The Real Estate Bust America’s Suburbs Need
Dingy old office complexes are hogging valuable land and holding back needed new development in high-growth areas outside city centers.
Goodbye and good riddance.
Photographer: David Paul Morris/Bloomberg
In all the banking turmoil of the past two weeks, the commercial real estate market has come into focus as another at-risk sector stressed by high interest rates. But while banks and investors sweat the potential for losses and loan defaults, there is a silver lining for certain places, including suburban enclaves that have exploded in growth and become more affluent over the past decade. Decaying but not-quite-dead-yet assets like big office complexes have been holding back transformations needed to support expanding populations. Their failure would ultimately be a benefit to their communities, which have been building toward this moment since the fallout from the 2008 recession.
The caveat in this discussion is that every place with a vacant office building won’t necessarily be in a position to redevelop or transform that parcel of land. If there is no population or wealth growth in the area, a vacant building is probably going to just remain vacant. And in urban environments like downtown San Francisco or Midtown Manhattan, where there's arguably a glut of office space even though the land is valuable, it may take years for landowners and the surrounding communities to figure out how to work through a transition.