citizens and cities that they must OK construction of 3.5 million new dwelling
units before the end of 2025 to slake California’s thirst for housing.
That
would have been a pace of about 700,000 new units per year, roughly five times
what was actually built in Newsom’s first full year as governor and far more
units than there are financially qualified buyers.
Yes,
the state did have about 150,000 homeless as of January, but few of them can
afford even so-called “affordable” housing.
Enter
the shelter-in-place tactics Newsom and local health officers decreed in order
to shake off the pandemic, which has afflicted many more than 20,000
Californians (the number rises by the hour) and killed hundreds of us.
Countless
corporations, from telemarketers to newspapers and law firms, have sent their
white collar workers home to use kitchen and dining room tables while cubicles
stand empty. Millions of square feet of office space, maybe billions, are idle.
No dummies, some executives
now realize they never really needed all that office space. And some workers
are coming to understand they don’t really need to spend hours each day
fighting traffic jams. Companies can save billions in rent money, while workers
can save immeasurable stress if this new reality lasts beyond the reopening of
commerce which may begin next month. If that Los Angeles real estate lawyer’s
clients are an indicator, many will try to escape leases.
What happens then to all that
office space? Already the owners – including real estate investment trusts
(REITs) whose shareholders suddenly see their stock values plummeting and
dividends drying up – are near panic.
Said one multi-billion-dollar
REIT (or is it really worth that much now, with tenants refusing to pay rent
and government edicts preventing evictions?) in a letter to stockholders, “The
COVID-19 pandemic has drastically impacted the viability and valuation of
almost all types of commercial real estate.”
The
solution to that REIT’s problem is obvious – and it’s also the answer to
California’s housing problem: Sell off a lot of that office space as apartments
and condominiums.
To a
large extent, the suddenly vacant square footage sits in existing buildings.
Converting several floors of many, many buildings into living units would not
require new construction, nor would it seriously change the nature of any
neighborhood.
That
was the chief objection of cities and neighborhoods to SB 50, the
nearly-successful effort by Democratic state Sen. Scott Wiener of San Francisco
to force building of high rise living units near transit stops and the busiest
bus routes in almost every California city.
Putting
new apartments and condos into existing office space solves those issues, while
also placing a large share of the new residents near transit stops and job
centers, just as Wiener wanted.
Sure,
the conversions would require a lot of plumbing, electric and drywall work, but
new laws signed by Newsom would grease the path to the needed building permits
and myriad new jobs would appear just when they are most needed. Meanwhile,
many building owners would get their money out pretty soon, plenty of
affordable new housing could quickly appear and the housing shortage could end.
That’s
a very expensive solution to the housing crisis, in terms of human suffering
and lives lost. But at least it offers a silver lining for an ultra-tragic
pandemic.
-30-
Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It" is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net
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